Avanceon: A Case Study

We met Avanceon Founder & CEO Bob Zeigenfuse for the first time in 2011. At that time, Bob was in the process of unwinding a strategic partnership that had not worked out as he had intended. The resolving transaction would include Bob buying back the partners ownership interest in Avanceon. This was a multi million dollar transaction and one with sundry complexities. One of those complexities was that some of the purchase consideration would take the form of a profit share for the 2 years after closing. Another complexity was the necessity to reboot an important strategic initiative, one that was the genesis of the partnership from the outset, but also one that had floundered due to the partner’s failure to perform. This reboot was inevitably going to require some expenditures to fix and the result was going to be a period of losses. Avanceon had grown to become a global leader in core systems and control integration for manufacturing companies. It’s franchise and customer relationships were stronger than ever. What was needed was a stream lined ownership structure and a few quarters to get the company back firing on all cylinders.

We recently sat down with Bob to talk more about Avanceon and its partnership with Fundamental Financial.

 

What was unique about the situation and opportunity for Avanceon Medical?

Unnecessary turmoil between the two owners was stymieing what was otherwise tremendous growth potential. Customers never felt better about our work and were begging us to take on additional projects and ownership was stuck over a divergence in the vision.

 

Did you face any special financing or capitalization challenges?

We weren’t going to raise equity. The problem from the beginning was an inability to find a common vision between owners. That was not going to be fixed by adding another owner to the mix. We also needed capital to fund some losses we knew were going to be required. This loss period was going to last about two quarters, but it wasn’t going to last longer. Our bank simply could not get there head around the combination of the need to incur some losses and the complexities of the ownership structuring transaction. They wanted out. We were sorely disappointed, but there was no sense wringing our hands over it. We needed an alternative source.

 

Why Fundamental?

We ran a competitive process and took term sheet from three separate providers. Prices and terms were close, but Fundamental was not the best on either. What Fundamental did offer was a direct promise from CEO, Tim Haddock. That promise was that they had taken the time to understand our situation. That was already evident to us by the far deeper understanding of it they demonstrated through their questions. Tim also promised a high level of service and a minimum level of complications and/or interference.

We chose them and they served us exceptionally well. Our financial profile improved considerably during our time with Fundamental and we recently went back to a new banking relationship. But we have nothing but good things to say about the relationship we had with Fundamental during what was an important transition period for Avanceon.

Fundamental delivered on everything they promised. Period.