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M&A: Hot Spots in 2010

Posted in Board Of Intellectual Capital, boic, Business models, BusinessWeek, Distressed IP, Economy, Gerbsman Partners, Intellectual capital, Investments, Market research, Sun Microsystems, Technology, Venture Capital, tagged , , , , , , , , , , , , on December 8, 2009| Leave a Comment »

Here is an interresting read from BusinessWeek.

For the mergers-and-acquisitions market, there is no doubt 2009 is ending better than it began. The year is winding up with a “sigh of relief,” says Morton Pierce, chairman of the M&A practice at law firm Dewey & LeBoeuf.

In the past month the M&A market has built up some momentum. According to Bloomberg, deals in North America were valued at $115.6 billion in November, the most since September 2008. Compare that with late 2008 and early 2009, when dealmaking either wasn’t happening at all or was centered in areas where deals absolutely needed to happen, such as failing financial institutions that needed buyers at any price. Deal volume in November was five times February’s volume of $22.5 billion.

Investors looking ahead to 2010 are wondering if this uptick in M&A can continue and where it will occur. Acquirers almost always buy at a premium, so traders can profit from correctly betting which industries will attract the most bidding activity.

Small Tech Deals

In 2009, Internet stocks, the investment and financial services industries, software, and oil and gas production were among the most active, according to Bloomberg data. Expect more dealmaking among technology stocks, say M&A experts. Oracle Corp. (ORCL) is battling European regulators to finish its $7.4 billion acquisition of Sun Microsystems (JAVA).

Such acquisitions, and especially much smaller deals, are a way of life for tech firms, says Daniel Mitz, a partner at law firm Jones Day who specializes in tech deals. “A lot of the innovation comes from smaller companies,” Mitz says. Dealmaking in tech slowed but didn’t stop during the downturn. There could be significant pent-up demand, Mitz says. “This is an industry that is ripe for M&A.”

One driver of a rebound for M&A in tech will be the strong financial positions of many tech firms, says Nadia Damouni, editor of dealReporter Americas, which tracks the M&A market. Another “cash rich” sector is health care, she says, but here the prospects for an M&A rebound are harder to read. The reason: Uncertainty surrounding the federal overhaul of the U.S.health-care system proposed by President Barack Obama and under discussion in Congress. “They’re at the whim of health-care reform,” Damouni says of the many insurers and health-care services companies that could be M&A targets at some point.

In health care, the key ingredient for dealmaking is “stability,” says Bob Filek, a partner at PricewaterhouseCoopers Transaction Services. If health-care reform passes—or even if it doesn’t—acquirers will want some certainty about what federal policy will mean for health care before making bids. Filek envisions “a couple of scenarios where [the result could be] a lot of M&A activity.”

Read the full article here.

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Successful termination of “Prohibitive Executory Real Estate Contract”

Posted in Board Of Intellectual Capital, boic, Distressed IP, Economy, Gerbsman Partners, Housing market, Intellectual capital, Investments, Market research, tagged , , , on December 2, 2009| Leave a Comment »

Steven R. Gerbsman, Principal of Gerbsman Partners, and Robert Tillman, member of Gerbsman Partners Board of Intellectual Capital, announced today that Gerbsman Partners successfully terminated the executory real estate contract for a financial services company. The venture capital backed company, executed a lease for space in Northern California. Due to market conditions, the company made a strategic decision to terminate its corporate space allocation. Faced with potential contingent liabilities in excess of $5 million, the company retained Gerbsman Partners to assist them in the termination of their prohibitive executory real estate contract.

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 60 Technology, Life Science and Medical Device companies and their Intellectual Property,, through its proprietary “Date Certain M&A Process” and has restructured/terminated over $790 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, Europe and Israel.

For additional information please visit www.gerbsmanpartners.com

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Dubai is just a harbinger of things to come for sovereign debt

Posted in Board Of Intellectual Capital, boic, tagged , , , , , on November 28, 2009| Leave a Comment »

Here is a good blog article from The Telegraph.

“Watch out. This may be just the beginning. In the scale of things, the debt problems of Dubai are little more than a flea bite. Dubai’s sovereign debts total “just” $80bn, which counts for nothing against the trillions being raised by advanced economies to plug fiscal deficits.

Small wonder, though, that this minor tremor has sent such shock waves around the wider capital markets. The fear is that threatened default in this tiny desert kingdom is just a harginger of things to come for government debt markets as a whole. According to new estimates by Moody’s, the credit rating agency, the total stock of sovereign debt worldwide will have risen by nearly 50 per cent between 2007 and 2010 to $15.3 trillion. The great bulk of this increase comes not from irrelevant little states like Dubai, but from the big advanced economies – America, Europe, and Japan.

Perversely, they are for the time being beneficiaries of the “flight to safety” that trouble in Dubai has sparked. Government bond yields in the major advanced economies have fallen in response to the crisis in the Gulf. If experience of the banking crisis, when investors removed their money from one bank only to find that the one they had put it into looked just as dodgy, is anything to go by, this effect will not last.”

Read the full article here.

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The Coming Deficit Disaster

Posted in Board Of Intellectual Capital, boic, tagged , , , , , , on November 23, 2009| Leave a Comment »

Here is an article from Wall Street Journal worth reading.

“President Barack Obama took office promising to lead from the center and solve big problems. He has exerted enormous political energy attempting to reform the nation’s health-care system. But the biggest economic problem facing the nation is not health care. It’s the deficit. Recently, the White House signaled that it will get serious about reducing the deficit next year—after it locks into place massive new health-care entitlements. This is a recipe for disaster, as it will create a new appetite for increased spending and yet another powerful interest group to oppose deficit-reduction measures.

Our fiscal situation has deteriorated rapidly in just the past few years. The federal government ran a 2009 deficit of $1.4 trillion—the highest since World War II—as spending reached nearly 25% of GDP and total revenues fell below 15% of GDP. Shortfalls like these have not been seen in more than 50 years.

Going forward, there is no relief in sight, as spending far outpaces revenues and the federal budget is projected to be in enormous deficit every year. Our national debt is projected to stand at $17.1 trillion 10 years from now, or over $50,000 per American. By 2019, according to the Congressional Budget Office’s (CBO) analysis of the president’s budget, the budget deficit will still be roughly $1 trillion, even though the economic situation will have improved and revenues will be above historical norms.

The planned deficits will have destructive consequences for both fairness and economic growth. They will force upon our children and grandchildren the bill for our overconsumption. Federal deficits will crowd out domestic investment in physical capital, human capital, and technologies that increase potential GDP and the standard of living. Financing deficits could crowd out exports and harm our international competitiveness, as we can already see happening with the large borrowing we are doing from competitors like China.”

Read the full article here.

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What should we be doing to fully take advantage of a recovery?

Posted in boic, tagged , , on November 19, 2009| Leave a Comment »

Here is an article from Rich D’Amaro, Chairman and CEO of Atlanta-based Tatum LLC, the nation’s largest executive service firm focused primarily on the Office of the CFO, has developed a list of six tips which should serve as a basic guide for financial executives in the coming months.

1. Identify and Maintain Your Strengths, and Your Best Customers

Identify the strengths that have enabled your success to date, and those that will be important in the future. Which capabilities and skills are most critical? What distinguishes your ability to serve customers effectively? Identify your highest-margin customers, and understand what you are “doing right” for them. Develop a game plan to protect and build on the strengths that have allowed you to be indispensable to these customers. Rather than cutting costs across the board, think about how you can shift resources to retain these high-margin customers, and attract more customers like them.

2. Capture Market Share: Consider Opportunistic Acquisitions

Recessions reshape industries faster than good times do, creating opportunities for those with the vision and ability to seize them quickly. Studies have shown that companies have twice the opportunity to change their relative position in an industry during a recession compared to growth times. Keep an eye on competitors, and stand ready to capture market share as other players allow cost cutting to damage their service and quality, or fail outright. Market valuations are still down for strong and weak companies alike, and companies with resources to acquire complementary rivals will earn higher returns than they can with internal, organic growth. Of course, acquire only companies that support your ability to be the best in the world at what you do, and work aggressively to capture synergies. New opportunities may also exist to gain new alliance partners, to move into adjacent markets, to adopt new pricing models, or to enter new channels. Some of these opportunities may be created by the failure of competitors, and some may be created by a new customer appetite for solutions that show measurable ROI or reduce risk.

3. Manage Liquidity As Closely As Profitability

Your company has been dealing not only with negative growth but also with liquidity constraints. During good times you may not have obtained sufficient lines of credit to sustain your company through economic adversity. Trying to maintain liquidity on a smaller revenue base can be crippling. Every balance sheet dollar has to be turned over faster to contribute to working capital. Maximize cash flow by matching inventories to sales and collecting from customers faster. Take advantage of increased supplier willingness to share risk and to provide favorable terms.

4. Keep Core Activities In-House, and Outsource Everything Else

Build and protect those “core” capabilities that differentiate you, while aggressively outsourcing anything non-core. Depending on your business, non-core activities may include IT maintenance, human resources administration, benefits and payroll, accounts receivable and payable, manufacturing, distribution or sales. You’ll get the benefit of service provider expertise and economies of scale, and will pay only for services you need. The biggest benefit of outsourcing, however, is that it shifts your focus, resources and capital toward serving your clients’ higher value needs and building your competitive advantage.

5. Create New Metrics and Manage by Them

Tight economics put a premium on your ability to understand and model the relationships between revenues, costs and margins. Think about metrics that focus on the building blocks of revenue and sustaining market share, including sales pipeline, customer satisfaction, pricing and market penetration. Metrics should look beyond core financials to provide management with insight into market dynamics such as market share trends. The good news is that the enhanced metrics you need during challenging times will help you manage more profitably and efficiently in good times as well.

6. Communicate and Reenergize!

A downturn is a scary time for all your constituencies. You now need to begin the process of re-energizing your employees and creating new trust among all your constituencies. Frequent and honest communication will go a long way toward maintaining a calm and motivated workforce. Create regularly scheduled forums to listen to concerns, and to update employees on the state of the company and on their roles in achieving new company objectives. Studies show that employees are motivated far more by a sense of shared purpose than by compensation. Create that shared purpose and reinforce it daily. Lead your company out of the recession with realistic confidence, candor and a renewed sense of direction.

About Tatum, LLC

Companies turn to Tatum when critical business challenges arise because we immediately deliver financial and technology operational expertise via solutions tailored to the Office of the CFO. We understand the urgency of NOW and we leverage nearly 1,000 executives and consulting professionals nationwide to accelerate results to create more valueâ„¢. For more information, visit http://www.tatumllc.com.

 

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