ATH MicroTechnologies, Inc. Essay Sample

August 15, 2017 Medical

Instruction manuals:
This instance describes the development of an advanced. entrepreneurial house in the medical engineering industry. The successes—and difficulties—of the concern are due in big portion to management’s efforts to plan and utilize formal control systems to accomplish net income and public presentation ends The instance is structured in five chronological subdivisions that will be discussed in category. To fix for the initial treatment. delight answer the inquiries at the terminal of this instance.

Establishing
In 1997. Dr. Charles Casper and John Frost founded ATH MicroTechnologies Inc. to develop. industry. and sell a new medical imagination merchandise. Dr. Casper ( 47 ) . a radiotherapist. had trained at Johns Hopkins medical school and. after a research family at Harvard Medical School. joined a private pattern in Florida. Casper specialized in the usage of imaging systems for the medical pattern. Over clip. he had experimented with different processs. such as ultrasounds and x-ray. until he became interested in a new engineering based on directing electronic urges through electrodes attached to the tegument and detecting how these urges changed as they went through the organic structure. Together with John Frost—an applied scientist who specialized in digital imagination for medical applications— Casper perfected the engineering. cut downing its cost and bettering its declaration. Both laminitiss anticipated a important market potency for their merchandise.

Relatively low cost combined with improved image quality made it a really attractive option for applications where other imaging systems were prohibitively expensive to utilize. With these outlooks. they convinced a group of physicians to put in the venture. The company started with $ 3. 6 million in paid-in capital. In 1998. ATH MicroTechnologies received regulative blessing to market its first product—an imaging system to work in concurrence with minimally invasive surgical processs. Constructing on this initial success and after a elaborate gross revenues and net income projection over a five twelvemonth period. a trade was struck with Alumni Capital Partners. a venture capital house. which agreed to put $ 8. 7 million to back up the launch of the new merchandise. The concern program anticipated the debut of new merchandises with increased image declaration and a broader scope of applications to draw the company into profitableness by the terminal of 2001. During this period. all the hard currency of the concern would be invested in merchandise development. production tooling. and selling.

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Professor Robert Simons and Doctoral Candidate Antonio Davila prepared the original version of this instance. “ATH Technologies. Inc. ( A ) : Making the Numbers. ” HBS No. 100-016. which is being replaced by this version prepared by Professor Robert Simons. Certain inside informations have been disguised. HBS instances are developed entirely as the footing for category treatment. Cases are non intended to function as indorsements. beginnings of primary informations. or illustrations of effectual or uneffective direction. Copyright © 2008. 2009 President and Fellows of Harvard College. To order transcripts or bespeak permission to reproduce stuffs. name 1-800-5457685. write Harvard Business School Publishing. Boston. MA 02163. or travel to www. hbsp. Harvard University. edu/educators. This publication may non be digitized. photocopied. or otherwise reproduced. posted. or transmitted. without the permission of Harvard Business School.

The merchandise was launched in December 1998 and gained a toehold in the market place. Extra directors. scientists. and selling forces were hired. Some were given equity places in the company in stead of to the full competitory wages. As expected. the investing in merchandise development and fabrication procedures absorbed all the hard currency that the concern generated. In 1999. the venture capital house organized another unit of ammunition of funding. conveying other venture capital houses into the company which invested $ 8. 0 million. At this point. the board was comprised 60 % inside managers and 40 % foreigners.

During 2000. the company improved the merchandise and a new coevals was developed. That same twelvemonth. the laminitiss received an offer to sell the company to Scepter Pharmaceutical. Inc. ( a anonym ) . a $ 10 billion pharmaceutical and medical merchandises company that wished to increase its presence in this market section. The offer seemed attractive to all the parties involved. The venture capital houses would be able to hard currency out productively. Scepter would add a new and successful merchandise to its merchandise line. and ATH would hold entree to hard currency to finance faster growing. The concern could add more people. expand installations. and purchase new equipment to take advantage of the market chance for its merchandise.

ATH was acquired by Scepter in early 2001 for an initial payment of $ 90 million to bing stockholders. In add-on. there was an “earn-out” clause whereby Scepter would pay. on a pro rata footing. an extra $ 30 million if the new merchandises presently under development were approved by the FDA ; $ 35 million if an independent survey proved that the ATH’s engineering was superior to other bing engineerings ; and $ 120 million over a three-year period get downing in December 2003 if gross revenues growing and net incomes ends were met ( Postpone A describes the earn-out construction ) . ATH’s 10 equity-holding directors who chose to remain with Scepter could have between $ 1. 5 million and $ 7. 5 million as extra payout from the sale of the company. Postpone A

Structure of Earn-out Payments
Gross saless Goals

2003 consequences
2004 consequences
2005 consequences

Table Bacillus

Bonus

$ 63 million
$ 114 million
$ 165 million

Net incomes Goals

$ 15 million
$ 20 million
$ 25 million

$ 8 million
$ 26 million
$ 36 million

Bonus
$ 15 million
$ 20 million
$ 25 million


Fiscal Performance. 1997-2000

Net gross revenues
Gross border
Selling and gross revenues
Research and development
Net income ( loss )
Cash and short-run investings
Other current assets
Net fixed assets
Entire assets
Long-run debt
Common stock
Retained net incomes
Headcount ( year-end )











1997

1998

1999

2000

7. 290
( 211. 571 )
28. 968
775. 941
( 1. 200. 441 )



272. 582
( 529. 131 )
296. 874
1. 320. 329
( 3. 076. 724 )



1. 295. 271
( 882. 978 )
1. 226. 747
2. 174. 553
( 5. 428. 640 )



4. 136. 258
259. 842
2. 280. 464
3. 295. 041
( 6. 791. 526 )



1. 000. 101
128. 139
471. 878
1. 865. 468


5. 879. 451
645. 177
1. 306. 449
8. 121. 039


8. 122. 898
1. 207. 577
1. 653. 102
11. 414. 744


1. 801. 023
1. 753. 899
1. 940. 523
5. 965. 154


3. 649. 677
( 1. 976. 913 )

12. 369. 788
( 5. 053. 637 )

20. 379. 063
( 10. 482. 276 )

20. 379. 063
( 17. 273. 802 )

This papers is authorized for usage merely in Strategic Cost and Profitability Management by Dr. Bala V Balachandran from January 2012 to July 2012.

ATH MicroTechnologies. Inc. ( A ) : Making the Numbers

108-092

Questions:

Does the earn-out construction focal point on the right public presentation ends?

( a ) Should Scepter Pharmaceutical put extra controls on this entrepreneurial house?

If you were president of ATH MicroTechnologies. how would you pass on and actuate employees to accomplish net income and public presentation ends?

( a ) What are the appropriate public presentation ends for employees to concentrate on?

( B ) How would you pass on and command events and employee actions that could set concern aims at hazard?

What are the best fiscal steps to measure ATH MicroTechnologies’

x

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