David Kanen, president of Kwm llc issues letter to the eGain board calling for the formation of a special committee and sale of egan. He also excoriates CEO Ashu Roy.
December 04 2023 - 7:00AM
Dear EGAN Board of Directors,
We, Kanen Wealth Management, LLC, owner of approximately 7% of
eGain Corporation’s (“EGAN” or the “Company”) common shares, are
calling on the board to formally hire an investment banker and form
a special committee to pursue a sale of the Company. Under CEO Ashu
Roy’s leadership, EGAN’s stock is down approximately 40% since the
Company’s IPO 24 years ago in 1999 versus the NASDAQ gain of
approximately 500%. The above scorecard speaks for itself! We will
attempt to provide some insight into the various reasons we believe
the Company has materially underperformed and how Mr. Roy is
incapable, in our opinion, of realizing the potential of EGAN for
shareholders, despite the Company’s high-quality products, the
Company’s position in the “magic quadrant,” and recent momentum in
EGAN’s sales funnel. We believe the problem is Ashu Roy and he has
failed shareholders!
Some examples of his arrogant, ineffective, and unsuccessful
behavior for shareholders are below:
- FAILURE IN BUILDING A THRIVING SALES ORGANIZATION
We have spoken with several former EGAN sales representatives
and have received negative feedback on how Mr. Roy consistently
micromanages, is overly involved in deals, is not responsive
enough, is not flexible enough on pricing, is difficult to deal
with, and is highly rigid. One can debate the above as opinion or
conjecture, however the Company’s failure to close new deals up
until recently corroborates this feedback.
- HOLDING A MAJOR SALES CONFERENCE ON YOM
KIPPUR
This fall, under Mr. Roy’s leadership, he chose to hold what is
likely the most important sales event for the year on a holiday
that excluded Jewish people. At best, this was an ignorant, obtuse
decision, which seems to be consistent with Mr. Roy’s other
behaviors, but regardless of “why,” it remains a moronic
decision!
- ASHU’S OBTUSE, UNENGAGED BEHAVIOR WITH
COUNTERPARTIES, WHEN INTRODUCTIONS WERE MADE EARLIER THIS
YEAR
Earlier this year, KWM made several introductions via email to
private equity firms interested in acquiring EGAN. We made these
introductions with his consent and approval. What we witnessed
thereafter was an arrogant CEO who could not be bothered to reply
to an email or even get on the phone. Rather, for the most part, he
delegated to his CFO, despite Mr. Roy owning 29% of the company. As
the saying goes, “actions speak louder than words.” Mr. Roy’s
actions shout, “I don’t give a crap!”
- IMPROPER HANDLING OF A RECENT INTRODUCTION TO A
BOARD CANDIDATE THAT IS A PROVEN SOFTWARE CEO AND ROCKSTAR
This candidate, in four years, built a SaaS company from $50M to
$500M, with half of the growth being organic and the other half
inorganic. Mr. Roy cannot hold a candle to this person. Sadly,
again, Mr. Roy’s actions speak loud and clear! Instead of
personally speaking with him, he had one board member conduct a
phone interview a month ago, with ZERO FOLLOW UP!
Mr. Roy, is this how you engage with sales prospects and your
sales personnel? YOU NEED TO GO, ASHU! YOU DON’T KNOW HOW TO
WIN!
In summary, EGAN directors, we ask that you kindly act on your
fiduciary responsibility to shareholders and run a legitimate
process to sell the company – a process that doesn’t rely
exclusively on Mr. Roy’s lack of talent in generating a positive
outcome.
Form a committee!
Sincerely,
David Kanen
President/CEO
Kanen Wealth Management
dkanen@kanenadvisory.com
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