• 

• THE GREAT RESTRUCTURING OF 2020 revisited in 4^th qtr 2021

• The Wuhan Coronavirus has fundamentally changed the world and United States economies.

• In many cases, those changes will be permanent.

• The unintended and unforeseen consequences of the crisis will ripple through all aspects of the world and United States economies for many years.

• Many new uncertainties have since arisen, including unprecedented and ever-increasing worldwide debt, inflation, supply chain interruptions, and huge political uncertainty, particularly with regard to China.

• The economic relationships between debtors (individuals, companies, governments) and creditors (vendors, lessors, lenders, employees) and owners (equity holders) are now fundamentally unbalanced, just as has occurred in all previous financial crises.

• ‘WHAT WE KNOW SO FAR’

• As in the Dotcom Crash, the 9/11 Crash and the 2008 Crash, those economic relationships will be rebalanced by renegotiation, sale, bankruptcy and liquidation, so that assets are redeployed, asset value is monetized and maximized and economic activity can continue.

• The world has survived far worse and has revived strongly. For example, World War I, followed by the Spanish Flu, followed by the huge economic growth of the 1920’s. Humans are wired to adapt to and to overcome hardship. We still have the land, resources, infrastructure, intellectual property, technology and talent that we had in January 2020. Huge economic dislocation can also spur huge creativity, energy and innovation, such as has happened with the acceleration of remote work and ecommerce.

• There have been major economic losers, but also major economic winners.

• The United States is self-sufficient in food and energy and is the largest market and the greatest economic and political safe haven in the world. We are the best-positioned country in the world to emerge stronger than before.

• The virus appears to be moderating with increased distribution of vaccines. We expect that it will continue to be with us on a permanent basis, like the seasonal flu.

• The world appears to have largely adapted to the virus, although there will be continual flareups and after-shocks.

• ‘WHAT WE DO NOT KNOW’

• The long-term effects of historically unprecedented government economic stimulation and significant increase in the deficit and of the worldwide political instability created by the virus.

• The availability of cash to sustain under-performing companies and businesses.

• How young CEO’s, investors, bankers will react to a situation that they have not seen or lived through before.

• WHAT HAPPENS NEXT!

• We expect that the world health and economic situation will become clearer over the next few months. We expect to see a giant wave of economic restructuring that will last several years.

• Early business crises will be driven by lack of cash. Based on our experience in several previous economic crashes, the speed with which business owners and managers face reality, preserve, protect and forecast cash and take effective action will determine which businesses survive and which die.

• It is critical for companies, investors and lenders to face reality and act quickly. When things are going bad, waiting seldom improves the situation. In over 40 years of crisis management and restructuring experience we have never seen a board of directors act too quickly when faced with a crisis. We have all too frequently seen a board act slowly or not at all.

• Gerbsman Partners believes that companies, investors and lenders should to call for assistance early. The earlier professionals can get involved in the process, the better the potential outcome in maximizing enterprise value.  Again based on experience, boards, investors and lenders request assistance only after a company has little cash or is out of cash. Many more options exist to maximize enterprise value if a company has some running room.

 Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property, as well as maximizing value for Intellectual Property Patents. Since 2001, Gerbsman Partners has been involved in maximizing value for 113 technology, medical device, life science, solar, fuel cell, cyber security, consumer 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, New York, McLean, VA/Washington DC, Orange County, Boston, Europe and Israel.

Steven R. Gerbsman
Principal
steve@gerbsmanpartners.com

“Do not go where the path may lead, go instead where there is no path and leave a trail.” – R.W. Emerson

“Never, never, never give up.” – Winston Churchill

“The seeds planted today are the flowers that will bloom tomorrow.”

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• 

Advantages of ‘Date-Certain M&A Process over Standard M&A’

Every venture capital investor hopes that all his investment will succeed. The reality is, however, that a large percentage of venture investments eventually are shut down. 

In the extreme they end in bankruptcy or assignment to creditors. The majority falls into the category of the “living dead.” Such companies are not complete failures, but their prospects do not justify continued investment, yet they are rarely shut down quickly.

Once reality has been recognized, most investors engage investment bankers to sell their investment off through prevailing M&A processes. Unfortunately, seldom with good results.

REASON #1

The main reason for that sad result is a fundamental misunderstanding of buyer psychology. In general, buyers act quickly and pay the highest price only by force of competitive pressure. 

Potential buyers of the highest probability are those already familiar with the company for sale, such as competitors, existing investors customers and vendors. Once a sales process starts the seller is very much a diminishing asset. Both financially and organizationally.  Unless compelled to act, potential buyers simply start to draw out the process, submit a low-ball offer when the seller runs out of cash, or try to pick up key employees and customers at no cost. 

REASON #2

The second reason is usually a misunderstanding of the psychology and methods of investment bankers.

Most investment bankers do best at selling “hot” companies. Companies whose value is perceived by buyers to be increasing quickly over time, and where there are multiple bidders.

They tend to be more motivated and work harder on such cases because transaction sizes –and resulting commissions– are larger and surrounding publicity can bring in new assignments, among others. They also tend to be more effective in maximizing value in such situations by using time to their advantage, pitting buyers against each other and setting very high expectations. 

In a situation where time is not your friend, the actions of standard investment banking practices often make a bad situation much worse. Such actions include assigning less experience B-Teams to smaller transaction size cases, “playing out the process” which works against the seller, and pitting multiple players against each other which can drive away potential buyers who often know far more about the seller than does the banker.

THE GERBSMAN PARTNERS ‘DATE-CERTAIN’ M&A PROCESS

The most effective solution in situations where time is not on your side is a Date-Certain Merger and Acquisition Process. 

Under this proprietary 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 to maximize the value of their intellectual properties and tangible assets. The Advisor works closely with board and corporate management to:

-Focus on Control, Preservation and Forecasting of CASH

-Develop a Strategy/Action Plan and Presentation to Maximize Value of Assets.

-Plans to include Sales Materials, Due Diligence access. a list of all possible Interested Buyers for Intellectual Properties and Assets and Identify and Retain Key Employees on a go-forward basis.

-Stabilize and provide Leadership, Motivation and Moral to all Employees.

-Communicate with the Board of Directors, Senior Management, Senior Lender, Creditors, Vendors and all other Stakeholders in Interest.

THE PROCESS

The company attorney prepares a simple “As-Is/Where –Is” asset sale documents. This document is very important and includes a “No-Reps or Warrantee” Agreement, as the board, officers and investors typically do not want any additional exposure on a deal. 

The advisor then follows up systematically with ALL potentially interested parties and coordinates their interactions with company personnel, including on-site visits. 

Typical terms for a Date-Certain M&A asset sale exclude representations and warranties and include a sales date –typically four to six weeks – from the point of readying sales materials for distribution, a refundable CASH deposit in the range of $200,000, a strong preference for cash consideration and with the ability to close a deal in seven business days. 

Date-Certain M&A terms can be varied to suit needs unique to given situations. For instance, the board may choose not to accept any bids, or to allow re-bids if there are multiple competitive bids, and/or allow early bids. 

The typical workflow timeline from advisor hiring to transaction close and receipt of consideration is four to six weeks. Such timelines may be extended as circumstances warrant. Upon receipt of considerations, the restructuring/insolvency attorney then distributes funds to creditors and shareholders (if there is sufficient consideration to satisfy creditors), and takes all needed steps to wind down the remaining corporate shell. Typically in coordination with the CFO.

PROCESS ADVANTAGES:

Speed:   – The entire Date-Certain M&A Process can typically be concluded in 4 to 6 Weeks. Creditors and investors receive their money quickly. A negative PR impact on investors and board members related to a drawn out process is eliminated. Where required, such timelines can be reduced to as little as two to three weeks, however severely compressing the process often impacts the final value received during asset auction.

Reduced Cash Requirements:  – Owing to the Date-Certain M&A process’ compressed turn-around time, there is a significantly reduced need for any additional investor cash to support the company during the process.

Maximized Value:  – A quick and effective process during wind-down mode minimizes strain and rapid asset depreciation and thereby preserves enterprise value. The fact that an auction will occur on a certain date typically brings truly interested and qualified parties to the table. In our considerable experience, this process strongly aids in maximizing the final value received. 

Cost:  – Advisory fees consist of a retainer and a performance fee, which is a percentage of the sales proceeds.

Control:  – At all time during the process, the board of directors retains complete control. For instance, it can modify the auction terms, or discontinue the auction at any point, thereby preserving all options for as long as possible.

Public Relations:  – As the entire sales process is private, there is no public disclosure. Once closed, the transaction can be portrayed as a sale of the company with all terms kept confidential. Accordingly investors can list the company in their portfolios as sold vs. having gone out of business.

A Clean Exit:  – Upon closing of the auction, considerations received are distributed and the advisor, under the leadership of the insolvency counsel, then takes all remaining steps to effect an orderly shut-down of the remaining corporate entity.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in underperforming, undercapitalized and undervalued companies and their intellectual properties. Since 2001, Gerbsman Partners has successfully maximized the values of 113 companies in a wide and diverse spectrum of industries, ranging from technology, life science, medical device, digital marketing, consumer to cyber security, to name only a few.

Since inception in 1980, Gerbsman Partners has successfully restructured/terminated over $810 million of real estate executory contracts and equipment lease/sub-debt obligations, and has been involved in over $2.3 billion of financings, restructuring and M&A transactions.

Gerbsman Partners has offices and strategic alliances  in San Francisco, Orange County CA, Boston, New York, Washington  DC, Mc Lean VA,  Europe and Israel.

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• 

Good afternoon;

Recently I was speaking with a good friend who is on the Board of The Robert Packard Center for ALS Research.   We chatted, as a friend has recently contracted this deadly disease and I wanted to know more about ALS and possible cures.  Our discussion was enlightening and after the call I decided to reach out to my network to solicit your potential support.

Amyotrophic lateral sclerosis (ALS), also known as Lou Gherig’s disease, is a fatal rapidly progressive neurodegenerative disease affecting nerve cells in the brain and spinal cord that control voluntary movements. Eventually, a person with ALS cannot move limbs, eat, speak, or breathe, which ultimately leads to death. Every 4 minutes, someone is diagnosed with ALS and another dies from the disease. The average life span from diagnosis is two to five years and there is no cure. Nearly 9 out of 10 cases of ALS are sporadic (no known family history of the disease) and 1 out of 10 are familial.

The World Health Organization predicts that by 2040, neurodegenerative diseases (including ALS, Alzheimer’s, and Parkinson’s disease) will overtake cancer as the second leading cause of death after cardiovascular disease. This is within our lifetime.

The Robert Packard Center for ALS Research at Johns Hopkins (Packard Center) has been at the forefront of ALS research for 21 years. Its researchers have made contributions to the field of ALS research leading to one of the two current FDA-approved drugs (Riluzole), and significant contributions to the development of two additional drugs currently in clinical trials for the treatment of familial forms of ALS. In addition, any research benefitting studies of other neurodegenerative diseases is shared.

The unique model of the Packard Center:

• Charges its Scientific Advisory Board with identifying the best and brightest investigators around the world (70% of its researchers are not at Johns Hopkins) conducting the most cutting-edge research that will push the science forward, inviting them to apply
• Employs a rapid-funding process to support novel ideas and lines of inquiry 
• Requires its researchers to present their unpublished data at monthly Principal Investigators meetings to receive feedback – challenging, questioning, supporting – from others in the Packard Center cohort. Packard Center researchers collaborate, and share resources and current data.
• Holds a yearly closed ALS Research Symposium – the premier ALS research event in the world – this year hosting 517 registrants from 7 countries, 23 states, and 115 institutions for 46 speakers and 25 posters over 17 zoom hours 

Another aspect of the Packard Center that is allowing researchers to take the next steps in understanding and treating this dreadful disease is its unprecedented program, Answer ALS. Answer ALS is producing the largest and most comprehensive foundation of integrated ALS data ever amassed and is utilizing big data and artificial intelligence to identify targeted pathways to fight ALS. 

Together, we can make a difference in the fight against ALS and other neurogenerative diseases by supporting Packard Center research. How can you help? Join me in making a contribution. Gifts of any amount make a difference. To provide some guidance:

• The Packard Center is fully funded through philanthropy
• Gifts of any size directly support Packard Center research
• Packard Center researchers are currently funded at $50,000/yr 
• The Packard Center seeks sponsorships for its Annual ALS Research Symposium 
• Gifts to the Packard Center endowment help secure a revenue stream for future ALS and neurogenerative research

In addition, you may:

• Follow the Packard Center on social media: Facebook, Twitter
• Run in its annual Fiesta 5K 
• Offer to host an event

Thank you for your consideration and for your potential support/interest in joining the fight against ALS and other neurodegenerative diseases. For any and all questions (about the science, giving, ways to participate), please contact Meg Whiteford and tell her I sent you:

Meg B. Whiteford, JD

Associate Director of Development

The Robert Packard Center for ALS Research

mwhiteford@jhmi.edu

(410) 955-8684 (office)

(410) 614-0659 (fax)

www.packardcenter.org

Make an online gift here 

Best,

Steve Gerbsman

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• 

Where were you on September 11, 2001????

Most will never forget and the memory of what happened that day MUST be passed on to generations.  Please, Please review with you children and grandchildren.  This is our history and it will not be re-written.

I remember receiving a call from our son at about 6:10 AM California time.  He was serving in the military in Israel and told us to turn on the TV.  With shock and dismay my wife and i watched the challenges of the next hours.

Among the things I will never forget are the faces of the men and woman of the NY Fire Department and NYPD walking up the stairs in the World Trade Center.  The look on their faces told the whole story.  They knew they were “going into Harms Way” and yet they marched on.

These are the “True Heroes”.  The Firefighter’s, the Police, the Medic’s and all the First Responders.  They all have one objective “to Serve & Protect”.

As a Director of a Fire District in California, I see every day their bravery, commitment and focus.

Please see a Firefighter’s Prayer below:

Firefighter’s Prayer

When I am called to duty, God wherever flames may rage,

give me strength to save a life, whatever be its age.

Help me to embrace a little child before it’s too late,

or save an older person from the horror of that fate.

Enable me to be alert to hear the weakest shout,

and quickly and efficiently to put the fire out.

I want to fill my calling and to give the best in me,

to guard my neighbor and protect his property.

And if according to your will I have to lose my life,

bless with your protecting hand my loving family from strife. Amen

Sent by :

Mark Pomi

Fire Chief

Kentfield Fire Protection District

9-11 Sounds of Silence Tribute by Steve A.

Please click on this link – remember, share and never, ever, ever, ever forget.   https://www.youtube.com/watch?v=3iy2L9VeUfc

Also, with respect and honor to all and especially our First Responders..  https://www.youtube.com/watch?v=fJ4yrMm6cSU

Lastly, again please tell the story of our history to your children.  We “must never forget”.

With respect

Steve Gerbsman

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• 

Good afternoon;

Recently I was speaking with a good friend who is on the Board of The Robert Packard Center for ALS Research.   We chatted, as a friend has recently contracted this deadly disease and I wanted to know more about ALS and possible cures.  Our discussion was enlightening and after the call I decided to reach out to my network to solicit your potential support.
 

Amyotrophic lateral sclerosis (ALS), also known as Lou Gherig’s disease, is a fatal rapidly progressive neurodegenerative disease affecting nerve cells in the brain and spinal cord that control voluntary movements. Eventually, a person with ALS cannot move limbs, eat, speak, or breathe, which ultimately leads to death. Every 4 minutes, someone is diagnosed with ALS and another dies from the disease. The average life span from diagnosis is two to five years and there is no cure. Nearly 9 out of 10 cases of ALS are sporadic (no known family history of the disease) and 1 out of 10 are familial.

The World Health Organization predicts that by 2040, neurodegenerative diseases (including ALS, Alzheimer’s, and Parkinson’s disease) will overtake cancer as the second leading cause of death after cardiovascular disease. This is within our lifetime.

The Robert Packard Center for ALS Research at Johns Hopkins (Packard Center) has been at the forefront of ALS research for 21 years. Its researchers have made contributions to the field of ALS research leading to one of the two current FDA-approved drugs (Riluzole), and significant contributions to the development of two additional drugs currently in clinical trials for the treatment of familial forms of ALS. In addition, any research benefitting studies of other neurodegenerative diseases is shared.

The unique model of the Packard Center:

• Charges its Scientific Advisory Board with identifying the best and brightest investigators around the world (70% of its researchers are not at Johns Hopkins) conducting the most cutting-edge research that will push the science forward, inviting them to apply
• Employs a rapid-funding process to support novel ideas and lines of inquiry 
• Requires its researchers to present their unpublished data at monthly Principal Investigators meetings to receive feedback – challenging, questioning, supporting – from others in the Packard Center cohort. Packard Center researchers collaborate, and share resources and current data.
• Holds a yearly closed ALS Research Symposium – the premier ALS research event in the world – this year hosting 517 registrants from 7 countries, 23 states, and 115 institutions for 46 speakers and 25 posters over 17 zoom hours 

Another aspect of the Packard Center that is allowing researchers to take the next steps in understanding and treating this dreadful disease is its unprecedented program, Answer ALS. Answer ALS is producing the largest and most comprehensive foundation of integrated ALS data ever amassed and is utilizing big data and artificial intelligence to identify targeted pathways to fight ALS. 

Together, we can make a difference in the fight against ALS and other neurogenerative diseases by supporting Packard Center research. How can you help? Join me in making a contribution. Gifts of any amount make a difference. To provide some guidance:

• The Packard Center is fully funded through philanthropy
• Gifts of any size directly support Packard Center research
• Packard Center researchers are currently funded at $50,000/yr 
• The Packard Center seeks sponsorships for its Annual ALS Research Symposium 
• Gifts to the Packard Center endowment help secure a revenue stream for future ALS and neurogenerative research

In addition, you may:

• Follow the Packard Center on social media: Facebook, Twitter
• Run in its annual Fiesta 5K 
• Offer to host an event

Thank you for your consideration and for your potential support/interest in joining the fight against ALS and other neurodegenerative diseases. For any and all questions (about the science, giving, ways to participate), please contact Meg Whiteford and tell her I sent you:

Meg B. Whiteford, JD

Associate Director of Development

The Robert Packard Center for ALS Research

mwhiteford@jhmi.edu

(410) 955-8684 (office)

(410) 614-0659 (fax)

www.packardcenter.org

Make an online gift here 

Best,

Steve Gerbsman

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