Case Study #6

Company Profile

• Company has raised $53 million from venture capitalists through four rounds of financing.
• The most recent financing occurred 8 months prior to Sherwood’s involvement.
• Company develops products and services for wireless technologies.

Financial Situation

• Company has $8 million in cash with a monthly cash burn rate of $1 million
• Company has a very clean balance sheet with no significant debt
• Board communicated to the Company that it would not consider additional investment until key sales milestones were met.
• Company is experiencing significant product development hurdles at a very late stage and realizes that the impending release of a new product line would be delayed by 60 days.

Sherwood Mandate

• Identify and monetize Company assets so that the sales runway could be extended.

Results

• Company had purchased rather than leased the majority of its equipment. Sherwood arranged for the sale of approximately $2.5 million (original cost) of hardware in an auction. The equipment was transported to a region of the country where the secondary market was less inundated. As a result, the
• Company realized an average sales price of 18% of the original cost.
• The Company had leased equipment that was no longer critical. Under the terms of its lease, the Company possessed the right to sublease the equipment. Sherwood contacted VC’s to identify a start-up who could initiate operations with cheaper, older equipment. The start-up agreed to pay 35% of the future payment stream as it came due (original cost of $800,000).
• Sherwood initiated an analysis of the Company’s patent portfolio and identified a broader set of uses for some key patents. The company was able to license the use of the patents to other companies who were competing in a tangential market. The monthly payment stream equaled $75,000.

Sherwood Partners, LLC

Solutions | Results | Success | Since 1992

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Mountain View, CA 94043

Phone: 650-454-8001
Fax: 650-454-8040

E-mail: info@shrwood.com