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Archive for the ‘Economy’ Category

“Maximizing Enterprise Value through Balance Sheet Restructuring & Date Certain M&A Process”

Posted in Board Of Intellectual Capital, boic, Economy, Gerbsman Partners, tagged , , , on May 14, 2009| Leave a Comment »

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 portfolio companies. These companies were not necessarily in Crisis, had CASH (in some cases significant CASH) and/or investor groups that were about to provide additional funding. In order stabilize their go forward plan and maximize CASH resources for future growth, there was a specific need to address the Balance Sheet and Contingent Liability issues as soon as possible.

Some of the areas in which Gerbsman Partners has assisted these companies have been in the 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, computer and hardware related leases and senior and sub-debt obligations. To date, Gerbsman Partners has terminated or restructured over $770 million of such obligations. These 77 deals were a mixture of both public and private companies, and allowed the restructured company to return to a path of financial viability.
  • Accounts Trade payable obligations – Companies in a crisis, turnaround or restructuring situation typically have accounts 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 enterprise value based on the reality and practicality of the situation.

Date Certain M&A Process

Gerbsman Partners developed its proprietary “Date Certain M&A Process” in 2002. Since that time, the process has evolved into a 4-6 time frame vehicle for maximizing enterprise value for venture backed Intellectual Property based companies. A description of this proven process can be reviewed on the Gerbsman Partners website.

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 52 Technology, Life Science and Medical Device companies and their Intellectual Property and has restructured/terminated over $770 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception in 1980, Gerbsman Partners has been involved in over $2.2 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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The real problem with the stress tests and the bailout programs

Posted in Board Of Intellectual Capital, Business models, Distressed IP, Economy, Investments, Market research, Strategy, tagged , , , , , , , , , , , , , , on May 8, 2009| Leave a Comment »

We wrote about this topic yesterday, the bailout was just a bandaid – the real issue is the fundamentals. The recent stress tests uncovered some uncomfortable truths in regards of cash, GMAC among others might need bailout or face bankruptcy!

The ever so humble (not) Paul Krugman today wrote a good Op-Ed in NY Times. Here are some selected quotes explaining the situation very clearly.

“I won’t weigh in on the debate over the quality of the stress tests themselves, except to repeat what many observers have noted: the regulators didn’t have the resources to make a really careful assessment of the banks’ assets, and in any case they allowed the banks to bargain over what the results would say. A rigorous audit it wasn’t.

But focusing on the process can distract from the larger picture. What we’re really seeing here is a decision on the part of President Obama and his officials to muddle through the financial crisis, hoping that the banks can earn their way back to health.”

He continues;

“After all, right now the banks are lending at high interest rates, while paying virtually no interest on their (government-insured) deposits. Given enough time, the banks could be flush again.

But it’s important to see the strategy for what it is and to understand the risks.

Remember, it was the markets, not the government, that in effect declared the banks undercapitalized. And while market indicators of distrust in banks, like the interest rates on bank bonds and the prices of bank credit-default swaps, have fallen somewhat in recent weeks, they’re still at levels that would have been considered inconceivable before the crisis.

As a result, the odds are that the financial system won’t function normally until the crucial players get much stronger financially than they are now. Yet the Obama administration has decided not to do anything dramatic to recapitalize the banks.

Can the economy recover even with weak banks? Maybe. Banks won’t be expanding credit any time soon, but government-backed lenders have stepped in to fill the gap. The Federal Reserve has expanded its credit by $1.2 trillion over the past year; Fannie Mae and Freddie Mac have become the principal sources of mortgage finance. So maybe we can let the economy fix the banks instead of the other way around.”

Read the full article here.

Others covering this article can be found here: Economists View, Brooks and Krugman, NewsTrust, One Penny Street, Relevant Science.

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“Bailout” in need of more bailout!

Posted in Board Of Intellectual Capital, boic, Economy, Investments, Market research, Strategy, tagged , , , , , , , , , , , , , , , , , , , , , , , , , , on May 7, 2009| Leave a Comment »

Putting cash into unhealthy business has long been understood as a bad deal. With the Bailout programs and the TARP initiative, some might have thought that the problem was solved – think again. Poor business remain poor business.

Here are some good quotes taken from NY Times.

“The results of the bank stress tests have been trickling out for days, from Washington and from Wall Street, and the leaks seem to confirm what many bankers feel in their bones: despite all those bailouts, some of the nation’s largest banks still need more money.

But that does not necessarily mean the banks will get that money from the government. The findings, to be released Thursday by the Obama administration, suggest that the rescue money that Congress has already approved will be enough to fill the gaps. If so, the big bailouts for the banks may be over.But hopes that the tests will be a turning point in this financial crisis electrified Wall Street on Wednesday and some overseas markets the next day. Financial shares soared, lifting the broader American stock market to its highest level in four months. The Dow Jones industrial average rose 101.63, or 1.2 percent, to close at 8,512.28 Wednesday, while Japan’s Nikkei index rose more than 4 percent by midday Thursday.”

Good news indeed, but…

“After news this week that Bank of America and Citigroup would be required to bolster their finances again, word came Wednesday that regulators had determined that Wells Fargo and GMAC, the deeply troubled financial arm of General Motors, would need to do so as well. But regulators decided that American Express, Capital One, Bank of New York Mellon, Goldman Sachs, JPMorgan Chase and MetLife would not need to take action. The official word is due at 5 p.m. Thursday.

The results so far seem to suggest that the 19 institutions that underwent these exams will need less than $100 billion in additional equity to cope with a deep recession, far less than some investors had feared. The question now is, where will banks get that capital?”

Read the full article here.

Other helpful sources on this issue can be found here: Huffington Post, Barrons Blogs, Wall Street Journal, Seeking Alpha, 24/7 WallStreet

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Few IPO candidates makes VC´s worried

Posted in Board Of Intellectual Capital, Business models, Economy, Gerbsman Partners, Intellectual capital, Investments, Market research, Strategy, Venture Capital, tagged , , , , , , , , , , on May 6, 2009| Leave a Comment »

A giant investment dilemma is coming into play as of late – the market, Silicon Valley especially, is running short on IPO candidates. The jackpots including Intel, Apple, Netscape, eBay, Yahoo and Google are all history by now. With few candidates, the payoffs look smaller and the real problem shows – where will the money come from for new investments?

Here are a good analysis taken from Silicon Valley.com.

“So how might a Facebook or LinkedIn IPO perform when the time is right? Or what will Skype’s IPO look like, assuming eBay proceeds with plans to spin it out in 2010 as a separate company?

“We’re seeing a rebuilding and stabilization of the IPO market, so that Silicon Valley firms will be able to participate.” said Jeff Grabow of the accounting firm Ernst & Young’s San Jose office, which issued its quarterly U.S. IPO Pipeline report Tuesday.”

It continues…

“The IPO is vital to the valley’s economy, promising a potential jackpot for VCs that compensates for investments that don’t pan out. Not so long ago, the valley seemed to pop out an IPO every few weeks. But since early 2008, the pipeline has been more like a sieve. The venture industry is now pushing for tax breaks and regulatory relief from Washington to revive the market.

Ernst & Young’s report offers a snapshot of the situation. Privately held companies get in the IPO pipeline by filing S-1 forms with the Securities and Exchange Commission that signal their plans to sell stock on public markets. There were 57 companies in the pipeline Dec. 31, but only 44 on March 30.

In the first quarter, 16 companies exited the pipeline — only two made Wall Street debuts. Among the others, 10 registrations had surpassed the one-year expiration for inclusion in the study, which suggests they may just be biding their time in a chilly market. Three registrants withdrew their S-1s, and one postponed. Three companies filed S-1s, including San Francisco-based OpenTable, the online restaurant reservation service.

When OpenTable filed in January, it seemed like wishful thinking in such a dreadful economy. Because SEC rules require “a quiet period” for companies that file for IPO, I couldn’t ask CEO Jeff Jordan why OpenTable was making such a move. How good could the restaurant business be with credit crunched and people pinching pennies?”

Read the full article here.

Other covering the issue: Techmeme, TechSheep, Congoo

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TARP: The Looming Debacle

Posted in Board Of Intellectual Capital, Economy, tagged , , , , , on April 29, 2009| Leave a Comment »

Here is a report on the real cost of the TARP program. As it seams, the plan does not always equal the result. The Power line Blog provides some stunning insights into the report submitted on April 21st. Click here to read the full article.

“On April 21, the Special Inspector General for the Troubled Asset Relief Program Act of 2009–“SIGTARP”–submitted his quarterly report to Congress on his office’s activities in relation to the TARP program. The report is a disquieting document that should be read by every American–certainly be every taxpayer.

The Inspector General’s report documents the stunning and at least partly illegal expansion of TARP from the $700 billion originally allocated by Congress to what is now a $3 trillion complex of programs. This chart shows the various programs that are now included within SIGTARP’s oversight, and how they have expanded from the initial $700 billion. Note that some of the programs are still incipient; $3 trillion is by no means a final number.”

The article continues,

“The report is valuable for a number of reasons, not least because it provides the most coherent description I’ve seen of the various programs now underway to bail out–or take over, as the case may be–the country’s financial sector. So far, the report’s most commented-upon feature is its description of the many criminal investigations that are now underway, arising out of TARP:

Both from the Hotline and from other leads, SIGTARP has initiated, to date, almost 20 preliminary and full criminal investigations. Although the details of those investigations generally will not be discussed unless and until public action is taken, the cases vary widely in subject matter and include large corporate and securities fraud matters affecting TARP investments, tax matters, insider trading, public corruption, and mortgage-modification fraud.

It is safe to assume, however, that the investigations now in progress represent not even the tip of the iceberg. The most troubling feature of the SIG’s report is its documentation of reluctance on the part of Tim Geithner’s Treasury Department to make even modest efforts to protect the interests of the taxpayers. To take just one glaring example, Treasury has refused to require banks to account for what they do with the billions of dollars they receive in TARP money:

Treasury has indicated, however, that it will not adopt SIGTARP’s recommendation that all TARP recipients be required to do the following:

• account for the use of TARP funds
• set up internal controls to comply with such accounting
• report periodically to Treasury on the results, with appropriate sworn certifications

In light of the fact that the American taxpayer has been asked to fund this extraordinary effort to stabilize the financial system, it is not unreasonable that the public be told how those funds have been used by TARP recipients. Treasury is now conducting regular surveys of the banks’ lending activities; however, with the exception of Citigroup and Bank of America, Treasury has refused to seek further details on TARP recipients’ use of funds.”

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