The DTM Example

Executives of the DTM Corporation (Nasdaq:DTMC), a manufacturer of rapid prototyping and manufacturing systems, approached ProActive regarding its interest in acquiring approximately 50% of DTM’s outstanding capital stock then owned by BFGoodrich. BFGoodrich had previously implemented a partial divestiture of DTM through an IPO in 1997. With the support of DTM’s management, we were able to negotiate with BFGoodrich the purchase of its remaining DTM stock, thereby gaining effective voting control of DTM.

The principals of DTM immediately became involved in a variety of strategic, operational and financial matters, including the following:

Strategic/Organizational:

  • Overhauled Board of Directors, including the addition of 2 principals of ProActive and 2 independents.
  • Restructured option plan to grant equity ownership to all employees and to significantly increase the equity participation of key executives.
  • Coordinated eventual sale of the company.

Operational:

  • Coordinated overhaul of compensation plans.
  • Extensively reviewed and challenged sales and marketing initiatives, including reorganization of international distributor and agent network.
  • Advised on systemization of new product development review process.
  • Advised on litigation strategy regarding various intellectual property matters.

Financial:

  • Assisted in establishing an asset based credit facility.
  • Advised on proposed Nasdaq delisting, which was ultimately avoided.
  • Coordinated discussions with investment bankers on feasibility of a secondary stock offering and/or private placement of securities.
  • Advised on alternative financing strategies.

Result:

  • DTM was sold to the industry leader 30 months after initial investment.
  • Annual revenues increased from approximately $27 million to $40 million during the first two years of involvement. (Grew to number 2 in the industry.)
  • Ten consecutive profitable quarters in a row (after only one profitable quarter in its history prior to ProActive’s involvement).
  • Annual Earnings increased approximately $8 million over first two years of involvement.
  • Market capitalization increased from approximately $7 million to $45 million during ProActive’s ownership period.
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