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San Francisco, July 2014

Successful “Date Certain M&A” of ClearEdge Power, LLC, its Assets and Intellectual Property to the Doosan Corporation. Gerbsman Partners, Financial Advisor

Steven R. Gerbsman, Principal of Gerbsman Partners, Kenneth Hardesty, Managing Principal and James Skelton, member of Gerbsman Partners Board of Intellectual Capital, announced today their success in maximizing stakeholder value for ClearEdge Power, LLC, (http://clearedgepower.com) through a 363 Chapter 11 sale to the Doosan Corporation (http://doosan.com).

Gerbsman Partners provided Financial Advisory leadership to ClearEdge Power, LLC, through the Chapter 11 process, facilitated the sale of the business unit’s assets and its associated Intellectual Property and closing of the sale. Due to market conditions, the board of directors of ClearEdge Power made the strategic decision to maximize the value of the business unit and Intellectual Property. Gerbsman Partners provided leadership to the company with:

1.  Business Consulting and Investment Banking domain expertise in developing the strategic action plans for maximizing value of the business unit, Intellectual Property and assets;
2.  Proven domain expertise in maximizing the value of the business unit and Intellectual Property through a Gerbsman Partners targeted and proprietary “Date Certain M&A Process”;
3.  The ability to “Manage the Process” among potential Acquirers, Lawyers, Creditors Management, Advisors and the Chapter 11 process;
4.  Communications with the Board of Directors, senior management, senior lenders, creditors, vendors and all stakeholders in interest.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 83 Technology, Life Science, Medical Device, Solar, Fuel Cell and Digital Marketing companies and their Intellectual Property and has restructured/terminated over $810 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception in 1980, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in San Francisco, Boston, New York, Washington, DC, McLean, VA, Europe and Israel.

GERBSMAN PARTNERS
Phone: +1.415.456.0628, Cell: +1 415 505 4991
Email: steve@gerbsmanpartners.com
Web: www.gerbsmanpartners.com
BLOG of Intellectual Capital: blog.gerbsmanpartners.com

July 21, 2014, 8:51 p.m. EDT

Apple to suppliers: Gear up for the next iPhone

 By Lorraine Luk

 

Apple Inc. is preparing for its largest initial production run of iPhones, betting that larger-screen models will lure consumers now attracted to similar phones from Samsung Electronics Co. and others.

The Cupertino, Calif., company is asking suppliers to manufacture between 70 million and 80 million units combined of two large-screen iPhones with 4.7-inch and 5.5-inch displays by Dec. 30, according to people familiar with the matter.

Its forecast for what is commonly called the iPhone 6 is significantly larger than the initial order last year of between 50 million and 60 million versions of the iPhone 5S and 5C–which had a display measuring 4-inches diagonally, these people said. Both of the coming models are expected to feature metal cases similar to the iPhone 5S and likely come in multiple colors, these people said.

Apple stuck with smaller displays on iPhones even as rival smartphone makers rolled out bigger screens and customers clamored for larger phones. Demand for larger-screen smartphones boosted Samsung, which started offering a 4.8-inch display in its Samsung Galaxy S models in 2012 and introduced an array of bigger phones.

Apple is scheduled to report its fiscal third-quarter results on Tuesday and provide a financial outlook for the current period ending Sept. 28. Historically, Apple has released a new iPhone in mid-September.

Analysts are forecasting Apple will report sales of about 35.9 million iPhone units for the three months ended June 30. That would be up about 15% from a year earlier.

For Apple, one possible hiccup with the larger screen is that display makers for the new iPhones are struggling to improve the production of the larger 5.5-inch screens, people familiar with the matter said. The production is complicated because the displays are using in-cell technology, which allows the screens to be thinner and lighter by integrating touch sensors into the liquid crystal display and making it unnecessary to have a separate touch-screen layer.

To factor in the possibility of a higher failure rate for displays, Apple has asked component makers to prepare for up to 120 million iPhones by year-end, the people familiar with the matter said. It made a similar request last year to prepare enough parts for a combined 90 million iPhones to provide some slack in its supply chain.

The 5.5-inch iPhone screen would face an additional manufacturing complication if it uses a cover using sapphire crystal, a more durable but costly alternative to glass, people familiar with the matter said.

Apple’s iPhone production forecast assumes a surge in demand from Apple’s partnership with China Mobile Ltd., the world’s largest carrier, which started offering the iPhone earlier this year. Bigger-screen smartphones are also popular in China and other emerging markets where the smartphone is replacing the personal computer as a main computing device.

As Apple competes against Google Inc.’s Android operating system, larger screens are now common in Apple’s core mobile market–high-price phones. In May, 98% of Android smartphones that sold globally at the equivalent of $400 or above featured a display greater than 5 inches, according to Counterpoint Research.

The new iPhones are coming to market as Samsung’s smartphone business is showing signs of sluggishness. Earlier this month, Samsung warned that its earnings would fall for a third straight quarter due to a glut of unsold smartphones. It is feeling the pinch in emerging markets where its low- to mid-end smartphones are facing intense price competition from rival Asian handset makers including Lenovo Group Ltd. and Xiaomi Inc.

Every year, Apple faces a delicate balancing act. It is critical for Apple to ensure that it has enough supplies of a new iPhone during the holiday season when demand is greatest. Shortages can often result in sales for its rivals, although too much inventory also is a concern.

Apple disappointed investors in last year’s December quarter when iPhone sales rose 7% from a year earlier, falling short of Wall Street expectations of a 15% increase as it struggled to fulfill demand for the 5S and failed to move enough 5C units. The slump proved temporary, with Apple reporting a 17% increase in the following quarter.

Michael Walkley, an analyst at Canaccord Genuity, said there is “strong pent-up demand” for the iPhone 6 because customers have held off on upgrading from older iPhone models.

To fulfill Apple’s demands, the company’s two main iPhone assemblers— Pegatron Corp. and Hon Hai Precision Industry Co., also known as Foxconn–are on a hiring binge at their respective manufacturing sites in China. Foxconn, for example, is hiring workers by the hundreds a day to staff production lines at their respective manufacturing sites in China, said people familiar with those companies.

Foxconn and Pegatron plan to start mass producing the 4.7-inch iPhone model next month and Hon Hai will begin making the 5.5-inch version exclusively in September, the people said.

Often, Apple’s production forecasts are adjusted based on early demand, according to people familiar with the matter. For example, Apple tweaked its initial forecasts for the iPhone 5S and iPhone 5C last year when the more expensive 5S initially sold better than expected and the 5C slumped in the first few months, these people said.

Apple Chief Executive Tim Cook has also warned that the supply chain is “very complex” and that it is impossible to take a data point from a supplier and extrapolate a broader meaning for Apple’s business.

Suppliers also say that Apple likes to build up inventory heading into the new year, because it is difficult to keep production lines humming at full capacity since many workers go home during Lunar New Year, which is in February next year.

Write to Lorraine Luk at lorraine.luk@wsj.com, Daisuke Wakabayashi at Daisuke.Wakabayashi@wsj.com and Eva Dou at eva.dou@wsj.com

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Dennis Cagan
Dennis has been a high-technology industry exec utive and successful entrepreneur for 45 years, having founded or co-founded over a dozen different companies.  During that time he has served as a CEO/chairman and held other C-level executive positions in both public andprivate companies and has been a venture capitalist, private investor, consultant, and board member. He has served on 48 corporate boards, both public and private.He resides in Plano, Tex., and currently sits on the boards of five high-technology companies.
Please click on link and read detail article below:

As the baseball world honors Derek Jeter at the All Star game and throughout the season, I am reminded of my baseball memories.

I grew up on Mickey Mantle, Yogi Berra and Whitey Ford. My son took his first steps when Reggie Jackson hit his third home run in the World Series against the Dodgers.

I celebrated the 5 World Championships won with Derek Jeter and his Yankee teammates.

When I coached Little League I shared with the team that 20, 30 40 years from now, you will remember that one hit, that one defensive gem and the championship you won. Recently I ran into a number of my players who I coached 25 years ago. They smiled when they saw me, talked about the Red Sox and the championship we won and did remember that hit, that run and that game.

To this day, I remember with pride the pinch hit triple I got, with the bases loaded, that won the game for my Babe Ruth league team.

Baseball is America and what a representative Derek Jeter has been.

Mr. Jeter, the Captain, the Yankee, I salute your ethics, integrity, commitment to excellence and most of all your “class”.

Thank you for the memories of the past and have a great second half of the year. Enjoy your contribution as a role model and an example of commitment to excellence.

From a born Yankee fan, who saw DiMaggio, Rizutto, Berra, Mantle, Ford, Richardson, Kubek, Boyer, Maris, White, Jackson and others. Derek Jeter, you have moved to Number 1.

Thank you for the memories.

#10 Dan’s Bee’s, first baseman and outfielder – Steve Gerbsman

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San Francisco, July 2014
“Terminating/Restructuring Prohibitive Real Estate, Licenses, Payables & Contingent Liabilities”
Gerbsman Partners has been involved with numerous national and international equity sponsors, senior/junior lenders, investment banks and equipment lessors in the restructuring or termination of various Balance Sheet issues for their technology, life science, medical device, solar and energy related portfolio companies.

These companies were not necessarily in Crisis, had CASH (in some cases significant CASH) and/or investor groups and lenders that were about to provide additional funding. In order stabilize their go forward plan and maximize CASH resources for future growth, there was a specific need to address the Balance Sheet and Contingent Liability issues as soon as possible.

Some of the areas in which Gerbsman Partners has assisted these companies have been in the termination, restructuring and/or reduction of:

1.  Prohibitive executory real estate leases, computer and hardware related leases and senior/sub-debt obligations – Gerbsman Partners was the “Innovator” in creating strategies to terminate or restructure prohibitive real estate leases, computer and hardware related leases and senior and sub-debt obligations. To date, Gerbsman Partners has terminated or restructured over $810 million of such obligations. These were a mixture of both public and private companies, and allowed the restructured company to return to a path of financial viability.
2.  Accounts/Trade payable obligations – Companies in a crisis, turnaround or restructuring situation typically have accounts and trade payable obligations that become prohibitive for the viability of the company on a go forward basis. Gerbsman Partners has successfully negotiated mutually beneficial restructurings that allowed all parties to maximize enterprise value based on the reality and practicality of the situation.
3  Software and technology related licenses – As per the above, software and technology related licenses need to be restructured/terminated in order for additional capital to be invested in restructured companies. Gerbsman Partners has a significant track record in this area.
About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 82 technology, medical device, life science, solar and energy related companies and their Intellectual Property, through its proprietary “Date Certain M&A Process” and has restructured/terminated over $810 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in Boston, New York, McLean, VA/Washington, DC, San Francisco, Orange County, Europe and Israel. For additional information please visit www.gerbsmanpartners.com or Gerbsman Partners blog.

GERBSMAN PARTNERS
Phone: +1.415.456.0628
Fax: +1.415.459.2278, Cell: +1 415 505 4991
Email: steve@gerbsmanpartners.com
Web: www.gerbsmanpartners.com
BLOG of Intellectual Capital: blog.gerbsmanpartners.com
Skype: thegerbs

 

Everything You Need To Know About The iPhone 6

 

iphone 6 concept

Johnny Plaid

An iPhone 6 concept

 

The next iPhone is likely only a few months away, and reports and rumors about the new device are spreading like crazy.

We’ve combed the web for leaked photos, rumors, and gossip, and rounded them all up here in one place.

The Advantages of a “Date-Certain” Mergers and Acquisition Process Over a “Standard Mergers and Acquisitions Process”
Every venture capital investor hopes that all of his investments will succeed. The reality is that a large percentage of all venture investments must be shut down. In extreme cases, such a shut down will take the form of a formal bankruptcy or an assignment for the benefit of creditors. In most cases, however, the investment falls into the category of “living dead”, i.e. companies that are not complete failures but that are not self-sustaining and whose prospects do not justify continued investment. Almost never do investors shut down such a “living dead” company quickly.

Most hope against hope that things will change. Once reality sets in, most investors hire an investment banker to sell such a company through a standard mergers and acquisition process – seldom with good results. Often, such a process requires some four to six months, burns up all the remaining cash in the company and leads to a formal bankruptcy or assignment for the benefit of creditors. In many instances, there are a complete lack of bidders, despite the existence of real value in the company being sold.

The first reason for this sad result is a fundamental misunderstanding of buyer psychology. In general, buyers act quickly and pay the highest price only when forced to by competitive pressure. The highest probability buyers are those who are already familiar with the company being sold, i.e. competitors, existing investors, customers and vendors. Such buyers either already know of the company’s weakness or quickly understand it as soon as they see the seller¥s financials. Once the sales process starts, the seller is very much a wasting asset both financially and organizationally. Potential buyers quickly divide the company’s burn rate into its existing cash balance to see how much time it has left. Employees, customers and vendors grow nervous and begin to disengage. Unless compelled to act, potential buyers simply draw out the process and either submit a low-ball offer when the company is out of cash or try to pick up key employees and customers at no cost when the company shuts down.

The second reason for this sad result is a misunderstanding of the psychology and methods of investment bankers. Most investment bankers do best at selling “hot” companies, i.e. where the company’s value is perceived by buyers to be increasing quickly over time and where there are multiple bidders. They tend to be most motivated and work hardest in such situations because the transaction sizes (i.e. commissions) tend to be large, because the publicity brings in more assignments and because such situations are more simply more fun. They also tend to be most effective in maximizing value in such situations, as they are good at using time to their advantage, pitting multiple buyers against each other and setting very high expectations. In a situation where “time is not your friend”, the actions of a standard investment banker frequently make a bad situation far worse. First, since transaction sizes tend to be much smaller, an investment banker will assign his “B” team to the deal and will only have such team spend enough time on the deal to see if it can be closed easily. Second, playing out the process works against the seller. Third, trying to pit multiple buyers against each other and setting unrealistically high valuation expectations tends to drive away potential buyers, who often know far more about the real situation of the seller than does the investment banker.

“Date Certain” M&A Process

The solution in a situation where “time is not your friend” is a “date-certain” mergers and acquisitions process. With a date-certain M&A process, the company’s board of directors hires a crisis management/ private investment banking firm (“advisor”) to wind down business operations in an orderly fashion and maximize value of the IP and tangible assets. The advisor works with the board and corporate management to:

1. Focus on the control, preservation and forecasting of CASH;
2. Develop a strategy/action plan and presentation to maximize value of the assets. Including drafting sales materials, preparing information due diligence war-room, assembling a list of all possible interested buyers for the IP and assets of the company and identifying and retaining key employees on a go-forward basis;
3. Stabilize and provide leadership, motivation and morale to all employees;
4. Communicate with the Board of Directors, senior management, senior lender, creditors, vendors and all stakeholders in interest.
The company’s attorney prepares very simple “as is, where is” asset-sale documents. (“as is, where is- no reps or warranties” agreements is very important as the board of directors, officers and investors typically do not want any additional exposure on the deal). The advisor then contacts and follows-up systematically with all potentially interested parties (to include customers, competitors, strategic partners, vendors and a proprietary distribution list of equity investors) and coordinates their interactions with company personnel, including arranging on-site visits. Typical terms for a date certain M&A asset sale include no representations and warranties, a sales date typically two to four weeks from the point that sale materials are ready for distribution (based on available CASH), a significant cash deposit in the $100,000 range to bid and a strong preference for cash consideration and the ability to close the deal in 7 business days.

Date certain M&A terms can be varied to suit needs unique to a given situation or corporation. For example, the board of directors may choose not to accept any bid or to allow parties to re-bid if there are multiple competitive bids and/or to accept an early bid. The typical workflow timeline, from hiring an advisor to transaction close and receipt of consideration is four to six weeks, although such timing may be extended if circumstances warrant. Once the consideration is received, the restructuring/insolvency attorney then distributes the consideration to creditors and shareholders (if there is sufficient consideration to satisfy creditors) and takes all necessary steps to wind down the remaining corporate shell, typically with the CFO, including issuing W-2 and 1099 forms, filing final tax returns, shutting down a 401K program and dissolving the corporation etc.

The advantages of this approach include the following:

Speed – The entire process for a date certain M&A process can be concluded in 3 to 6 weeks. Creditors and investors receive their money quickly. The negative public relations impact on investors and board members of a drawn-out process is eliminated. If circumstances require, this timeline can be reduced to as little as two weeks, although a highly abbreviated response time will often impact the final value received during the asset auction.

Reduced Cash Requirements – Given the date certain M&A process compressed turnaround time, there is a significantly reduced requirement for investors to provide cash to support the company during such a process.

Value Maximized – A company in wind-down mode is a rapidly depreciating asset, with management, technical team, customer and creditor relations increasingly strained by fear, uncertainty and doubt. A quick process minimizes this strain and preserves enterprise value. In addition, the fact that an auction will occur on a specified date usually brings all truly interested and qualified parties to the table and quickly flushes out the tire-kickers. In our experience, this process tends to maximize the final value received.

Cost – Advisor fees consist of a retainer plus 10% or an agreed percentage of the sale proceeds. Legal fees are also minimized by the extremely simple deal terms. Fees, therefore, do not consume the entire value received for corporate assets.

Control – At all times, the board of directors retains complete control over the process. For example, the board of directors can modify the auction terms or even discontinue the auction at any point, thus preserving all options for as long as possible.

Public Relations – As the sale process is private, there is no public disclosure. Once closed, the transaction can be portrayed as a sale of the company with all sales terms kept confidential. Thus, for investors, the company can be listed in their portfolio as sold, not as having gone out of business.

Clean Exit – Once the auction is closed and the consideration is received and distributed, the advisor takes all remaining steps to effect an orderly shut-down of the remaining corporate entity. To this end the insolvency counsel then takes the lead on all orderly shutdown items.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 69 Technology, Life Science and Medical Device companies and their Intellectual Property, through its proprietary “Date Certain M&A Process” and has restructured/terminated over $800 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in Boston, New York, Washington, DC, Alexandria, VA, San Francisco, Orange County, Europe and Israel. For additional information please visit http://www.gerbsmanpartners.com or Gerbsman Partners blog.

GERBSMAN PARTNERS
Email: steve@gerbsmanpartners.com
Web: http://www.gerbsmanpartners.com
BLOG of Intellectual Capital: blog.gerbsmanpartners.com
Skype: thegerbs

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