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Archive for the ‘Gerbsman Partners’ Category

E.U. challenge to Oracle/Sun deal a bad omen for M&A

Posted in Board Of Intellectual Capital, Business models, Distressed Intellectual Property, Economy, Gerbsman Partners, Intellectual capital, Investments, Java, Strategy, Sun Microsystems, Technology, tagged , , , , , , on November 10, 2009| Leave a Comment »

We all know that mergers are not easy. Here is some news in regards to the Oracle/ Sun merger from Daily Finance.

“As expected, the E.U. raised objections to the Oracle (ORCL) buyout of Sun (JAVA) at about the same time that the Department of Justice approved the deal. The E.U.’s objection is based on the large market share that the two tech companies would have in the MySQL software business.

European authorities have been deviling American companies for years. In 2001 they killed the GE (GE) deal to purchase Honeywell (HON), which would have been the crowning achievement of Jack Welch’s tenure at the world’s largest conglomerate. The E.U. has troubled Microsoft (MSFT) and Intel (INTC) over antitrust concerns, and now it has brought up similar issues with Oracle’s plans.

The aggressive stance of the Europeans could threaten other deals in the works, starting with the planned joint venture in the search industry betweenYahoo! (YHOO) and Microsoft. Action on the merger could bring Google’s (GOOG) huge market share in the search industry under scrutiny. Even the Kraft (KFT) deal with Cadbury might be aggressively reviewed — if it ever happens. That transaction would give Kraft a huge portion of the gum and chocolate businesses in Europe.”

Read the full article here.

 

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Mother of all carry trades faces an inevitable bust

Posted in Board Of Intellectual Capital, Economy, Gerbsman Partners, Investments, Market research, tagged , , , , , , , on November 2, 2009| Leave a Comment »

Here is a market commentary from Financial Times.

“Since March there has been a massive rally in all sorts of risky assets – equities, oil, energy and commodity prices – a narrowing of high-yield and high-grade credit spreads, and an even bigger rally in emerging market asset classes (their stocks, bonds and currencies). At the same time, the dollar has weakened sharply , while government bond yields have gently increased but stayed low and stable.

This recovery in risky assets is in part driven by better economic fundamentals. We avoided a near depression and financial sector meltdown with a massive monetary, fiscal stimulus and bank bail-outs. Whether the recovery is V-shaped, as consensus believes, or U-shaped and anaemic as I have argued, asset prices should be moving gradually higher.

But while the US and global economy have begun a modest recovery, asset prices have gone through the roof since March in a major and synchronised rally. While asset prices were falling sharply in 2008, when the dollar was rallying, they have recovered sharply since March while the dollar is tanking. Risky asset prices have risen too much, too soon and too fast compared with macroeconomic fundamentals.

So what is behind this massive rally? Certainly it has been helped by a wave of liquidity from near-zero interest rates and quantitative easing. But a more important factor fuelling this asset bubble is the weakness of the US dollar, driven by the mother of all carry trades. The US dollar has become the major funding currency of carry trades as the Fed has kept interest rates on hold and is expected to do so for a long time. Investors who are shorting the US dollar to buy on a highly leveraged basis higher-yielding assets and other global assets are not just borrowing at zero interest rates in dollar terms; they are borrowing at very negative interest rates – as low as negative 10 or 20 per cent annualised – as the fall in the US dollar leads to massive capital gains on short dollar positions.”

Read the full story here.

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IT Services In Sweet Spot As M&A Gathers Steam

Posted in Board Of Intellectual Capital, Business models, Distressed IP, Gerbsman Partners, Intellectual capital, Investments, Market research, Strategy, Venture Capital, tagged , , , , , , , on October 30, 2009| Leave a Comment »

Here is some possitive news from VC Circle.

“The ongoing recovery in the economy and credit markets has made tech companies look for ways to come out on top.

The U.S. information technology services sector is likely to be a focus of merger and acquisition activity as its companies are among the most attractive in the technology space.

A rebound in tech spending has increased the appeal of IT services companies and put them in the crosshairs as deal momentum picks up in the industry.

The ongoing recovery in the economy and credit markets has made tech companies look for ways to come out on top, and they have shown a willingness to pay hefty premiums in a sector that has historically commanded high prices.

IT services firms have a recurring revenue stream, high margins, a strong growth outlook and impressive returns on investment, making tempting targets for buyers. They offer consulting, software services, business process outsourcing, systems integration and interactive marketing.

Cash-rich technology giants plan to strengthen their portfolios, and smaller firms want to stay in the game through acquisitions as their larger rivals become even more formidable.

Attractive acquisition candidates include Sapient, Computer Sciences, WNS, Amdocs, Cognizant Technology and ExlService, analysts said.

Consolidation is under way. In September, Xerox Corp said it would buy Affiliated Computer Services Inc in a deal valued at about $5.5 billion, and Dell Inc said it planned to buy Perot Systems Corp for about $3.9 billion.

“The pattern here is that you have commoditizing tech product companies looking for a strategy that’s better than doing nothing,” Sanford C. Bernstein analyst Rod Bourgeois said.

“They’re looking at the IT services industry to juice up their struggling tech product business.”

Possible acquirers could be tech giants such as IBM, Hewlett-Packard or Cisco, European players like BT or Deutsche Telekom and Asian companies like Hitachi, Fujitsu or NEC, analysts said.

“There’s definitely going to be some strategic acquisitions — there’s no doubt about that,” Goldman Sachs analyst Julio Quinteros said. “It’s just, how much are you willing to pay? And would you rather wait for the market to come back a little bit?”

The recurring revenue stream that IT services firms have gives them more visibility and stability.

“What’s driving a lot of this is the evolution of hardware companies looking for more stability and recurring revenues that are typically associated with services models and by the same token software companies potentially looking for the same thing,” Quinteros said.

Hardware and software companies want to diversify their portfolios by adding services, to help them survive and even prosper through tough times.

“What’s alluring about services for tech product companies is first the precedent of IBM and HP coupling products with services to be able weather the downturn well,” Bourgeois said.

In 2008, Hewlett-Packard acquired EDS for $13 billion in what is considered the biggest acquisition in the space ever. In 2002, IBM bought PwC Consulting from PricewaterhouseCoopers for about $3.5 billion.

“Vendors are trying, to some extent, to emulate the integrated model that IBM really pioneered when they got into the services business years ago,” UBS analyst Jason Kupferberg said. “HP followed suit buying EDS. Now you’re seeing a continuation of that theme.”

Read the full article here.

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This Year’s Top 10 Largest Venture Funding Deals

Posted in Board Of Intellectual Capital, Business models, Economy, FaceBook, Gerbsman Partners, Investments, Market research, Strategy, Venture Capital, tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , on October 22, 2009| Leave a Comment »

Here is a interesting article from WSJ Online.

“Twitter Inc.’s $100 million funding round drew considerable attention for its massive size, but it’s not the largest venture deal so far this year. That round actually tied for the fourth largest, according to data compiled from Dow Jones VentureSource.

Here’s a list of the Top 10 venture capital rounds through the third quarter. The deals are impressive considering the cloud hanging over the venture industry. Besides Twitter and another dot-commer, Facebook Inc., these companies range from massive clean-technology projects and health-care plays to wireless equipment makers and, in one case, a waste-collection service.

#1 Solyndra Inc., Fremont, Calif. – $286 million

The solar panel maker is on the federal government’s hot-list, receiving a $535 million loan guarantee in September to build a second manufacturing plant and create hundreds of jobs. That loan encouraged venture firms to invest at least another $198 million in Solyndra. (The company announced that amount in September though a spokesman told VentureWire the round’s total was even higher.) Argonaut Private Equity, an investment vehicle for Oklahoma billionaire George Kaiser, led the round. Others participating in the round weren’t disclosed, although Solyndra’s investors include CMEA Capital, Redpoint Ventures, RockPort Capital Partners, U.S. Venture Partners and Virgin Green Fund, which together have invested more than $600 million. Solyndra plans to finish building its plant in Fremont by the end of next year and ship its first product in early 2011.

#2 Clovis Oncology Inc., Boulder, Colo. – $146 million

In May, Domain Associates, New Enterprise Associates and others bet $146 million that former executives of cancer-drug company Pharmion Corp., which sold for $2.9 billion last year, will repeat that success with newly formed Clovis Oncology. Also participating were Pharmion investors Aberdare Ventures, Abingworth Management, ProQuest Investments and Versant Ventures, and newcomer Frazier Healthcare Ventures. Like Pharmion – which raised $145 million in venture capital and convertible debt before going public in 2003 – Clovis will acquire cancer therapies, develop them through to regulatory approval in the U.S. and Europe, and market them.

#3 Small Bone Innovations Inc., New York – $108 million

The orthopedic device company, founded in 2004, has developed a portfolio of products for thumb, hand, wrist, elbow, foot and ankle surgeries. The STAR Ankle total joint replacement system, one of Small Bone’s flagship products, received Food and Drug Administration clearance in May. The $108 million Series D round, which closed in April, included new investors The Family Office of Bahrain, Goldman Sachs & Co., Khazanah Nasional Brhd. and Malaysian Technology Development Corp. and existing investors 3i Group, Axiom Venture Partners, NGN Capital, TGap Ventures and Trevi Health Ventures. Executives told VentureWire they expect Small Bone to reach profitability in 12 months, and unlike many medical device companies which become acquisition targets, could grow into a full-fledged company in its own right.

#4 (Tied) A123 Systems Inc., Watertown, Mass. – $100 million

The electric-car battery maker’s initial public offering last month captured investors’ imagination – and wallets – with a vision of a future where power is stored intelligently and deployed efficiently in a world of lower carbon emission. Before the IPO, A123 Systems gathered $100 million in Series F funding in June from investors Gururaj Deshpande, General Electric Co., North Bridge Venture Partners and Qualcomm Inc. A123 also received a $249.1 million grant from the U.S. Department of Energy grant, the second-biggest awarded as part of a $2.4 billion program to start up a domestic battery industry. The company, which has a deal to supply Chrysler Group LLC with batteries for planned electric vehicles and hybrids, is said to be in the late stages of negotiations for another DOE loan worth as much as $235 million.

#4. (Tied) Facebook Inc., Palo Alto, Calif. – $100 million

Facebook recently reached an important milestone for an Internet company, becoming cash-flow positive as it also grabbed its 300 millionth member. Will an IPO be coming soon? Executives won’t say, but the company’s investors are counting on a spectacular exit at some point given how much money they’ve invested over the years. One of the newest investors is Digital Sky Technologies, a Russian Internet investor that put $100 million into Facebook in July while also paying another $100 million to buy out shares of any selling employees.

#4 (Tied) Open Range Communications Inc., Greenwood Village, Colo. – $100 million

One Equity Partners committed $100 million to Open Range at the start of the year to help it roll out wireless broadband and Internet services in rural America by the end of the year. The deal followed a $267 million loan from the U.S. Department of Agriculture’s Rural Development Utilities Program. Founded in 2004, Greenwood Village, Colo.-based Open Range hopes to reach more than six million Americans in 546 underserved and rural communities across the U.S. lacking access to traditional DSL or cable broadband service providers. Open Range plans to use WiMAX technology to enable access to its planned wireless service with a simple plug-in device.

#4 (Tied) Twitter Inc., San Francisco – $100 million

At a $1 billion valuation, Twitter’s $100 million fourth round proved the Web messaging company is here to stay, at least longer than some thought. The funding came from some unlikely sources, including T. Rowe Price Group, better known for its retirement funds than venture capital investing, Morgan Stanley, which invested from its asset management business, and Insight Venture Partners, a growth-equity investor that doesn’t typically put money in pre-revenue companies. Other investors in Twitter include Benchmark Capital, Institutional Venture Partners, Spark Capital and Union Square Ventures, which didn’t reinvest in the latest round reportedly because the deal priced the firm out. Now the pressure will be on for Twitter to live up to the hype.”

Read the full article here.

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Venture Funding Up 17.5%, M&A Rebounds Even More

Posted in Board Of Intellectual Capital, Business models, Gerbsman Partners, Intellectual capital, Investments, Market research, Technology, Venture Capital, tagged , , , , , , , , on October 15, 2009| Leave a Comment »

Here is some good news from TechCrunch.

“Last quarter, based on funding and M&A data we collect in CrunchBase, we signaled that we were cautiously optimistic about the rebound of the tech sector. Q2 trends were no worse than Q1 09: venture financings were up 20% and mergers & acquisitions held steady (excluding Oracle’s acquisition of Sun Microsystems) in comparison to Q1.

With another quarter of data under our belts, we’re feeling even better about the health of technology startups. The number of new startups, venture fundings and M&A are all on the rise. In addition to decent stats, there are lots of new tech products launching across diverse categories, coming from companies both great and small. The Layoff Tracker and Deadpool have quieted down in our sector. In short, we’re feeling like there’s a more rational and focused market for startups and tech.

Strategic M&A Is Back: 3x Q2 Levels

One of the strongest signals of the quarter was the resumption of activity in mergers and acquisitions. The acquisition market really rebounded in Q3 09 to over $45 billion from 231 deals, 3x greater than Q2’s $15 billion. We haven’t seen M&A activity at this level since Q2 08, which recorded 275 deals totaling $59 billion.

…

Most encouraging, acquirers are adding strategically to their businesses (Amazon-Zappos, Facebook-Friendfeed, Google-On2, Yahoo!-Xoopit, VMWare-Springsource, RIM-Torch Mobile, Intuit-Mint, etc.) Some acquirers are returning to the market with multiple strategic deals (Adobe, EMC, IBM, Thomson Reuters, Yahoo!, Google, etc.) Deal making was well distributed across business segments (consumer web, retail, mobile, advertising, enterprise, biotech, cleantech)”

Read the full article here.

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