4). Metapath Cash flow Problems
Metapath was facing a serious issue regarding its cash flows in its 6th year, post series E investment. This compelled the exiting investors to divest prematurely from their investments. Additionally, it can be assessed that, the only offer available was an additional investment of $40 million at $20 million pre with pay-to-play, participating preference liquidation was imposed with the condition that, the management would stay for a period of two years. Therefore, to mitigate the adverse situation and attract or hold the investors, the CEO should first, identify the core issues causing the decline in cash flows generated and provide quick remedial actions to mitigate the adverse effects of declining cash flows or try and gain additional investments from existing or new investors to fulfill the cash flow requirement of the company. This could increase the investors’ confidence in their investment, expanding their investment period. Which would give the company sufficient time to implement a proper fix for its cash flow problems. Furthermore, the CEO should identify key investors or shareholders of the company and hold negotiations with these key investors. CEO could offer them convertible preferredstocksinstead of common or preferred stocks. Which would increase the investors’ confidence in the company and its investment opportunity, as it would allow the investors to convert their stock in to common stocks, in case of liquidation or sale at a cheaper rate. Which, in turn, would enable them to recover their entire principal amount invested and gain a significant return on their investment attributed to the increase in value of the company in the market. In addition to this, Metapath could acquire short-term or long-term loans from potential lenders available in the market at lower interest rates depending upon the amount of capital required. Which, in turn, would enable the company to fulfil its cash flow requirements. Moreover, the company could hire experts or employ expert staff to assess and analyze various stock under consideration to evaluate or differentiate between good or bad stocks available in the market through the assessment of their historic performance. Which would enable them to investment in those stocks that had out performed in the past and are expected to outperform in the future. On the other hand, divest from those that had under performed in the past and are expected to underperform in the future. Hence, it would enable Metapath, to increase the overall performance of its portfolio in the market, while giving it a competitive edge over its competitors present in the market. Which could also enhance, the investors’ interest and confidence in the company and its investment and allow the company to potentially gain additional investors in the future, while gaining higher returns for its efficient investments in good stocks and divestment from bad ones. Which, in turn, would enable, Metapath to mitigate the risk of declining cash flows in the future, it could also allow them, to make additional investments in various other stocks and investment opportunity. Which could further enhance its position in the market and its expected returns for the stocks portfolio invested. Therefore, it can be determine that, through the initiatives mentioned above, Metapath would be able to mitigate risk of declining cash flow, while maintaining their strong position and share of the market…………….
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