Harvard Organization School
Rev. January 1, 1991
Advanced Medical Technology Organization
Early in April 1986, Tom Wintertime, vice president and loan official of the Traditional western National Bank of Bay area, California, was reviewing credit request for $8 million by Peter Haskins, president of Advanced Medical Technology Organization. Advanced Medical Technology Firm (AMT) produced, manufactured, and sold medical medical instruments, needles and catheters that allowed fast and less unpleasant access to many different organs and vessels. The products represented an alternative to traditional surgical treatments and allowed analysis or corrective treatment with less risk and trauma including lower cost. A good example of the products had been catheters that might be introduced in a blood vessel and then manipulated through partially closed arteries or into the heart by itself. AMT got experienced amazing growth, supported by weighty spending on r and d and an instant expansion of its salesforce. Its technological staff was very well considered at developing new products having a wide range of applications. The combination of state-of-the-art products and a quickly expanding industry resulted in revenue growth around 30% per year. Mr. Haskins believed that industry product sales would still grow only at that rate which any failing to maintain AMT's market situation would be harming in terms of competitive position and internal spirits. Sales volume, which had grown continuously from the start, was always large in relation to the available capital. The situation was exacerbated simply by large operating losses because AMT came into new markets aggressively. Managing met the financing demands by weighty reliance on short-term credit rating, by leasing some making facilities, and by establishing a connection with Natural Labs, Incorporation., a leading pharmaceutical drug firm. Biological Labs was eager to be involved in the large and rapidly broadening medical instrumentation market, nevertheless had failed in its interior efforts to the business. By 1983, Biological Labs acquired fallen in back of in catheter and instrumentation technology. Administration abandoned its internal attempts and entered into an agreement with AMT. On the initial closing on June 2, 1983, AMT received a cash payment of $7 mil in exchange for 5% with the outstanding shares and the directly to purchase one more 13% with the outstanding share over a 5-year period stopping June 1988 for $12 million. In the event Biological Labs purchased the $12 mil of additional share, it would also provide the right to need AMT to merge in Biological Labs in 1992. The price can be based on a multiple of average income in 1990 and 1991. Subsequent to the agreement, Natural Labs produced four acquisitions of share, as proven in Stand A.
This situatio was ready as the basis for class discussion rather than to illustrate possibly effective or ineffective managing of an administrative situation. Copyright В© 1986 by the President and Guys of Harvard College. To order copies or demand permission to reproduce materials, call 1-800-545-7685, write Harvard Business Institution Publishing, Boston, MA 02163, or head to http://www.hbsp.harvard.edu. Zero part of this kind of publication may be reproduced, trapped in a retrieval system, employed in a chart, or sent in any form or by any meansвЂ”electronic, mechanical, copying, recording, or otherwiseвЂ”without the permission of Harvard Organization School. 1
Advanced Medical Technology Corporation
Equity Investments by Biological Labs
June 85 $2, 000, 000 August 1985 $2, 000, 500 May 1986 $4, 500, 000
April 1985 $4, 000, 1000
On The spring 14, 1986, at the advice of his public accountant, Mr. Haskins visited the Western Countrywide Bank to go over the possibility of securing a line of credit. He hit with Mr. Winter, vice president and loan officer of the bank. Mr. Winter explained that although having been unfamiliar with AMT's products, this individual...
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