How Not To Finance Your Company: TalkPoint CEO Nick Balletta (Part 5)

Sramana: In 2003 you reacquired the company. Had everything dwindled, or did it still have customers?

 Nick Balletta: Yes, it still had customers. Morgan Stanley and Goldman are both still customers. When we dumped the company into a public shell, we ran it public for a year and a half. It was an undercapitalized technology company, and the shell company was not clean. It had some employees and facilities that had to be taken care of in order for us to take the company public.

Sramana: Why did you start with a public shell? 

 Nick Balletta: I had 30 days to find a home for the business. I could not form my own company and raise money in 30 days.

Sramana: You were able to raise money with a public shell?

 Nick Balletta: No, the public shell company had money in it. Bank One was the majority shareholder of the technology company VNCI, headquartered in New Hampshire. It had a couple hundred thousand dollars in revenue and a little cash on the balance sheet. We used that as a structure to quickly get the company. I then did a pipe transaction with that company to get it funded going forward.

Sramana: Tell me about the pipe transaction.

 Nick Balletta: It was horrible. It was hard to do because it was a tough capital market environment. The entire time I was trying to keep employees and management in place along with our clients, all the while living in a fishbowl. Every 30 days I had to file reports. After Sarbanes-Oxley it is not a fun thing to do. I had people from Bank One on the board.

We decided to just take the company private and clean out Bank One. We brought on TalkPoint Holdings as our private entity. That is the company we have today and we have been here since 2005.

Sramana: What financing did you do to take the company private?

 Nick Balletta: I got a group of investors together that included myself along with two small venture funds. We bought out the public investors.

Sramana: What was the public valuation at that time?

 Nick Balletta: It was incredibly low. We did not have to raise too much capital. It was a clean transaction. At that time, we got out of transaction mode and got into ‘running the business’ mode. We now have a much different philosophy. It is about profitable growth. We focus on automation and scale. I have people here who have worked with me since CNBC. You name a bank, and chances are we are still doing business with them. It is amazing. We have more than 200 clients with double-digit profitability growth.  We have had this level of growth for the past couple of years.

This segment is part 5 in the series : How Not To Finance Your Company: TalkPoint CEO Nick Balletta
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