Archive for February, 2015
Do you remember the Ventures and Babbitt the drummer who played “Walk Don’t Run”?Do any of you remember the USAF Four Star General George Babbitt from Tacoma, WA? Anyone who thought the military is all spit and polish and discipline?Pretty interesting. General Babbitt was a drummer at one time for the Ventures.This is cool. Watch it. You will love it if you like rock n’ roll.Some of you probably don’t remember the Ventures. Those that do, enjoy the clip. It should bring a smile to your face.
Gerbsman Partners – The Advantages of a “Date-Certain M&A Process” over an “Assignment for the Benefit of Creditors – ABC”
Posted in Uncategorized, tagged Assignment for the Benefit of Creditors-ABC, Date Certain M&A Process, Gerbsman Partners, Maximizing Value of Assets and Intellectual Property on February 12, 2015| Leave a Comment »
The Advantages of a “Date-Certain M&A Process” over an “Assignment for the Benefit of Creditors – ABC”
Apart from a formal bankruptcy (Chapter 7 or Chapter 11) there are two basic approaches to maximizing enterprise value for under-performing and/or under-capitalized technology, life science, medical device and solar companies and their Intellectual Property: a “Date-Certain M&A Process” and an assignment for the benefit of creditors (ABC).
Both of these processes have significant advantages over a formal bankruptcy in terms of speed, cost and flexibility. Gerbsman Partners’ experience in utilizing a “Date Certain M&A Process” has resulted in numerous transactions that have maximized value anywhere from 2-4 times what a normal M&A process would have generated for distressed asset(s). 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 three to four weeks from the point that sale materials are ready for distribution (based on available CASH), a significant cash deposit in the $150,000 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 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 – 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.
To this end the insolvency counsel then takes the lead on all orderly shutdown items.
In an Assignment for the Benefit of Creditors (ABC), the company (assignor) enters into a contract whereby it transfers all rights, titles, interests, custody and control of all assets to an independent third-party trustee (assignee). The Assignee acts as a fiduciary for the creditors by liquidating all assets and then distributing the proceeds to the creditors. We feel that an ABC is most appropriate in a situation with one or more highly contentious creditors, as it tends to insulate a board of directors from the process. Nevertheless, we have found that most creditors are rational and will support a quick process designed to maximize the value that they receive. A good advisor will manage relationships with creditors and can often successfully convince them that a non-ABC process is more to their advantage. Apart from its one advantage of insulating the board of directors from the process, an ABC has a number of significant disadvantages, including:
Longer Time to Cash – Creditors and investors will not receive proceeds for at least 7 months (more quickly than in a bankruptcy but far slower than with a “date-certain” auction).
Higher Cost – Ultimately, ABCs tend to be more expensive than a “Date Certain M&A Process”. It is not uncommon for the entire value received from the sale of company assets to be consumed by fees and/or a transaction for maximizing value may not be consummated in a timely fashion.
Loss of Control – Once the assets are assigned to the independent third-party trustee, the board of directors has no further control over the process. It cannot modify the process in any way or discontinue the process. Thus, it is not possible to explore multiple options in parallel.
Higher Public Relations Profile – The longer time frame for the ABC process and the more formal (and public) legal nature of an ABC make it more difficult to put a positive spin on the final outcome.
Messy Exit – Most independent third-party trustees do not perform the services of cleanly shutting down the remaining corporate shell. Thus, investors must either pay another party to do this job or leave it undone, resulting in increased liability.
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 88 technology, medical device, life science, fuel cell and solar 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, 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, New York, Virginia/Washington DC, Boston, Europe and Israel.
1. good health
2. love of family
3. the integrity of my name
4. hope for the future during these challenging times
5. good and long term friendships
6. enjoying and being with a great wife, children and grandchildren
And knowing that we will be judged in life on how our children raise their children, for they are the future.
May they have ethics, integrity, love of family and do the best they can and never, never, never, never, never ever give up.
That’s the GERBS birthday wish.
The 10 best iPhone apps on sale right now
by Steven Tweedie – Business Insider
There are too many apps in the App Store to notice when each one goes on sale.
Luckily we’ve collected the best iPhone apps on sale at this very moment so you don’t have to. From charming puzzle games like Blek to apps designed to keep your iPhone from getting lost, you’re bound to find a good deal on something new.
Just remember these deals could end at any time, so act quick!
Click here to see the 10 best apps on sale right now
They once were among the most universally admired and revered men in the United States .. There were 80 of the Raiders in April 1942, when they carried out one of the most courageous and heart-stirring military operations in this nation’s history. The mere mention of their unit’s name, in those years, would bring tears to the eyes of grateful Americans.Now only four survive.
After Japan’s sneak attack on Pearl Harbor, with the United States reeling and wounded, something dramatic was needed to turn the war effort around.
Even though there were no friendly airfields close enough to Japan for the United States to launch a retaliation, a daring plan was devised. Sixteen B-25s were modified so that they could take off from the deck of an aircraft carrier. This had never before been tried — sending such bi g, heavy bombers from a carrier.
The 16 five-man crews, under the command of Lt. Col. James Doolittle, who himself flew the lead plane off the USS Hornet, knew that they would not be able to return to the carrier. They would have to hit Japan and then hope to make it to China for a safe landing.
But on the day of the raid, the Japanese military caught wind of the plan. The Raiders were told that they would have to take off from much farther out in the Pacific Ocean than they had counted on. They were told that because of this they would not have enough fuel to make it to safety.
And those men went anyway.
They bombed Tokyo and then flew as far as they could. Four planes crash-landed; 11 more crews bailed out, and three of the Raiders died. Eight more were captured; three were executed.
Another died of starvation in a Japanese prison camp. One crew made it to Russia.
The Doolittle Raiders sent a message from the United States to its enemies, and to the rest of the world: We will fight. And, no matter what it takes, we will win.
Of the 80 Raiders, 62 survived the war. They were celebrated as national heroes, models of bravery. Metro-Goldwyn-Mayer produced a motion picture based on the raid; “Thirty Seconds Over Tokyo,” starring Spencer Tracy and Van Johnson, was a patriotic and emotional box-office hit, and the phrase became part of the national lexicon. In the movie-theater previews for the film, MGM proclaimed that it was presenting the story “with supreme pride.”
Beginning in 1946, the surviving Raiders have held a reunion each April, to commemorate the mission. The reunion is in a different city each year. In 1959, the city of Tucson, Arizona, as a gesture of respect and gratitude, presented the Doolittle Raiders with a set of 80 silver goblets. Each goblet was engraved with the name of a Raider.
Every year, a wooden display case bearing all 80 goblets is transported to the reunion city. Each time a Raider passes away, his goblet is turned upside down in the case at the next reunion, as his old friends bear solemn witness.
There has always been a plan: When there are only two surviving Raiders, they would open the bottle, at last drink from it, and toast their comrades who preceded them in death.
As 2013 began, there were five living Raiders; then, in February, Tom Griffin passed away at age 96.
What a man he was. After bailing out of his plane over a mountainous Chinese forest after the Tokyo raid, he became ill with malaria, and almost died. When he recovered, he was sent to Europe to fly more combat missions. He was shot down, captured, and spent 22 months in a German prisoner of war camp.
The selflessness of these men, the sheer guts … there was a passage in the Cincinnati Enquirer obituary for Mr. Griffin that, on the surface, had nothing to do with the war, but that was emblematic of the depth of his sense of duty and devotion:
“When his wife became ill and needed to go into a nursing home, he visited her every day. He walked from his house to the nursing home, fed his wife and at the end of the day brought home her clothes. At night, he washed and ironed her clothes. Then he walked them up to her room the next morning. He did that for three years until her death in 2005.”
So now, out of the original 80, only four Raiders remain: Dick Cole (Doolittle’s co-pilot on the Tokyo raid), Robert Hite, Edward Saylor and David Thatcher. All are in their 90s. They have decided that there are too few of them for the public reunions to continue.
The events in Fort Walton Beach marked the end. It has come full circle; Florida’s nearby Eglin Field was where the Raiders trained in secrecy for the Tokyo mission. The town planned to do all it can to honor the men: a six-day celebration of their valor, including luncheons, a dinner and a parade.
Do the men ever wonder if those of us for whom they helped save the country have tended to it in a way that is worthy of their sacrifice? They don’t talk about that, at least not around other people. But if you find yourself near Fort Walton Beach this week, and if you should encounter any of the Raiders, you might want to offer them a word of thanks. I can tell you from first hand observation that they appreciate hearing that they are remembered.
The men have decided that after this final public reunion they will wait until a later date — some time this year — to get together once more, informally and in absolute privacy. That is when they will open the bottle of brandy. The years are flowing by too swiftly now; they are not going to wait until there are only two of them. They will fill the four remaining upturned goblets. And raise them in a toast to those who are gone.
PLEASE SEND THIS ON TO EVERYONE
IN YOUR ADDRESS BOOK, ESPECIALLY
TO THOSE WHO WERE TOO YOUNG TO
KNOW ABOUT THESE BRAVE HEROES.
MAY GOD BLESS THEM!
One photo shows the biggest weakness with the iPhone 6’s camera
These days, we use our smartphones for almost everything — especially taking photos. Smartphone cameras have gotten so good that there’s really no need to carry around a separate camera for most situations.
Business Insider’s Christian Storm and Harrison Jacobs tested the iPhone 6’s camera against a Canon 5D Mark II DSLR ($3,000) and a point-and-shoot Canon PowerShot SD1400-IS ($169) to see exactly how the three compare.
Here’s the bottom line: a DSLR is always going to capture higher-quality images, and professional photographers will always need the customization that you can only get with a DSLR. But, the iPhone 6 shoots impressive images that are just as good, or better, than a standard point-and-shoot.
Still, there’s one crucial area where the gap between the iPhone 6 and a DSLR really shows itself: zooming.
The photo below was taken from our office’s rooftop with the DSLR using a 70-200mm telephoto lens. It’s so detailed you can easily make out the text on the one way traffic sign and the pattern on the sweater in the Ann Taylor store window.
Now here’s that same photo taken with the iPhone 6, which isn’t clear at all. Storm and Jacobs write that the iPhone camera doesn’t actually zoom — it just creates the “illusion” of doing so. Instead, you’re actually just enlarging a portion of the image.
To be fair, this is probably true of most smartphones, except for the few that have an optical zoom like Samsung’s Galaxy S4 Zoom. Still, it’s interesting to see where DSLR cameras shine over smartphones.