Chapter 15 - CrossWave Almost Died and Then Didn’t
CrossWave had thirty-seven days before projected cash exhaustion after Hawthorne and Northline withdrew.
The board hired restructuring adviser.
Options narrowed.
One strategic buyer, Atlas Industrial Software, offered:
Acquire CrossWave assets and customer contracts for $14 million plus assumption of selected liabilities.
That would wipe most common shareholder value.
Employees retained selectively.
Another fund offered rescue financing:
$4 million senior preferred.
Heavy dilution.
Board chose a negotiated recapitalization led by existing investors plus new strategic capital.
Terms:
$4.5 million bridge.
Founder Daniel’s common stake diluted from 31 percent to 9 percent on fully diluted basis after recap and option pool.
Victor Shaw remained interim CEO.
Later permanent.
Daniel removed from board under investor rights after criminal indictment.
Patricia’s advisory contract terminated.
Cross Strategic Advisors repaid $92,000 of the $150,000 recent fee under settlement because services unsupported.
The remaining $58,000 was credited to actual work after review.
Again:
Not everything fake.
CrossWave laid off seventeen employees.
I hated that.
Would my five million have prevented layoffs?
Maybe temporarily.
Would it have solved governance?
No.
The company survived.
Two years later, revenue stabilized.
Three years later, Atlas acquired it for $38 million.
Investors recovered portions.
Employees with options got varying amounts.
Daniel’s diluted shares, subject to forfeiture/restitution liens, produced some value used toward restitution.
I never invested.
Never became owner.
Never took his company.
May you like
Good.
It had never been mine to take.
