Posts filed under ‘Interim Management’
The Brenner Group Celebrates 25 Years
As I reflect back on the past 25 years, the company and I have seen many changes in Silicon Valley. The types of industries that venture firms invest in has changed dramatically, and there have been a number of business cycles – both up and down. (more…)
Judging the Gigabit Challenge
Rich Brenner has been named a judge for The Gigabit Challenge, a global business plan competition to find disruptive ideas and bright passionate entrepreneurs. (more…)
What is the “Zone of Insolvency” We Keep Hearing About, and What Must an Officer or Director Do Once They Enter This Zone?
During the past few years, most small companies have heard someone refer to the Zone of Insolvency, and reference how dangerous this is to the Directors and Officers.
In this post, we will review what the definition of “zone of insolvency” is, and what Directors and Officers are supposed to do, and say, if they find themselves in or approaching this zone.
Insider Trading – Are VCs Dealing Themselves Inside Rounds?
Brian Broughman and Jess Fried put forth a study recently on insider rounds in venture-backed companies: Do VCs Use Inside Rounds to Dilute Founders? Some Evidence from Silicon Valley.
As the name implies, inside rounds are rounds of investment by existing investors, versus outside rounds that are led by new investors.
In our valuation practice, we are often confronted with clients having gone through inside rounds, and we need to make a determination if the pricing of those investments provides an indication of value of the equity of a company (regardless of which class of shares; but usually invested as preferred equity). Each case is different, but often such an investment is not a good indicator of value as it lacks arm’s length characteristics.
Although Broughman and Fried only cover a very limited geography (Silicon Valley), a very limited time frame (companies that were sold in 2003 and 2004), and had very specific exit circumstances (M&A), it provides a welcome quantitative analysis of such inside rounds. (more…)
The Latest IPO Bumps
This is my second blog posting on IPO Bumps of VC backed companies. The IPO Bump refers to the difference between a stock option’s exercise price and the price of the company’s shares at the IPO. There has been some speculation on whether 409A rules (among other factors) are leading to the end of the IPO Bump. However, a sampling of recent tech IPOs indicates IPO Bumps are alive and well, although the magnitudes of the Bumps can differ significantly among IPO issuers. (more…)
Recent IPOs and the IPO Bump
The “IPO Bump” refers to the difference in the exercise price of stock option grants and the offering price at the IPO. The theory is that employees are sometimes granted stock options with strike prices that are at a discount relative to the IPO price (especially in the period immediately preceding the IPO). There has been some speculation on whether 409A rules (among other factors) are leading to the end of the IPO Bump.
IRC 409A requires the company to estimate the fair market value of its stock at the time of an option grant. As a venture capital backed company grows successfully and starts aiming for an IPO exit, the fair market value of the stock should grow as well, in theory. If the company had perfect foresight, the discount relative to the IPO price should decrease the closer the company gets to an IPO. (more…)
Where Are All the Tech IPOs in 2011? Part One.
2011 started off as a year anxiously anticipated by investors and tech-watchers alike: the tech IPO market would return. Typical of the sentiment was the DealBook post on Dec 30, 2010: Is 2011 the Year of the Blockbuster Tech I.P.O.?
Several positive indicators underscored that sentiment: rebounding stock market, low interest rates and a poor real estate market suggesting that growth stocks could be attractive investments, several big name private companies were raising institutional funds at billion dollar valuations, and anecdotally the local law firms all spoke to the resurgence in their S-1 filing activity and often referred to a healthy “IPO pipeline”. So confidence in a tech IPO resurgence was high. But with a third of the year gone, there have been few notable IPOs and while activity is up over 2010, we’ re not seeing the kind of breakthrough IPO activity including the big name consumer internet players that most had expected. What happened? (more…)
Bubble Watch – Part 3: Cloud Computing
In our first two installments of bubble watch, we looked at cleantech and social gaming. Of course, our trilogy wouldn’t be complete without also considering cloud computing. (more…)
Bubble Watch – Part 2: Social Gaming
In my first bubble watch installment, I took a look at the cleantech industry. To continue our search for the latest bubble, we direct our attention towards the area of social gaming:
A search for “social gaming bubble” on Google returns a whopping 266,000 results. Move over, cleantech! The search in the news section shows an increase from 22 hits in 2009 to 87 in 2010. Getting closer. (more…)
Bubble Watch – Part 1: Cleantech
The end of the old year and the beginning of the new year always lends itself to a retrospective on the past and speculations on the future. And what could be more enticing to speculate on than the latest financial bubbles; a worthwhile topic since 1637, when some single tulip bulbs in Holland sold for more than 10 times the annual income of a skilled craftsman.
So here goes our list of contenders for 2011 bubbles: (more…)
