Dollars and Sense

Lessons Learned

And so Morton began to structure a new deal-one he felt confident Micro-Link's executives could sell to local investors.

But aside from the evergreen truism "Trust in yourself," exactly what pearls of wisdom did Morton and Duke acquire along the way? Following are five lessons Morton says they learned the hard way at a cost of some $250,000.

1. Offer a clean slate. "We made the mistake of being half-merged with our technology partner at the time we were looking for capital," recalls Morton. Had Micro-Link and Hiarc merged before seeking outside capital, he says, they would have had a much easier go of it.

2. Always keep a fallback position in your hip pocket. If you accept the reality that most deals fall though, Morton says, you'll take better care of the capital sources that show an interest in you, and keep them up to date, even if they are not working on a transaction. "After our second transaction fell through, we couldn't very effectively go back to the first one," he explains, "because we had basically let the relationship go."

3. Be selective about financial advisors. Morton says Micro-Link used several financing consultants. While consultants can be worth their weight in gold if they produce, they're a drag on cash flow when they don't. Morton's advice: Hire one if you must, but don't stick with him or her too long if you don't see results.

4. Explore your local options first. "When we brought on the Hiarc technology," recalls Morton, "we had an incredibly exciting opportunity-but we never presented it to local investors. As we later found out, there was a lot of local support for what we were doing, but we got too caught up in selling the deal in New York to notice."

5. Talk to decision makers. "The so-called 'commitment committee' really caught us off guard," says Morton. "We thought the guy we were talking to all along had the authority to do the deal. Talking to the 'senior vice president of investment banking' sounded pretty good to us. We should have known otherwise, and the fact that we didn't cost us dearly."

As for the new challenges facing Micro-Link, Morton is optimistic. "I feel much better about being in charge of the sales process," says Morton. "In fact, I feel better about us doing it than I do about asking someone else when they are going to get it done."

David R. Evanson, a writer and consultant, is a principal of Financial Communication Associates in Ardmore, Pennsylvania.

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This article was originally published in the July 1996 print edition of Entrepreneur with the headline: Dollars and Sense.

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