Avoiding business crisis

1
Avoiding business crisis Successful crisis
management
VAR Management

• VAR-MIT presentation
• MAY 2006

2
Agenda
VAR Management

• VAR- who we are
• Overall Special Situations market
• High techs unique characteristics
• How to avoid business crisis
• Successful crisis management
• Summary

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Special Situations? Terminology
VAR Management

• .

4
VAR overviewA corporate doctors view
VAR Management

• Special Situation firm
• Advisory management services
• Complex MA, investments
• Technology low tech
• Works with VCs, banks, management, holding
  companies- Israel, US
• Whole ground- Recovery Restructuring interim
  CEO/CFO Winding down liquidations investment
  banking equity/debt investments
• Sample cases- Shef Hayam, Global Metals,
  RealTimeImage, Teleknowldge, Shellcase, Lambda
  Crossing, Real Estate, unknown

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Overall Special Situation market
VAR Management

• As all environments-economical world has its weak
  and strong segments
• Current high risk Israeli companies- 16
• More than 14B bad banks debt
• Startup weak segment- high percentage
• Problems are mostly dealt in house
• Mercury, Comverse

6
High techs unique characteristics
VAR Management

• High risk- high reward model
• Quality, driven personnel- management VC
• Not based on normal key elements- revenue,
  EBITDA..
• Multiple shareholders
• Thin operation- clients, suppliers, employees,
  tangible assets, banks
• High dependency on key employees
• Forward looking business model

7
How to avoid business crisis
VAR Management

• From day one- build it right
• On going-As in a family- always keep it close
• People, people, people
• Executable plan- fight for it know when to turn
• Routine reviews
• Symptoms
• Business plan objectives repeatedly not met
• Employees/key personnel problems
• Current shareholders dont participate in new
  rounds
• Bank alerts
• Clients/suppliers continuant dissatisfaction
• On going cash problems

8
Successful crisis management
VAR Management

• Proper analysis of main curable problems- view
  the big picture and treat key players
• Decisive Game Plan and crisis management team
• Minimum unnecessary changes
• Short vs. long term plan
• Trust mechanism and high EQ skills
• Know when to shift to long term monitor past
  game plan

9
Summary
VAR Management

• Business crisis- almost in every house
• Early discovery better healing chances
• Dont be a macho- go see a doctor
• Bottom line results- key factor
• People
• Good luck