Feeds:
Posts
Comments

Archive for September, 2021

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.

Read Full Post »

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 ALSAnswer 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:

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

Read Full Post »

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

Read Full Post »


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 ALSAnswer 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:

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

Read Full Post »

By Frank Schaeffer 

The Washington Post

August 23, 2021

Before my son became a Marine, I never thought much about who was defending me.  Now when I read of the war on terrorism or the coming conflict in Iraq, it cuts to my heart. When I see a picture of a member of our military who has been killed, I read his or her name very carefully. Sometimes I cry.

In 1999, when the barrel-chested Marine recruiter showed up in dress blues and bedazzled my son John, I did not stand in the way.  John was headstrong, and he seemed to understand these stern, clean men with straight backs and flawless uniforms.  I did not.  I live in the Volvo-driving, higher education-worshiping North Shore of Boston. 

I write novels for a living. I have never served in the military.It had been hard enough sending my two older children off to Georgetown and New York University. John’s enlisting was unexpected, so deeply unsettling.  I did not relish the prospect of answering the question, “So where is John going to college?” from the parents who were itching to tell me all about how their son or daughter was going to Harvard.  At the private high school John attended, no other students were going into the military.“But aren’t the Marines terribly Southern?” (Says a lot about open-mindedness in the Northeast) asked one perplexed mother while standing next to me at the brunch following graduation.  “What a waste, he was such a good student,” said another parent.  One parent (a professor at a nearby and rather famous university) spoke up at a school meeting and suggested that the school should, “carefully evaluate what went wrong.”

When John graduated from three months of boot camp on Parris Island, 3000 parents and friends were on the parade deck stands.  We parents and our Marines not only were of many races but also were representative of many economic classes. Many were poor. Some arrived crammed in the backs of pickups, others by bus.  John told me that a lot of parents could not afford the trip.We in the audience were white and Native American.  We were Hispanic, Arab, and African American, and Asian. We were former Marines wearing the scars of battle, or at least baseball caps emblazoned with battles’ names.  We were Southern whites from Nashville and skinheads from New Jersey, black kids from Cleveland wearing ghetto rags and white ex-cons with ham-hock forearms defaced by jailhouse tattoos.  We would not have been mistaken for the educated and well-heeled parents gathered on the lawns of John’s private school a half-year before.

After graduation one new Marines told John, “Before I was a Marine, if I had ever seen you on my block I would’ve probably killed you just because you were standing there.” This was a serious statement from one of John’s good friends, a black ex-gang member from Detroit who, as John said, “would die for me now, just like I’d die for him.”

My son has connected me to my country in a way that I was too selfish and insular to experience before.  I feel closer to the waitress at our local diner than to some of my oldest friends.  She has two sons in the Corps.  They are facing the same dangers as my boy.  When the guy who fixes my car asks me how John is doing, I know he means it.  His younger brother is in the Navy.Why were I and the other parents at my son’s private school so surprised by his choice?

  During World War II, the sons and daughters of the most powerful and educated families did their bit.  If the idea of the immorality of the Vietnam War was the only reason those lucky enough to go to college dodged the draft, why did we not encourage our children to volunteer for military service once that war was done?

Have we wealthy and educated Americans all become pacifists?  Is the world a safe place?  Or have we just gotten used to having somebody else defend us?  What is the future of our democracy when the sons and daughters of the janitors at our elite universities are far more likely to be put in harm’s way than are any of the students whose dorms their parents clean?

I feel shame because it took my son’s joining the Marine Corps to make me take notice of who is defending me.  I feel hope because perhaps my son is part of a future “greatest generation.”  As the storm clouds of war gather, at least I know that I can look the men and women in uniform in the eye.  My son is one of them.  He is the best I have to offer.  John is my heart.

Faith is not about everything turning out OK.  Faith is about being OK no matter how things turn out.Oh, how I wish so many of our younger generations could read this article.  It makes me so sad to hear the way they talk with no respect for what their fathers, grandfathers and great grandfathers  experienced so they can live in freedom.

 

Read Full Post »