VC for a troubled CLEC replaced the CEO with a CMP executive.
The company’s balance sheet was in trouble.
The VC didn’t want to put more money into
it. Was there a merger possibility?
Action:
CMP developed a business strategy to focus on profitable
investments.To
make immediate balance sheet improvements, CMP renegotiated
all of the long term debt and converted it to equity.Operating
costs were reduced by eliminating all nonessential sales
and customer service functions.Significant
managerial changes improved sales and marketing productivity.Improved
margins by moving from reseller relationship to a facilities-based
carrier.Negotiated
favorable sale of product line with negative gross margins.
Results:
The monthly cash burn rate was reduced by 60 percent .The
balance sheet was greatly improved by eliminating
debt and selling unneeded assets.Revenues
grew 5-6% despite selling product line representing
20% of revenues.Gross
margins increased from < 20% to 36% in 6 months.Negotiated
merger with another CLEC netting the VC 80% ownership
despite being half the size of the other company.
•
Starting a Start-Up
Situation:
Presented with the challenge of deregulation and the need to expand a geographically
based business, a CMP partner was tasked with
creating a completely separate national long
distance network with no ties to the parent.
Action:
A macro view of the systems and operations was required. A systematic approach
and organizational plan were developed.Processes
and procedures were created to comply withregulatory
restrictions. Economies of scale were secured through
macro level planning. Speed to market was maximized
through repeatable procedures implemented in each
state.
Results:
In two and a half years, one of the highest-quality, nationwide, long distance
infrastructures was built and completed from
scratch on budget.This
included fully functioning network operations
and OSS.The
network now carries the nation’s third
largest volume of long distance traffic.
