After years of success, the CEO of a subscription software company was staring down some serious challenges that stood to impact the fate of the company. Once a leader in its space, the company had invested heavily in new product development at the expense of building its direct sales capability. At the same time, economic woes had led to steep declines in subscriptions for its legacy product, which left the company facing crippling layoffs to make payroll or a fire sale just when its promising new product was ready to launch. The CEO presented a business case to his peers outlining several options to keep the company afloat, but was very discouraged and all but convinced the company would have to fold.
Several CEO peers suggested investigating bridge financing. With this option, the company could borrow enough on the promise of its new product to avoid layoffs for several months, and in that time, could engage the right banker and secure a term sheet that would set the company on firm footing.
The CEO followed his peers' advice, and took advantage of their recommended contacts for a bridge loan and banker. Several months later, the firm was acquired as a wholly-owned subsidiary by a major public company at a valuation favorable to investors, all while avoiding layoffs and enabling the company's passionate employees to continue their work.