In 2000, Sedona Corporation, a provider of Internet-based customer relationship management tools, was in financial distress. Unable to approach traditional capital markets, it raised $2.5 million by issuing a floating rate convertible preferred security to Rhino Advisors, a private investment fund. This move almost brought Sedona’s business to an end. Through an analysis of the Sedona deal and its aftermath, this case teaches students about the circumstances and processes of a prototypical private investment in public equity, or PIPE transaction.

Case id: 110311