Blog of Intellectual Capital

Read Full Post »

Growing up in NYC in the 50’s there was always the discussion about “the Mick”, the Duke” and the “Say Hey Kid”. They all were All Stars, but dependent on where you lived is the person and team you rooted for.

As a Bronx Boy, “Mick” was always #1. Then there was Casey, Scooter, Yogi, Moose, the Marine, the Doctor, Whitey, Billy and the rest of the pack. Also, Joe D at the end of his career.

Sit back and enjoy Warner Wolf’s interview and also see his other interviews of Joe D, and the Splendid Splinter.

Read Full Post »

• 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.

’10 Reasons Why 2022 will be Challenging’

1. Increased inflation. Government created immense amounts of cash and debt, and we will be experiencing the effects for a long time. U.S. debt has more than doubled in the past 10 years. Passing Build Back Better would have made the problem even worse, but it was bad enough to start.

2. Continued supply chain problems and personnel shortages, further contributing to inflation.

3. Rising interest rates, which will negatively affect the stock market and increase our debt problem.

4. Worsening crime. It is a far easier to defund police departments, cause retirements of experienced officers, discourage new police recruits, and destroy police morale and motivation than it is to build back such things. Progressive district attorneys will further increase the problem by refusing to prosecute criminals, as is happening in New York City, Los Angeles, San Francisco and other major metropolitan areas. The pendulum will eventually swing back to law and order, but it will take several years to happen. Even if Republicans win both houses of Congress in the mid-terms, the administration will most likely veto any crime bill.

5. Covid has significantly worsened in the short term. My two doctor friends estimate that the actual incidence of Covid is 5X the reported incidence. Vaccines seem to lessen the severity of Covid, and the Omicron variant of Covid seems to be far less deadly than previous variants. Nevertheless, vaccines, and even, previous Covid infection, do not absolutely stop new infection. My friend just experienced a mild case of Covid upon returning from a vacation to New York City, despite being vaccinated once with the J&J vaccine and three times with the Pfizer vaccine. His daughter and his sister-in-law both experienced mild Covid recently after having been vaccinated twice and having been sick with Covid last year.

6. If we are lucky, Omicron will lead us to herd immunity, and at some point, the politicians will declare that Covid is now endemic, just like the other 200 endemic respiratory viruses. We will continue to feel the short term negative effects of Covid at least through 2022. The long term effects on children, businesses, travel and general physical and mental health will be with us for decades.

7. Despite falling Biden poll numbers, Progressives are doubling down on all Progressive policies. Do not expect any movement toward the center from the Democratic Party, such as occurred when Clinton experienced setbacks in the first midterm election of his presidency. With the exception of Senators Manchin and Sinema, Progressives now control the Democratic Party. They also control most of the mainstream media, academia, entertainment, and tech communities, as well as most major urban governments. Their view of the world is that the only problem with Progressive policies is that such policies have not been implemented hard enough.

8. China is experiencing its own economic problems, including a bursting real estate bubble, power shortages, shut downs of ports, increasing government control over tech, increasing government control over Hong Kong, and resulting slower growth. Given the size of the Chinese economy and its connections to the world, the U.S. economy will be negatively affected by Chinese problems.

9. China, Russia, Iran and others perceive our current administration as weak. They may conclude that such weakness is a passing advantage they need to exploit while it lasts. My biggest concern is the potential for a major international crisis, or several happening at once. Taiwan, Ukraine, the Middle East all come to mind, but the real spark will likely be something that we cannot anticipate.

10. Even if Republicans take the House and the Senate in 2022 (which is by no means certain), the Democrats will still control the Presidency. Thus, the ability of the Republicans to reverse Progressive policies will not even begin until early 2023, and will be limited for at least another two years.

• WHAT HAPPENS NEXT!

• We expect that the world health and economic situation will continue to 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 45 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 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 115 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.

Read Full Post »

Terminating/Restructuring Prohibitive Real Estate, License, 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, cyber security, solar and cleantech portfolio companies. 

These companies were not necessarily in crisis, but had cash (in some cases significant cash reserves) and/or investor groups that were about to provide additional funding. In order to stabilize their Go-Forward-Plan and maximize cash resources for future growth, there were specific needs to address Balance Sheet and Contingent Liability issues as soon as possible. 

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

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 and senior and sub-debt obligations.  To date, we have terminated or restructured $810 million of such obligations for private and public companies, and which has allowed them to return to financial viability. 

Accounts/Trade Payable Obligations

            Companies in a crisis, turnaround or restructuring situation typically have account 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 value based on the reality or practicality of the situation.

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, successful track record in these areas.

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 115 companies in a wide and diverse spectrum of industries. In the process, GP has successfully restructured/terminated over $810 million of real estate executor contracts and equipment lease/sub-debt obligations, and has assisted 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, McLean VA, San Francisco, Orange County, Europe and Israel. 

Read Full Post »