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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 »

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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 Nevertheless, we do not believe that the laws of history, and especially, the laws of human nature, have been repealed.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.

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

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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.

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Gerbsman Partners Successful “Date Certain M&A” of Syncapse, Corp., its Assets and Intellectual Property

Posted in "Date Certain M&A Process", Blog of Intellectual Capital, Board Of Intellectual Capital, Gerbsman Partners, Inetellectual Property, Steven R. Gerbsman, Syncapse, Uncategorized, tagged , , , , on September 5, 2013| Leave a Comment »

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San Francisco, September, 2013
Successful “Date Certain M&A” of Syncapse, Corp., its Assets and Intellectual Property
Steven R. Gerbsman, Principal of Gerbsman Partners, Kenneth Hardesty and James Skelton, members of Gerbsman Partners Board of Intellectual Capital, announced today their success in maximizing stakeholder value for Syncapse, Corp., a venture capital backed, technology enabled social performance management services company.

Gerbsman Partners provided Crisis Management and Investment Banking leadership, facilitated the sale of the business unit’s assets and its associated Intellectual Property. Due to market conditions, the board of directors made the strategic decision to maximize the value of the business unit and Intellectual Property by putting the Canadian parent corporation into receivership. Gerbsman Partners was retained by the Receiver and Gerbsman provided leadership to the company with:

1.  Crisis Management and technology/social commerce domain expertise in developing the strategic action plans for maximizing value of the business unit, Intellectual Property and assets;
2.  Proven domain expertise in maximizing the value of the business unit and Intellectual Property through a Gerbsman Partners targeted and proprietary “Date Certain M&A Process”;
3.  The ability to “Manage the Process” among potential Acquirers, Lawyers, Creditors Management, Advisors and the Receiver;
4.  Communicate with the Board of Directors, senior management, senior lender, creditors, vendors and all stakeholders in interest.
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 77 Technology, Life Science, Medical Device, Solar and Social Commerce 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, Boston, New York, Washington, DC, McLean, VA, Europe and Israel.

GERBSMAN PARTNERS
Email: steve@gerbsmanpartners.com
Web: www.gerbsmanpartners.com
BLOG of Intellectual Capital: blog.gerbsmanpartners.com

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Bidding Process – Procedures for the Sale of Syncapse Corp.- its Assets and Intellectual Property – Date Certain M&A Gerbsman Partners

Posted in "Date Certain M&A Process", Gerbsman Partners, Inetellectual Property, Syncapse, Technology, tagged , , , , , , on August 5, 2013| Leave a Comment »

Bidding Process – Procedures for the Sale of Syncapse Corp.- its Assets and Intellectual Property

Further to Gerbsman Partners e-mail of July, 25, 2013 regarding the sale of Syncapse Corp.’s assets and intellectual property (the “Syncapse Assets”), I attach the draft legal documents and refundable deposit wire transfer information that we will be requiring of bidders for the Syncapse Assets.  Gerbsman Partners – http://gerbsmanpartners.com/ has been retained by MNP Ltd., in its capacity as Court-appointed receiver (the “Receiver”) of the property, assets and undertakings of Syncapse Corp. (“Syncapse”, or the “Company”) (http://syncapse.com/), to solicit interest for the acquisition of the Syncapse Assets.  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 agreements.  I would also encourage all interested parties to have their counsel speak with Harvey Chaiton, counsel to the Receiver

For additional information please contact Harvey Chaiton of Chaitons LLP, counsel to the Receiver.  He can be reached at 416-218-1129 and/or at harvey@chaitons.com.

Following an initial round of due diligence, interested parties will be invited to participate with a sealed bid, for the acquisition of the Syncapse Assets. Sealed bids must be submitted so that the bid is actually received by the Receiver no later than August 16, 2013 by 12:00 p.m.Toronto Time (the “Bid Deadline”) at the Receiver’s office, located at 300-111 Richmond Street West , Toronto, ON CANADA M5H 2G4 to the attention of Arif Dhanani.  Please also email steve@gerbsmanpartners.com with any bid.  For additional information regarding bid requirements and considerations, please contact Steve Gerbsman at steve@gerbsmanpartners.com.

Wire Transfer information for refundable deposit required to Bid – 15% of the offer amount (payable to the Receiver, in trust).  The deposit must be wired to the Receiver’s account in advance (information will be provided), or paid by certified cheque, money order or bank draft drawn on a Canadian bank.  The winning bidder will be notified within 3 business days of the Bid Deadline. The deposit will be held in trust by the Receiver.  Unsuccessful bidders will have their deposit returned to them within 3 business days of notification that they are an unsuccessful bidder.

Bank Name:  TD Canada Trust

SWIFT address for TD: TDOMCATTTOR
Correspondent bank is Bank of America, NY, NY
SWIFT address for Bank of America: BOFAUS3NXXX
Fedwire ABA # 026009593
Address: 100 33rd Street West, New York, NY  10001

US dollar account:
Account name: MNP Ltd.
IBAN (institution #) 004, transit #10852, account # 7328451
Branch address: 100 – 220 Commerce Valley Dr. West, Markham ON  L3T 0A8

For your convenience, I have restated the description of the Updated Bidding Process.

The key dates and terms include:
The Bidding Process for Interested Buyers

Interested and qualified parties will be required to sign a Non-Disclosure Agreement (attached hereto as Attachment A) to have access to certain members of management and intellectual capital teams and the due diligence “war room” documentation (“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 acknowledges and agrees to the bidding procedures described herein; (ii) that it has had an opportunity to inspect and examine the Syncapse 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 the Receiver, Syncapse or 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 the Receiver, Syncapse and Gerbsman Partners (and their respective staff, agents, or attorneys) do not make any representations and warranties whatsoever 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 all or part of the Syncapse Assets. Each sealed bid must be submitted so that it is received by the Receiver no later than Friday, August 16, 2013 at 12:00pm Toronto Time (the “Bid Deadline”) at the Receiver’s office, located at 300-111 Richmond Street West , Toronto, ON CANADA M5H 2G4 to the attention of Arif Dhanani.  Please also email steve@gerbsmanpartners.com with any bid.  For additional information regarding bid requirements and considerations, please contact Steve Gerbsman at steve@gerbsmanpartners.com.

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.  All bids must be accompanied by a refundable deposit in the amount of 15% of the offer amount (payable to the Receiver, in trust).  The deposit must be wired to the Receiver’s account in advance (information will be provided), or paid by certified cheque, money order or bank draft drawn on a Canadian bank.  The winning bidder will be notified within 3 business days of the Bid Deadline. The deposit will be held in trust by the Receiver.  Unsuccessful bidders will have their deposit returned to them within 3 business days of notification that they are an unsuccessful bidder.

The Receiver is free to conduct the sale process as it determines in its sole discretion (including, without limitation, terminating further participation in the process by any party, negotiating with prospective purchasers and entering into an agreement with respect to a sale transaction without prior notice to you or any other person) and any procedures relating to such transaction may be changed at any time without prior notice to you or any other person.  For greater certainty, the Receiver 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 and best bid submitted will likely be chosen as the winning bidder and bidders may not have the opportunity to improve their bids after submission.

The Receiver will require the successful bidder to close within 5 days after Court approval of the transaction. The Syncapse Assets 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 other taxes, if any, relating to the sale of the Syncapse Assets shall be the sole responsibility of the successful bidder and shall be paid to the Receiver at the closing of any transaction.

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Gerbsman Partners – Date Certain “Sale of Syncapse Corp. its Assets and Intellectual Property”

Posted in "Date Certain M&A Process", Gerbsman Partners, Inetellectual Property, Receiver, Restructuring, Syncapse, Uncategorized, tagged , , , , on July 25, 2013| Leave a Comment »

SALE of Syncapse Corp, its Assets & Intellectual Property
Gerbsman Partners – http://gerbsmanpartners.com – has been retained by MNP Ltd., in its capacity as Court-appointed receiver (the “Receiver”) of the property, assets and undertakings of Syncapse Corp. (“Syncapse”, or the “Company”) (http://syncapse.com), to solicit interest for the acquisition of  Syncapse’s intellectual property (the “Syncapse Assets”).

Headquartered in Toronto, Canada and with offices in New York City, London and India, Syncapse is a provider of technology-enabled social performance management services for global, enterprise clients with multiple B2C brands.

In July 2012, the Company acquired the assets of Clickable, Inc., as well as its India subsidiary (together, “Clickable”), a leading search and social media ad tech company, with approximately $32 million raised. This added a deep expertise in digital paid advertising, and a skilled, cost-effective R&D and support team based in Gurgaon, India.

Syncapse derives revenue from 3 related lines of business: SaaS subscriptions, Ads and media solutions, and consulting services.

____________________________

IMPORTANT LEGAL NOTICE:

The information in this memorandum does not constitute the whole or any part of an offer or a contract, nor does it purport to contain all information that may be required or relevant to a recipient’s evaluation of any transaction and recipients will be responsible for conducting their own investigations and analysis.

The information contained in this memorandum relating to the Syncapse Assets has been supplied by Syncapse. It has not been independently investigated or verified by the Receiver, Gerbsman Partners, their agents or any other party.

Potential purchasers should not rely on any information contained in this memorandum or provided by the Reciever, Syncapse 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.

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

Any sale of the Syncapse 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 the Receiver, Syncapse and Gerbsman Partners. Without limiting the generality of the foregoing, the Receiver, Syncapse and Gerbsman Partners and their respective staff, agents, and attorneys,  hereby expressly disclaim any and all implied warranties concerning the condition of the Syncapse 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.

Except as otherwise noted, this memorandum speaks as of the date hereof.  The delivery of this memorandum should not and does not create any implication that there has been no change in the business and affairs of Syncapse since such date.  Neither the Receiver, Syncapse or Gerbsman Partners, or their respective staff, agents and attorneys, undertakes any obligation to update any information contained herein.

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

SUMMARY OF HISTORICAL INFORMATION

Syncapse provided technology-enabled social performance management solutions for global, enterprise clients with large brand portfolios. The Company operationalized and scaled social media efforts through its cloud-based, Syncapse Platform, a unified suite of on-demand tools and applications. Key elements of Syncapse’s Platform include: publishing & collaboration, social & search ad management technology, the SocialSYNC™ data management store, and the extensible and customizable Syncapse Analytics Suite. Leveraging this proprietary technology, the Company also offered a robust set of consulting and data services designed to meet the complex requirements required by global brands. Together, Syncapse’s capabilities enabled clients to build brand health and drive incremental reach, frequency, and effectiveness with minimal marketing investment, while delivering a consistent, coordinated customer experience across multiple social media outlets.

Syncapse offered enterprise brands a fully integrated, SaaS-based, social performance management solution which combines paid, earned, and owned media. Syncapse’s comprehensive, unified platform enabled marketers to manage campaigns across all brands, geographies, and social media channels, and is the best solution to bridge the gap between marketing and IT requirements. Syncapse powered the world’s largest multinational corporations including Anheuser Busch-InBev, Alticor Inc. (Amway), The Coca-Cola Company, Diageo PLC, JPMorgan Chase Bank, Johnson & Johnson Limited and L’Oreal Canada Inc..

Syncapse was headquartered in Toronto, Canada with an R&D and support center in Gurgaon, India, and offices in New York and London.

Target Market:
Syncapse was positioned to benefit from accelerating growth in marketing technology budgets and the continuing migration of the social conversation to the C-suite. With the explosive adoption of social platforms like Facebook, Twitter, YouTube, and LinkedIn, social media has become one of the fastest growing segments of digital marketing today, with estimated market size expected to reach $16Bn by 2016[1]. According to Altimeter Group, Global corporations are struggling to manage an average of 178 business-related social media accounts, along with a host of potential legal, compliance, and brand perception risks. Further, use of social media has transformed from simple marketing tactics to sophisticated enterprise-wide strategic initiatives, creating IT challenges involving data, analytics, content management, security, and consumer privacy protection. As a result, global brands are accelerating growth of marketing technology budgets.

Recurring revenue model:
Syncapse generated revenue from three revenue streams: recurring subscription-based software licenses, support and consulting services, a large percentage of which was typically retained and recurring and media and advertising (self-serve and managed).

Customers:
Syncapse’s strong customer base included blue-chip customers such as Anheuser Busch-InBev, Alticor Inc. (Amway), The Coca-Cola Company, Diageo PLC, JPMorgan Chase Bank, Johnson & Johnson Limited and  L’Oreal Canada Inc., among others.

In addition to its enterprise customer base, the company had approximately 100 small and medium business clients that use Syncapse Ads, either on a self-serve or managed services basis.

Proprietary, scalable technology platform that leverages the Company’s industry-leading analytics capabilities.
Syncapse had pursued a client-centric approach to build technology and infrastructure that accepts third-party data integration, created meaningful data visualization and analytics, and enabled efficient, collaborative, global publishing. Following the acquisition of Clickable in July 2012, the Syncapse platform functioned across paid, owned, and earned media – mission-critical in today’s social media marketplace. New platform enhancements also helped global marketers aggregate, normalize, and optimize social data and insights across media channels, brands, and markets. Syncapse had 3 out of 4 Facebook Preferred Marketing Developer badges, and submitted for the 4th, which will put the Company in the elite position of being one of two developers with all four (joining Adobe).

Intellectual Property
Syncapse generated a substantial body of intellectual property in the form of production software (source code, testing tools, APIs), trademarks, and know-how, including familiarity with all relevant social media platform APIs. Details of the Company’s IP (patent filings, trademarks and software) are set out in Appendix B.

THE FOLLOWING FINANCIAL DATA IS PRESENTED FOR INFORMATIONAL PURPOSES ONLY.  PAST PERFORMANCE MAY NOT BE INDICATIVE OF FUTURE RESULTS.  THIS INFORMATION SHOULD NOT BE RELIED UPON TO MAKE FUTURE PERFORMANCE PROJECTIONS OF ANY KIND.  (historical financial data to be supplied upon request for a sales letter by qualified interested partie

The reasons why Syncapse’s assets are attractive are:

Syncapse has historically experienced strong, underlying growth and has been the leader in the field of social media technology and services for the past 5 years. However, recent working capital constraints and an overly leveraged balance sheet have created the opportunity for the sale of the Syncapse Assets.  The acquisition of the Syncapse Assets can enable the purchaser to realize significant short and long term value from exploitation of the subject intellectual property.
·       Enterprise-Class Technology – Syncapse’s products were developed with direct input from some of the world’s largest marketers, including The Coca-Cola Company (Syncapse Platform), Alticor Inc. (Amway) (Syncapse Franchise edition) and Anheuser-Busch InBev (Syncapse dashboard and analytics), and were running in production for these clients and more.

·       Low-cost, highly skilled R&D organization – Syncapse’s R&D and support, were centered in Gurgaon, India, which is a rapidly growing high-tech suburb of New Delhi. Previously with approximately 80 employees, and an average annual salary cost of $27,000, Syncapse India was a cost-effective, scalable R&D and support centre. The team averaged 4.6 years of work experience, 28 years of age, 2 years of tenure with the company, with >50% of the product development team graduating from Tier 1 schools in India.

·       R&D Investment: Syncapse invested over $25 million in R&D, with Clickable having invested approximately a further $11 million in R&D prior to its acquisition by Syncapse. This combined R&D investment, of approximately $36 million, resulted in mature, production SaaS platforms, tools and test suites that were the result of hundreds of man-years of software development.

·       Robust Growth: Syncapse’s revenue was historically heavily concentrated with RIM/Blackberry, which accounted for as much as 89% of the company’s revenue in 2009, but <10% in FY2013. As RIM reduced its marketing spending, due to its own market challenges, Syncapse had to backfill the decline in RIM revenue with other enterprise clients. While top-line revenue growth appears flat and net income performance has been volatile, the Company had underlying, year-over-year growth, ex-RIM, with the addition of major enterprise clients during periods of significant investment in product development.

·       Attractive Industry – Digital advertising and marketing, and social media in particular, is growing at a rapid rate, as companies continue to shift marketing budgets away from traditional media to new, consumer-direct relationships. With the explosive adoption of social platforms like Facebook, Twitter, YouTube, and LinkedIn, social media has become one of the fastest growing segments of digital marketing today, with estimated market size expected to reach $16Bn by 2016[2]. According to Altimeter Group, Global corporations are struggling to manage an average of 178 business-related social media accounts, along with a host of potential legal, compliance, and brand perception risks. Further, use of social media has transformed from simple marketing tactics to sophisticated enterprise-wide strategic initiatives, creating IT challenges involving data, analytics, content management, security, and consumer privacy protection. As a result, global brands are accelerating growth of marketing technology budgets.

·       Diversified Base of Customers – Syncapse’s customer base is comprised of some of the world’s largest B2C brand marketers across a range of industries. The list includes: Anheuser Busch-InBev, Alticor Inc. (Amway), The Coca-Cola Company, Diageo PLC, JPMorgan Chase Bank, Johnson & Johnson Limited and L’Oreal Canada Inc., among others,

·       Excellent Relationships – Syncapse’s strength was predicated on strong relationships within and outside the social media industry. Syncapse achieved 3 out of 4 Facebook Preferred Marketing Developer certifications (only one company, Adobe, has achieved all 4), and had senior level relationships across Facebook, Twitter, LinkedIn, Google, and other major players in the social media space.

·       Opportunity for Future Growth  – Opportunities for growth can be realized by fully exploiting the global nature of the client contracts that are in place (Master Services Agreements, SaaS Platform Licensing Agreements) by taking advantage of the existing client base, and selling into local and regional client groups and new business development of the SaaS applications running in production.

·       Market Position: Syncapse was a significant enterprise-focused, social media company in a group that included Adobe, Oracle and Salesforce, each of which had added similar capabilities via acquisition. While Syncapse was not the biggest of the group, it had the advantage of being one of the first entrants into this early-stage market, and an exceptionally strong reputation for providing a combination of social media and data solutions to global enterprise clients.

·       Corporate Agreements in Place: The Company’s Master Services Agreements and/or SaaS License Agreements are in place with the following companies: Anheuser-Busch InBev; Alticor (Amway); Diageo PLC; Goodyear Dunlop Tires Operations S.A.; Johnson & Johnson Limited; JP Morgan Chase Bank; L’Oreal Canada Inc.; Reckitts Benckiser Corporate Services Limited; The Coca-Cola Company, and several smaller entities.

[1] Forrester Group

[2] Forrester Group

The Bidding Process for Interested Buyers
Interested and qualified parties will be required to sign a Non-Disclosure Agreement (attached hereto as Attachment A) to have access to certain members of management and intellectual capital teams and the due diligence “war room” documentation (“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 acknowledges and agrees to the bidding procedures described herein; (ii) that it has had an opportunity to inspect and examine the Syncapse 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 the Receiver, Syncapse or 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 the Receiver, Syncapse and Gerbsman Partners (and their respective staff, agents, or attorneys) do not make any representations and warranties whatsoever 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 all or part of the Syncapse Assets. Each sealed bid must be submitted so that it is received by the Receiver no later than Friday, August 16, 2013 at 12:00pm Toronto Time (the “Bid Deadline”) at the Receiver’s office, located at 300-111 Richmond Street West , Toronto, ON CANADA M5H 2G4.  Please also email steve@gerbsmanpartners.com with any bid.  For additional information regarding bid requirements and considerations, please contact Steve Gerbsman at steve@gerbsmanpartners.com.
 
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.  All bids must be accompanied by a refundable deposit in the amount of 15% of the offer amount (payable to the Receiver, in trust).  The deposit must be wired to the Receiver’s account in advance (information will be provided), or paid by certified cheque, money order or bank draft drawn on a Canadian bank.  The winning bidder will be notified within 3 business days of the Bid Deadline. The deposit will be held in trust by the Receiver.  Unsuccessful bidders will have their deposit returned to them within 3 business days of notification that they are an unsuccessful bidder.
 
The Receiver is free to conduct the sale process as it determines in its sole discretion (including, without limitation, terminating further participation in the process by any party, negotiating with prospective purchasers and entering into an agreement with respect to a sale transaction without prior notice to you or any other person) and any procedures relating to such transaction may be changed at any time without prior notice to you or any other person.  For greater certainty, the Receiver 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 and best bid submitted will likely be chosen as the winning bidder and bidders may not have the opportunity to improve their bids after submission.
 
The Receiver will require the successful bidder to close within 5 days after Court approval of the transaction. The Syncapse Assets 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 other taxes, if any, relating to the sale of the Syncapse Assets shall be the sole responsibility of the successful bidder and shall be paid to the Receiver at the closing of any transaction.
 
Management Team at Syncapse (for information purposes only):
 
Michael Scissons, Founder & CEO
Serial entrepreneur, tech enthusiast and social media veteran, Michael is the chairman, founder and CEO of Syncapse. Since its launch in 2007, Syncapse has been firmly rooted in Michael’s passion for developing innovative and accessible technology. It is these beliefs that have enabled Michael to grow Syncapse internationally—spanning the US, Canada, Europe and India—and to serve the world’s largest global brands. An avid writer and sought after industry pundit, Michael regularly contributes to many industry-leading sources including Bloomberg West, Advertising Age and Fast Company.

In 2010, Michael was awarded Ernst & Young’s prestigious Emerging Entrepreneur of the Year award. Before Syncapse, Michael led Facebook media sales in Canada as Director of Facebook Media within the Interpublic network. He worked with pioneering brands to integrate their marketing into Facebook starting in early 2006. Michael graduated from the University of Saskatchewan, where he debuted businesses based on concepts he’d developed since the tender age of six.

Sarah Johnson, SVP Brand Partnerships and Managing Director
Sarah is a member of the Executive Team and leads the Client Solutions consulting group. She has worked on the client and consulting areas of the business, having started her career in marketing at Microsoft and Wyeth Consumer Healthcare, followed by a shift to consulting for a technical marketing firm. Sarah has been with Syncapse from the beginning, supporting   our major clients’ successful growth in social media. Sarah is well versed in the challenges associated with social media management, ranging from gaining internal buy-in to setting a coordinated enterprise strategy with regional flexibility and ultimately understanding what drives success. Sarah is based in Toronto. Outside of the office, she loves to travel the globe in search of new adventures.

Sundeep Sahi, SVP Engineering and Managing Director (India)
Sundeep comes to Syncapse from Clickable with extensive software development and management experience, bringing expertise in the Internet, security and distributed technologies. He has held management and technical   roles in large companies like Microsoft and Aditi, and start-ups like Talisma and eLiveBooks.

Prior to his time at Clickable, Sundeep worked at Microsoft on a variety of products including Biztalk Server and Distributed Application Server; he was responsible for services design and architecture.
Sundeep has a Bachelor of Technology degree, with Honors in Electrical Engineering, from Kurukshetra University, India.

Fred Rolff, CFO
As CFO, Fred is responsible for managing Syncapse’s growing financial, legal, IT and administration infrastructure, maximizing revenue growth across all markets. Fred’s previous roles include Vice President of Finance at Tremor Media, Vice President and Controller at The Knot, and CFO at both MeMedia Inc. and Sentigen Holding Corp. He also served as Director, Financial Strategy for Rare Medium Group and Supervising Senior Accountant at KPMG, giving him a unique array of finance, accounting, and operating experience.

Applying the wealth of knowledge he has accumulated over the years, Fred ensures that we maximize our investment in the Syncapse product to maintain its world-class quality. Fred holds a Bachelor of Science degree in Accounting from Villanova University and an MBA in Finance from Fordham University.

For additional information

Steven R. Gerbsman – steve@gerbsmanpartners.com

Kenneth Hardesty – ken@gerbsmanpartners.com

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