Feeds:
Posts
Comments

Posts Tagged ‘Gerbsman Partners’

Gerbsman Partners – “Date Certain M&A” – Sale of GluMetrics, Inc., its Assets & Intellectual Property

Posted in "Date Certain M&A Process", Gerbsman Partners, Steven R. Gerbsman, Uncategorized, tagged , , , , on January 30, 2014| Leave a Comment »

SALE OF GLUMETRICS, INC.

Gerbsman Partners (www.gerbsmanpartners.com) has been retained by GluMetrics, Inc. (www.GluMetrics.com) to solicit interest for the acquisition of all, or substantially all, the assets of GluMetrics, Inc.

Based in Irvine, CA, GluMetrics, Inc. is a glucose monitoring medical device company, founded in 2005 with a patented, optical fluorescence, continuous, non-consumptive, real-time glucose sensing technology with the potential to materially impact both the hospital-based and diabetic glucose monitoring markets.

The Company has raised in four (4) rounds of venture capital financing over $57M, from Versant Ventures, ATV (Advanced Technology Ventures), Kaiser Permanente Venture Group, New Leaf Partners and private investors.

IMPORTANT LEGAL NOTICE:

The information in this memorandum does not constitute the whole or any part of an offer or a contract.

The information contained in this memorandum relating to GluMetrics’ Assets has been supplied by GluMetrics.  It has not been independently investigated or verified by Gerbsman Partners or its agents.

Potential purchasers should not rely on any information contained in this memorandum or provided by GluMetrics, or Gerbsman Partners (or their respective staff, agents, and attorneys) in connection herewith, whether transmitted orally or in writing as a statement, opinion, or representation of fact. Interested parties should satisfy themselves through independent investigations as they or their legal and financial advisors see fit.

GluMetrics, Gerbsman Partners, and their respective staff, agents, and attorneys, (i) disclaim any and all implied warranties concerning the truth, accuracy, and completeness of any information provided in connection herewith and (ii) do not accept liability for the information, including that contained in this memorandum, whether that liability arises by reasons of GluMetrics’ or Gerbsman Partners’ negligence or otherwise.

Any sale of the GluMetrics Assets will be made on an “as-is,” “where-is,” and “with all faults” basis, without any warranties, representations, or guarantees, either express or implied, of any kind, nature, or type whatsoever from, or on behalf of GluMetrics or Gerbsman Partners.  Without limiting the generality of the foregoing, GluMetrics and Gerbsman Partners and their respective staff, agents, and attorneys,  hereby expressly disclaim any and all implied warranties concerning the condition of the GluMetrics Assets and any portions thereof, including, but not limited to, environmental conditions, compliance with any government regulations or requirements, the implied warranties of habitability, merchantability, or fitness for a particular purpose.

This memorandum contains confidential information and is not to be supplied to any person without Gerbsman Partners’ prior consent.  This memorandum and the information contained herein are subject to the non-disclosure agreement attached hereto as Exhibit A.

GluMetrics, Inc. is a medical technology company that has developed the patented GluCath® Intravascular Continuous Glucose Monitoring (IV-CGM) System (referred to as the“GluCath System”).  The system consists of (i) a fiber-optic based, single-use, disposable sensor that is inserted into either an artery or vein using standard vascular accesstechniques and (ii) a portable battery-powered monitor. The GluCath sensors leverage a proprietary chemistry which changes its fluorescence in proportion to the surrounding glucose concentration.

GluMetrics was focused initially on applying its proprietary technology to inpatient continuous glucose monitoring, a market that could exceed $1.4 billion globally, concentrating solelyon specific critically ill patient segments in the surgical, cardiac and medical Intensive Care Unit (ICU). Significant and successful clinical testing was completed using the first product embodiment in hospitalized, post surgical patients in the US and abroad. The impressive results of this data speak to a significantly de-risked core measurement engine. The Companybelieves that an additional $800 million of upside opportunities exist in the hospital by expanding from the initial core ICU market to general surgeries and the general ward.

With the first commercially viable non-enzymatic sensor technology, the Company also believes that it could exploit the existing outpatient continuous glucose monitoring marketconsisting of three million people with Type 1 diabetes and the need for improved sensor technologies to support safe and effective insulin pump therapy, including the elusive “closedloop” insulin delivery system. Healthy human volunteer studies in diabetics were also completed which helped further confirm the utility and performance of the measurement engine in subcutaneous placements.

GluMetrics believes its assets are attractive for a number of reasons:

Technology “De-risked” with Clinically Proven Success

GluMetrics has completed design, development and clinical testing of its continuous, real-time, non-consumptive, fluorescent glucose measurement technology, which included extensivein-vitro testing and design verification activities. The technology, successfully deployed in the hospital ICU setting, is easily inserted via an existing radial artery cannula, stable requiring only one calibration/day, with exceptional accuracy in the hypo- and euglycemic ranges.

The Technology is Applicable for Numerous Applications

The core chemistry, hydrogel and optical system are configurable for other applications, including CGM for the diabetic population. In addition, potential applications such as for bioreactors and other laboratory measurements are straightforward developments, based on the existing measurement engine.

The Intellectual Property Portfolio is Diverse and Impressive

Twenty-five (25) issued US Patients and Foreign Counterpatents cover the core technology with an additional Twenty-two (22) pending US or PCT patent applications, with Claims that are extremely broad and diverse covering both the intravascular and subcutaneous realms (see Appendix for details).

Well Documented, Repeatable Manufacturing and Quality Procedures

The GluMetrics dye-quencher chemistry, hydrogel and monitors have been manufactured under the Company’s Quality System. The processes incorporated have resulted in repeatable and reliable devices for the uses intended, and are thoroughly documented, including all product and raw materials specifications, manufacturing and inspection processes.

GluMetrics Company Profile and Funding History

GluMetrics, Inc. was incorporated on Jan. 1, 2005. Throughout the course of 2005, GluMetrics, Inc. raised just over $2.9M in series “A” and “AA” capital to fund recruitment, establish theOrange County, California headquarters and advance the development of the fundamental GluCath sensor chemistry.

In July 2006, GluMetrics purchased all assets, goodwill and intellectual property of TGC Research Ltd. from Diametrics Medical, Inc. (“Diametrics”).  All prior art, trade secrets andintellectual property (including seven issued patents still in force) relating to Diametrics’ previous fluorescence-based intravascular systems for blood constituent monitoring is nowexclusively owned by GluMetrics.  Following this transaction, TGC Research Ltd. became a wholly-owned subsidiary of GluMetrics, Inc.

Also in July 2006, the Company closed a $9M series “B” financing to further refine and validate the GluCath System in pre-clinical trials.  This series “B” round was co-led by VersantVentures (Newport Beach, CA) and Advanced Technology Ventures (Palo Alto, CA), with each firm participating at $4.5M.

In March 2008, GluMetrics secured a $3M venture debt financing through Silicon Valley Bank supporting operations through September/October of 2008.

In July 2008, the Company closed a $21M series “C” round financing to continue the development of the GluCath System and initiate clinical trials. This series “C” round was led by NewLeaf Venture Partners (Menlo Park, CA) with significant participation from series “B” investors.

In October 2010, GluMetrics secured $10M in bridge financing from existing investors to initiate clinical trials of an arterial sensor and support ongoing operations.

In March 2012, the Company secured $8M in new equity as part of a recapitalization.  These funds supported the expansion of clinical trials, including extended duration arterial andvenous deployments.

In January 2013, GluMetrics secured $5.6M in bridge financing from existing investors to complete its arterial and venous clinical trials through the second half of 2013.

Impact of Technology on the Market

The GluCath System is ideally positioned to become the clinician’s preferred solution to support glycemic measurement for both the in-hospital and diabetic markets for five primaryreasons:

1)      The GluMetrics fluorescent glucose sensing system is the first non-GOX sensor to be clinically validated in a meaningful multi-center trial with sub-10% MARD results.

2)      The ultimate flexibility and adaptability of the measurement engine will enable broad application across a diverse universe of clinical applications including hospital-based and diabetic patients.

3)      The GluCath sensor measures plasma glucose in flowing blood continuously and directly. Given the non-enzymatic method of measurement, the GluCath sensor is notsusceptible to the numerous interferences and limitations which have affected electrochemical sensors.

4)      The GluCath System is most accurate in the physiologic range where accuracy is paramount (i.e., in the euglycemic and hypoglycemic range).  Additionally, the GluCathSystem provides rapid user feedback on both directionality and rate of change.

5)      The GluCath monitor is configured in a portable, hand-held, battery powered format allowing for flexible and convenient monitoring across the continuum of care (i.e., Pre-op-OR-ICU-Step-Down-General Floor-Outpatient). The GluCath sensor is small enough to be inserted into the radial artery of the arm via a standard arterial catheter, while maintaining pressure monitoring and blood sampling capability.  The sensor can also be deployed directly into a vein using a splittable introducer, leaving only the sensorindwelling in the vessel. Alternatively, it is feasible to deploy the sensor through a central venous catheter or integrated into a novel vascular access device.

6)      The sensor physical size, optical path and chemistry are such that it can be configured for subcutaneous insertion and sensing

In contrast to the GluCath System, potentially competitive devices now known to be under development have significant disadvantages, including larger size, limited mobility, therequirement for unique flush/calibration solutions and greater user-complexity. Additionally, numerous physician interviews have described some of these competitive approaches asfundamentally lacking sufficient accuracy in the target range, algorithmically dropping points, missing glucose excursions, or being too slow to reflect changing blood glucose.

GluMetrics’ Assets

Scope Of GluMetrics’ Patent Coverage

In summary, GluMetrics has a strong patent portfolio, including 25 issued patents, 1 allowed and 21 pending patent applications, with priority in optical fiber-based equilibrium fluorescent glucose detection going back as early as December 2000, and patent terms extending past 2030.  Since licensing the core chemistry, GluMetrics has perfected its commercially valuable innovations in extensive patent filings.  Indeed, the GluMetrics’ patent portfolio creates a minefield for any competitor trying to commercialize an equilibrium, fluorescent glucose sensor, whether intravascular or subcutaneous, whether fluorescence lifetime or intensity, and whether critically ill or walking diabetic populations. (See Appendix for details)

In addition to the GluMetrics’ patent portfolio, the following are available:

·         Clinical and pre-clinical data

·         Design and test equipment used in the development and manufacture of the GluCath system

·         Product specifications, drawings, manufacturing, assembly and quality insurance documentation

·         Furniture, fixtures and tooling used to assemble and/or manufacture the system

·         Test procedures, reports and data supporting the system testing during design and development

The assets of GluMetrics will be sold in whole or in part (collectively, the “GluMetrics Assets”). The sale of these assets is being conducted with the cooperation of GluMetrics.  GluMetrics and its employees will be available to assist purchasers with due diligence and a prompt, efficient transition to new ownership.  Notwithstanding the foregoing, GluMetrics should not be contacted directly without the prior consent of Gerbsman Partners.

The Sale of the GluMetrics Assets is being conducted pursuant to a Resolution of the Board of Directors of GluMetrics, Inc. for the liquidation and dissolution of the company which was approved by unanimous consent of the Board on January 23, 2014. GluMetrics expects the sale of the GluMetrics Assets to be completed without any further vote or action by GluMetrics’ stockholders.

GluMetrics, Inc. Key Personnel

William Markle, President and CEO

With a 30 year career in high-tech medical devices focusing on the Critical Care marketplace (Baxter, Edwards Life Sciences, American Hospital Supply), Mr. Markle has most recentlybeen a senior member of two well-funded and successful medical device start-up companies:  Tensys Medical and Masimo Corp.  Bringing an emphasis on understanding and definingkey customer requirements, operationally building and directing successful marketing, clinical support and direct sales teams, Mr. Markle has a strong record of both successful fund-raising and visionary leadership in multiple “customer-facing” disciplines.  A graduate of Duke University (BSME) and Pepperdine (MBA), Mr. Markle provides a current and real-worldperspective to the creation of shareholder value within the medical device sector.

Stuart L Gallant, VP, Product Development

Mr. Gallant has been in medical device development and management for over 41 years with extensive experience in the design, development and marketing of cardiovascular, patientmonitoring and vital signs devices and systems.  Initiating his career with Medtronic, he has subsequently been a successful medical device entrepreneur involved with creating,managing and developing four prior medical device start-ups, including significant experience with venture- capital financed enterprises, in senior management and Board positions.Coupled with his technical and management background and education (BSEE, MSBME, MBA), Mr. Gallant holds twenty US issued patents in medical devices and nationallyrecognized professional certifications in financial planning (CFP®, ChFC®).

Tricia Zubke, Controller

Ms. Zubke has over 20 years’ experience in accounting, human resources, information technology and all aspects of office management.  Prior to joining GluMetrics, Inc. in 2005, Ms. Zubke worked for a privately-held real estate development company and a recruiting firm specializing in human resources executives.  Ms. Zubke obtained a Bachelor’s degree in business management from Concordia University, Irvine and is a licensed California real estate broker.

GluMetrics, Inc. Outside Board of Directors

·         Mike Carusi, General Partner, Advanced Technology Ventures, Palo Alto,, CA

·         Charles Warden, Managing Director, Versant Ventures, Menlo Park, CA

·         Sam E. Brasch, Director, Kaiser Permanente Ventures, Oakland, CA

·         John Alexander, Santa Cruz, CA

·         Tom Berryman, Laguna Beach, CA

The Bidding Process for Interested Buyers

Interested and qualified parties will be expected to sign a nondisclosure agreement (attached hereto as Exhibit A) to have access to key members of the management and intellectual capital teams and the due diligence “war room” documentation (the “Due Diligence Access”).  Each interested party, as a consequence of the Due Diligence Access granted to it, shall be deemed to acknowledge and represent (i) that it is bound by the bidding procedures described herein; (ii) that it has an opportunity to inspect and examine the GluMetrics Assets and to review all pertinent documents and information with respect thereto; (iii) that it is not relying upon any written or oral statements, representations, or warranties of GluMetrics, Inc., Gerbsman Partners, or their respective staff, agents, or attorneys; and (iv) all such documents and reports have been provided solely for the convenience of the interested party, and neither GluMetrics nor Gerbsman Partners (or their respective, staff, agents, or attorneys) makes any representations as to the accuracy or completeness of the same.

Following an initial round of due diligence, interested parties will be invited to participate with a sealed bid, for the acquisition of the GluMetrics Assets.  Sealed bids must be submitted so that the bid is actually received by Gerbsman Partners no later than March 7, 2014 at 3:00 p.m. Eastern Standard Time (the “Bid Deadline”) at GluMetrics’ office, located at 15375 Barranca Pkwy, Suite I-111, Irvine, CA  92618.  Please also email steve@gerbsmanpartners.com with any bid.

Bids should identify those assets being tendered for in a specific and identifiable way.  The attached GluMetrics fixed asset list may not be complete and Bidders interested in the GluMetrics Assets must submit a separate bid for such assets.  Be specific as to the assets desired.

Any person or other entity making a bid must be prepared to provide independent confirmation that they possess the financial resources to complete the purchase where applicable.  All bids must be accompanied by a refundable deposit check in the amount of $250,000 (payable to GluMetrics, Inc.).  The winning bidder will be notified within 3 business days after the Bid Deadline.  Non-successful bidders will have their deposit returned to them.

GluMetrics reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all assets from sale.  Interested parties should understand that it is expected that the highest bid will be chosen as the winning bidder and bidders may not have the opportunity to improve their bids after submission.

GluMetrics will require the successful bidder to close within 7 business days.  Any or all of the assets of GluMetrics will be sold on an “as is, where is” basis, with no representation or warranties whatsoever.

All sales, transfer, and recording taxes, stamp taxes, or similar taxes, if any, relating to the sale of the GluMetrics Assets shall be the sole responsibility of the successful bidder and shall be paid to GluMetrics at the closing of each transaction.

For additional information, please see below and/or contact:

Steven R. Gerbsman

(415) 456-0628

steve@gerbsmanpartners.com           

Read Full Post »

The Black Swan Pushes Events to the Tipping Point-Maximizing Enterprise Value in the upcoming Crisis – This article was published by Steven R. Gerbsman and Robert Tillman in May, 2007.

Posted in Blog of Intellectual Capital, Gerbsman Partners, Steven R. Gerbsman, Uncategorized, tagged , , , , on January 15, 2014| Leave a Comment »

gp_nl_header

San Francisco, January, 2014
The Black Swan Pushes Events to the Tipping Point-Maximizing Enterprise Value in the upcoming Crisis
This article was published by Steven R. Gerbsman and Robert Tillman in May, 2007.

Please read, enjoy and “be prepared”.

Best regards,
Steve Gerbsman

We are currently in one of the best economic times in our country’s history. The stock market is at all time highs, unemployment is at all-time lows, interest rates are low, money is plentiful and deal valuations are high and getting higher. There are, of course, many worrisome trends: terrorism, excessive government spending, trade deficits, high oil prices, immigration and over the longer term, such issues as an aging population and (possibly) global warming. Although problems and worries always exist, in historical terms, times are very good indeed.

The big questions for us as specialists in maximizing enterprise value are:

Will it end?

Yes. Of course. Even fundamentally healthy economies experience frequent and often violent corrections. The current world economy has evolved in many ways over the past decade. All large businesses are international. The primary economies of the world are very tightly linked together. Money is far more liquid and moves around the world with far less “friction” than it did in the past. The pace of technical change continues to increase. Nevertheless, we do not believe that the laws of history, and especially, the laws of human nature, have been repealed.

As always, “The more things change, the more that they remain the same.”

When will it end?

Unfortunately, no one knows the answer to this question. In historical terms, the current economic expansion has continued for a very long time and has survived numerous shocks, including war, a doubling of energy prices, natural disasters and localized economic downturns, such as the bursting of the sub-prime mortgage bubble. It appears to be “ripe” for a downturn. On the other hand, inherently unstable situations often persist for far longer than anyone could believe possible. During the 2000 Internet bubble, it seemed to us for quite some that the old rules of business no longer applied and that 25 year-old CEOs knew something us old guys did not know. When the crash occurred, we were relieved to find out that we were not so obsolete after all.

We did, however, underestimate the staying power of technically insolvent companies with broken or non-existent business models. Many of these companies had significant cash on the balance sheet (offset, of course, by significant liabilities) and investors who continued to infuse more cash far beyond the point of reason. Today, there exist immense pools of uncommitted cash, much of it in the hands of entities, such as private equity funds and hedge funds that are subject to minim al regulatory scrutiny and whose operations are obscured from the public view. In addition, the weakness of the dollar against both the Euro and the Pound Sterling makes U.S. assets a relative bargain. These factors tend to mitigate against an economic downturn. For how much longer they will continue to do so we do not know (and if we did know, we would certainly would not tell).

How will it end?

Fast, hard and unexpectedly. Two recent books shed a great deal of light on the process:

The first book, The Tipping Point by Malcolm Gladwell describes how human behavior causes events to cascade rapidly once a certain critical mass (the “Tipping Point”) has been achieved. Examples in the business world include periodic economic “panics” and the spread of certain technologies and products, such as personal computers, iPods, cell phones, etc. It is very difficult to predict in advance when the “tipping point” in any situation will be reached, but history has shown that, once it has been reached, events proceed very quickly.

The second book, The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb describes how highly improbable, and hence unpredictable, events periodically create massive change. The title of the book derives from the observation that the existence of even a single black swan disproves the assertion that all swans are white. Historical examples include the Fall of France at the beginning of World War II, the rise of the Internet and 9/11.

There are many obvious candidates for a “black swan” event that pushes the world economy over “the tipping point” into a downturn – a war with Iran, a nuclear terrorist attack or a worldwide bird flu or small pox epidemic, but generally, it is what you do not see that gets you. We are fundamentally optimists about the long-term prospects of the world economy. In many highly measurable ways, the wor ld really is improving, driven by technological innovation, a lowering of barriers to trade and increasing economic integration. Nevertheless, we are old enough to have lived through many “bumps” along the road and know that such discontinuities will always occur. We believe that we will see a significant economic event sometime over the next 12-18 months, either localized to a particular sector or geographic region or globally.

Our Advice?

Before such an event occurs:

As a board member, investor or stakeholder:

1.  Implement tight cash flow, receivables and inventory reporting so that you are alerted to problems early.
2.  Focus on the control, preservation and forecasting of CASH on a weekly, monthly and quarterly basis.
3.  Require “bottoms up” forecasting for all aspects of revenue and expense. Have the CEO and CFO defend ALL numbers.
4.. Hold the CEO responsible and accountable for Performance. If you are off the business plan/forecast, re-forecast based on the reality of “what is” today.
5.  Communicate frequently with all parties at interest. Check that the CEO is providing leadership, motivation and morale to the management team and employees.
6.  Review all companies in your portfolio. Identify and define action plans to fix weaknesses now.
7.  Utilize professional resources to assist in maximizing enterprise value, when appropriate.
When such an event occurs:

Face up to reality and act quickly. When things are going bad, waiting seldom improves them. 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.
Call for assistance early. The earlier professionals can get involv ed in the process, the better the potential outcome in maximizing enterprise value. Many times boards request assistance only after a company has run out of cash. Many more options exist to maximize enterprise value if a company has some running room.
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 79 technology, medical device, life science, digital marketing/social commerce and solar 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, 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, Boston, Orange County, VA/DC, Europe and Israel.

gp_nl_footer

GERBSMAN PARTNERS
Phone: Cell: +1 415 505 4991
Email: steve@gerbsmanpartners.com
Web: www.gerbsmanpartners.com
BLOG of Intellectual Capital: blog.gerbsmanpartners.com

Read Full Post »

The Silly Season Again-Are We in For Another Bubble?

Posted in Uncategorized, tagged , , , on January 8, 2014| Leave a Comment »

The Silly Season Again-Are We in For Another Bubble?
This article was published in March, 2007 by Steven R. Gerbsman and Robert Tillman.

Please read, enjoy and “be prepared”.

Best regards,
Steve Gerbsman

Here are some trends that are presently being observed in the market:

Valuations and Leverage

According to Venture Source, the median venture capital pre-money valuation in Q1 2005 was $15 million, the highest it has been since 2001. In Q3 2006, it is up 20%-40% from 2005. It is a good bet that it will be higher yet in Q4 2006. Although these deals have not reached the $21 million level of 1999 or the $23 million level of 2000, they are getting there. The market is also seeing valuations paid by private equity investors now in the 10X to 12X trailing EBITDA range. Strategic buyers are having a hard time competing at these price levels and Private Equity and Hedge Funds are flush with CASH.

The market is also observing that banks are financing new deals in the 7X to 7.5X trailing EBITDA range. This high level of debt financing is what allows the private equity firms to pay 10X to 12X trailing EBITDA. In many instances, the private equity firms approach a deal with the expectation that they will be able to refinance within a year and then pull out all or a substantial part of their equity investment. Clearly, a deal financed in this way must continue to show substantial EBITDA growth in order for such leverage to be repaid. Such highly leveraged deals are extremely vulnerable to any EBITDA downturn.

As professional turnaround and restructuring people, Gerbsman Partners talks regularly to investors, i.e. lenders, hedge funds, private equity firms and venture capital firms. We also are in contact with most of the top bankruptcy attorneys around the United States and with many investment bankers. The general consensus is that there is a very large amount of cash chasing a limited number of quality deals. Almost every deal of any significant size is professionally shopped by an investment banker, resulting in a highly competitive auction situation and high valuations.

We are also observing that most bank and investment firms are reporting few problems in their portfolios. Bankruptcy attorneys business have been slow. Certainly, most of the 2000 Bubble deals have been cleaned or sold or have died. Nevertheless, we feel that investment firms are simply covering up their problems using the large amounts of cash currently available. Many investment firms are in the process of raising new funds and are thus reluctant to face up to the problems represented by their “living dead” portfolio companies. Even with “healthy” companies, rapid growth often masks underlying structural problems.

Worrisome Developments

Owing to increasingly globalized competition, there is little ability for businesses in many sectors to raise prices. In fact, prices in certain areas, particularly electronics and telecommunications services continue to fall in real terms. As such, we are observing cost pressure on businesses in the following areas.

Interest rate increases will likely continue and there has been a more than 2X rise in energy prices over the past two years, with oil hovering now around $50 – $60 a barrel. Since this rise in energy prices appears to be driven by higher consumption in both China and India, it is likely to be a long-term trend. The effect of this long-term energy price rise is still percolating through the economy.

Health care costs are increasing, which is felt by businesses as the cost of health insurance is also increasing. Part of these increases are owing to an aging population, workman’s compensation and liability insurance costs. We are also observing wage escalations, built in commercial real estate lease rent escalations, an increase in water prices, particularly in the Western United States. There is increasing evidence that we are in the end stages of a residential real estate bubble and currently in a “soft” nationwide soft real estate market. Consumer leverage is up substantially, in large part because of the real estate price increases and the cost of energy and in many instances, the consumer has spent at an unsustainable level by cashing in on the equity value of their homes and short term re-financings are coming due.

Other major uncertainties that we are observing are, the potential for a major terrorist attack in the United States using some form of nuclear weapon, the potential for a major global influenza epidemic on the scale of that of 1918, the potential destabilizing effects of the huge increase in hedge funds and in all forms of derivative contracts. (For the clearest explanation of derivatives and their consequences, see pages 12-14 of Warren Buffet’s 2002 Letter to the Berkshire Hathaway shareholders, an increasing trade deficit and a major ongoing budget deficit).

Conclusions

Increasing business and consumer leverage makes the overall economy vulnerable to any sort of shock. That shock can come from one of the sources we have cited or from ones that we have not yet seen. We are not certain what it will be or when it will come.

Market prices often continue to rise even when everyone “knows better”. For example, Sir Isaac Netwon, the Master of the Mint and likely the smartest man in England at the time of the famous South Sea Bubble foresaw a stock market crash and sold out his holding for a profit of 7,000 pounds. When the market continued to rise, he bought back in and subsequently lost 20,000 pounds. (This was at the time that the annual wage for a skilled craftsman was about 30 pounds). People who invest on the greater fool theory often find themselves looking at the greater fool in the mirror.

Based on the above, we strongly suggest that all equity and debt providers review all their all their portfolio companies and take aggressive steps immediately to address and weaknesses. We also trust that all financing groups seek to maintain pricing discipline in their investments. Based on the reality of 1999 and 2000 era funds, it is far better to miss a deal than to overpay.

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. In the past 60 months, Gerbsman Partners has been involved in maximizing value for 79 technology, medical device, life science, digital marketing/social commerce and solar 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, 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, Boston, Orange County, VA/DC, Europe and Israel.

Read Full Post »

Gerbsman Partners wishes you and your family a Happy, Healthy and Safe Holiday Season & New Year.

Posted in Uncategorized, tagged on January 2, 2014| Leave a Comment »

January, 2014

Gerbsman Partners wishes you and your family a Happy, Healthy and Safe Holiday Season & New Year.
We also say “thank you” to our clients, advisors, business partners and all the people the team has been involved with. Gerbsman Partners’ goals have been and always will be, to “Earn the Trust and Confidence” of our clients, and to maintain the highest standards of “Ethics and Integrity”.

As we enter this New Year, we do so again with “Hope for the Future” and with the belief that the heritage of our nation will continue to demonstrate the values of life, liberty and the pursuit of goodness.

Please accept our appreciation for your past support, confidence and continued trust. May 2014 be a successful and profitable year for you and more importantly, provide a gateway to a bright and prosperous future.

Please also remember that Leaders, Lead; Freedom is not Free and we also should take responsibility for our actions.

May you and your family be healthy, stay safe and enjoy.

Best Regards,

Steven R. Gerbsman

Read Full Post »

Gerbsman Partners – Final Update to the Bidding Process, Procedures for the Sale of certain Assets and Intellectual Property of Spinal Restoration, Inc.

Posted in Uncategorized, tagged , , , on December 30, 2013| Leave a Comment »

Final Update to the Bidding Process, Procedures for the Sale of certain Assets and Intellectual Property of Spinal Restoration, Inc.

Further to Gerbsman Partners e-mail of December 8, 2013 and December 3, 2013 regarding the sale of certain assets of Spinal Restoration, Inc., I attach the draft legal documents and wire transfer information below, that we will be requesting of bidders for certain Assets and Intellectual Property of Spinal Restoration, Inc.  All parties bidding on the assets are encouraged, to the greatest extent possible, to conform the terms of their bids to the terms and form of the attached agreement.  Any and all of the assets of Spinal Restoration, Inc. will be sold on an ‘as is, where is’ basis and will be subject to “The Bidding Process for Interested Buyers”, outlined below.

I would also encourage all interested parties to have their counsel speak with Erik S. Romberg, Esq., counsel to Spinal Restoration, Inc.

For additional information please contact Erik S. Romberg Esq, 512 320 9278
erikromberg@andrewskurth.com

Please review in detail, the “Bidding Process for Interested Buyers” below.

The key dates and terms include:

The Bidding Process for Interested Buyers

Interested and qualified parties will be expected to sign a nondisclosure agreement (attached hereto as Exhibit A) to have access to key members of the management and intellectual capital teams and the due diligence “war room” documentation (the “Due Diligence Access”). Each interested party, as a consequence of the Due Diligence Access granted to it, shall be deemed to acknowledge and represent (i) that it is bound by the bidding procedures described herein; (ii) that it has an opportunity to inspect and examine the Spinal Restoration Assets and to review all pertinent documents and information with respect thereto; (iii) that it is not relying upon any written or oral statements, representations, or warranties of Gerbsman Partners, or their respective staff, agents, or attorneys; and (iv) all such documents and reports have been provided solely for the convenience of the interested party, and Gerbsman Partners (and their respective, staff, agents, or attorneys) do not make any representations as to the accuracy or completeness of the same.

Following an initial round of due diligence, interested parties will be invited to participate with a sealed bid, for the acquisition of the Spinal Restoration Assets. Sealed bids must be submitted so that it is actually received by Gerbsman Partners no later than Friday, January 10, 2014 at 3:00 p.m. Central Daylight Time (the “Bid Deadline”) at Spinal Restorations’ office, located at 9600 Great Hills Trail Ste. West 150 Austin, Tx. 78759. Please also email steve@gerbsmanpartners.com with any bid.

Bids should identify those assets being tendered for in a specific and identifiable way.

Any person or other entity making a bid must be prepared to provide independent confirmation that they possess the financial resources to complete the purchase where applicable. All bids must be accompanied by a refundable deposit check in the amount of $200,000 (payable to Spinal Restoration, Inc.).  The winning bidder will be notified within 3 business days of the Bid Deadline. Unsuccessful bidders will have their deposit returned to them within 3 business days of notification that they are the unsuccessful bidder.

Spinal Restoration reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all of the assets from sale.  Interested parties should understand that it is expected that the highest and best bid submitted will be chosen as the winning bidder and bidders may not have the opportunity to improve their bids after submission.

Spinal Restoration will require the successful bidder to close within a 7 day period. Any or all of the assets of Spinal Restoration will be sold on an ‘as is, where is’ basis, with no representation or warranties whatsoever.

All sales, transfer, and recording taxes, stamp taxes, or similar taxes, if any, relating to the sale of the Spinal Restoration Assets shall be the sole responsibility of the successful bidder and shall be paid to Spinal Restoration at the closing of each transaction.

For additional information, please see below and/or contact:

Steven R. Gerbsman
steve@gerbsmanpartners.com

Kenneth Hardesty
ken@gerbsmanpartners.com

Read Full Post »

« Newer Posts - Older Posts »