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© 2006 Tatum, LLC  All rights reserved.
Doug Tatum – Chairman Emeritus Tatum LLC © 2006 Tatum, LLC  All rights reserved. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Small vs. Entrepreneurial Growth Companies A Key Distinction ,[object Object],[object Object],[object Object],[object Object],© 2006 Tatum, LLC  All rights reserved.
Small vs. Entrepreneurial Growth Companies A Key Distinction ,[object Object],[object Object],© 2006 Tatum, LLC  All rights reserved. Among nations with similar economic structures, the correlation between entrepreneurship and economic growth exceeds 0.70 and is highly statistically significant
Gazelles- The Navigating the Growth Process The Economy & No Mans Land © 2006 Tatum, LLC  All rights reserved.
Meeting the Growth Challenge A Map through No Man’s Land Definition ,[object Object],[object Object],[object Object],[object Object],© 2006 Tatum, LLC  All rights reserved.
Meeting the Growth Challenge A Map through No Man’s Land The Four Ms ,[object Object],[object Object],[object Object],[object Object],© 2006 Tatum, LLC  All rights reserved.
The Market Transition © 2006 Tatum, LLC  All rights reserved.
© 2006 Tatum, LLC  All rights reserved.
© 2006 Tatum, LLC  All rights reserved.
Meeting the Growth Challenge A Map through No Man’s Land Market Mis-alignment © 2006 Tatum, LLC  All rights reserved. EARLY STAGE/ SIMPLE RAPID GROWTH/ SIMPLE? EARLY STAGE/ SIMPLE Company Simplicity Customer Company Complexity Multiple Customers Market Mis-alignment is the natural progression of Entrepreneurial Control
Meeting the Growth Challenge A Map through No Man’s Land Mis-alignment Causes ,[object Object],[object Object],[object Object],[object Object],[object Object],© 2006 Tatum, LLC  All rights reserved.
[object Object],[object Object],[object Object],[object Object],Meeting the Growth Challenge A Map through No Man’s Land Mis-alignment Effects © 2006 Tatum, LLC  All rights reserved. Company is no longer simple to do business with
Meeting the Growth Challenge A Map through No Man’s Land The Market Navigation Rule © 2006 Tatum, LLC  All rights reserved. The business as a whole must become good at doing what the Entrepreneur did well with customers in order to successfully re-create Market Alignment
The Management Transition © 2006 Tatum, LLC  All rights reserved.
[object Object],[object Object],[object Object],Meeting the Growth Challenge A Map through No Man’s Land The Management Transition © 2006 Tatum, LLC  All rights reserved.
[object Object],[object Object],[object Object],Meeting the Growth Challenge A Map through No Man’s Land The Value of Management © 2006 Tatum, LLC  All rights reserved.
Meeting the Growth Challenge A Map through No Man’s Land The Management Navigation Rule © 2006 Tatum, LLC  All rights reserved. The founder must hire at the top first, not the middle, to successfully navigate through No Man’s Land
Attracting Management You Can’t Afford © 2006 Tatum, LLC  All rights reserved. No : the company is not directly taxed on the employees’ gain upon exercise of ‘non-qualified options’.  No:  “qualified options” are not taxable to Individual upon exercise No : special accounting treatment No:  valuation requirements United States 2000 Yes:  the company is directly taxed on the employee’s gain upon exercise of “ non- qualified options”  No:  “qualified options” are not taxable to the individual upon exercise. Yes:  special Accounting treatment Yes : Valuation Requirements France 2000 No:  the company is not directly taxed on the employees’ gain upon exercise of ‘non-qualified options’. Yes:  “qualified options” could be taxable to an individual upon exercise. Yes:  special Accounting treatment Yes:  Valuation Requirements United States Now
The Transition in the Economic Model © 2006 Tatum, LLC  All rights reserved.
Meeting the Growth Challenge A Map through No Man’s Land The Model © 2006 Tatum, LLC  All rights reserved.
© 2006 Tatum, LLC  All rights reserved.
© 2006 Tatum, LLC  All rights reserved.
The Case of the Freight Forwarding Industry © 2006 Tatum, LLC  All rights reserved.
Meeting the Growth Challenge A Map through No Man’s Land The Model Navigation Rule © 2006 Tatum, LLC  All rights reserved. The business’s value proposition must be scalable (profitable at a higher volume) to successfully navigate No Man’s Land
The Money © 2006 Tatum, LLC  All rights reserved.
Microeconomics of Growth © 2006 Tatum, LLC  All rights reserved. The following illustrations were built from an economic model that accounts for the typical asset growth characteristics of a rapidly expanding business on accrual accounting and transitioning through “No Man’s Land.”
Illustration of “Capital Funding Gap” ,[object Object],© 2006 Tatum, LLC  All rights reserved. Capital Funding Level Business Category Capital Sources Business Risks BUSINESSES IN “ CAPITAL NO MAN’S LAND” -Limited Cash Flow- (“Too big to be small; too small to be big”) Start-up and Other  Small Businesses Emerging Growth Businesses $1 million $250,000 0 Investment Bankers (IPO Market/Private Placements) Commercial Bankers Private Equity Groups Venture Capitalists SBICs/SBA Loans Very Limited Access to Capital (Angels/Factors) High Cost of Account & Collateral  Management Business Borrowing Exceeds Personal Assets Investment by Family & Friends Loans Based on Personal Assets: Banks/Home Equity/Credit Cards/SBICs/SBA Lower Risk Higher Risk
Meeting the Growth Challenge A Map through No Man’s Land The Money © 2006 Tatum, LLC  All rights reserved.
Meeting the Growth Challenge A Map through No Man’s Land The Money Navigation Rule © 2006 Tatum, LLC  All rights reserved. The key to raising money is reducing real and perceived risk of the company
General Thoughts and Conclusions ,[object Object],[object Object],[object Object],© 2006 Tatum, LLC  All rights reserved.

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The Survival Guide For Ce Os In This Economic Downturn

  • 1. © 2006 Tatum, LLC All rights reserved.
  • 2.
  • 3.
  • 4.
  • 5. Gazelles- The Navigating the Growth Process The Economy & No Mans Land © 2006 Tatum, LLC All rights reserved.
  • 6.
  • 7.
  • 8. The Market Transition © 2006 Tatum, LLC All rights reserved.
  • 9. © 2006 Tatum, LLC All rights reserved.
  • 10. © 2006 Tatum, LLC All rights reserved.
  • 11. Meeting the Growth Challenge A Map through No Man’s Land Market Mis-alignment © 2006 Tatum, LLC All rights reserved. EARLY STAGE/ SIMPLE RAPID GROWTH/ SIMPLE? EARLY STAGE/ SIMPLE Company Simplicity Customer Company Complexity Multiple Customers Market Mis-alignment is the natural progression of Entrepreneurial Control
  • 12.
  • 13.
  • 14. Meeting the Growth Challenge A Map through No Man’s Land The Market Navigation Rule © 2006 Tatum, LLC All rights reserved. The business as a whole must become good at doing what the Entrepreneur did well with customers in order to successfully re-create Market Alignment
  • 15. The Management Transition © 2006 Tatum, LLC All rights reserved.
  • 16.
  • 17.
  • 18. Meeting the Growth Challenge A Map through No Man’s Land The Management Navigation Rule © 2006 Tatum, LLC All rights reserved. The founder must hire at the top first, not the middle, to successfully navigate through No Man’s Land
  • 19. Attracting Management You Can’t Afford © 2006 Tatum, LLC All rights reserved. No : the company is not directly taxed on the employees’ gain upon exercise of ‘non-qualified options’. No: “qualified options” are not taxable to Individual upon exercise No : special accounting treatment No: valuation requirements United States 2000 Yes: the company is directly taxed on the employee’s gain upon exercise of “ non- qualified options” No: “qualified options” are not taxable to the individual upon exercise. Yes: special Accounting treatment Yes : Valuation Requirements France 2000 No: the company is not directly taxed on the employees’ gain upon exercise of ‘non-qualified options’. Yes: “qualified options” could be taxable to an individual upon exercise. Yes: special Accounting treatment Yes: Valuation Requirements United States Now
  • 20. The Transition in the Economic Model © 2006 Tatum, LLC All rights reserved.
  • 21. Meeting the Growth Challenge A Map through No Man’s Land The Model © 2006 Tatum, LLC All rights reserved.
  • 22. © 2006 Tatum, LLC All rights reserved.
  • 23. © 2006 Tatum, LLC All rights reserved.
  • 24. The Case of the Freight Forwarding Industry © 2006 Tatum, LLC All rights reserved.
  • 25. Meeting the Growth Challenge A Map through No Man’s Land The Model Navigation Rule © 2006 Tatum, LLC All rights reserved. The business’s value proposition must be scalable (profitable at a higher volume) to successfully navigate No Man’s Land
  • 26. The Money © 2006 Tatum, LLC All rights reserved.
  • 27. Microeconomics of Growth © 2006 Tatum, LLC All rights reserved. The following illustrations were built from an economic model that accounts for the typical asset growth characteristics of a rapidly expanding business on accrual accounting and transitioning through “No Man’s Land.”
  • 28.
  • 29. Meeting the Growth Challenge A Map through No Man’s Land The Money © 2006 Tatum, LLC All rights reserved.
  • 30. Meeting the Growth Challenge A Map through No Man’s Land The Money Navigation Rule © 2006 Tatum, LLC All rights reserved. The key to raising money is reducing real and perceived risk of the company
  • 31.

Editor's Notes

  1. © 2006 Tatum, LLC Thank you xxxxxx appreciate Renaissance Executive for hosting me. My objectives this morning are to convince you of three things That there are a unique group of companies that have a hugely disproportional effect on the US Economy – and how they relate to the private equity market and to the issue of large corporate and US global competitiveness. That in order to survive and flourish that each of these companies have to complete a unique transition that in most cases is fatal to them called No Mans Land and is directly associated with the risk of investing in them from a private equity perspective. From an Entrepreneurial CEO’s perspective this is an overview of the transition issues faced by a company that have to be addressed in order for an emerging growth company to grow to scale and ultimately be endorsed by the capital markets. Many of us in the business of serving these companies also need to understand the issues that these companies face because if they are successful they become our best clients. That there are Four Navigational Rules that must be followed as a Map through the transition. They are immutable – like gravity. and they directly relate to the Navigating to the next level process and the CEO Advantage One Page Translator. Leadership Notes Ask to talk about leadership No Mans Land Transition is a target rich environment that separates the really good leaders from those that are average Take this opportunity to talk to first about what we observed a Leader of a company that makes the transition has to do to be successful and then what leadership characteristic we can learn out of those observations.