Posts filed under ‘Restructurings’
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…)
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…)
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…)
Is Strong IPO Market Momentum Benefiting VC Backed Companies?
PwC just released its US IPO Watch which tracks IPO activity on US stock exchanges. According to PwC, “…the surge of activity in the fourth quarter of 2010 confirms the IPO market has recovered from the doldrums of 2008 and 2009.” (more…)
Focus.com Seminar on Financial Management of SMBs
Focus.com is hosting a teleconference featuring a panel of senior CFOs with extensive tech sector start-up experience on Thursday, January 20 at 11AM PT/2PM ET. The subject is tips and trends in managing finances and cash in early stage companies.
If you are an entrepreneur or CEO of an early stage company, and you are considering additional financing from current or potential investors, then this session should help you stay on top of the finance issues that are most important to growing your business and attracting additional financing. For more information on the event, go to http://www.focus.com/events/finance/focus-finance-roundtable-financial-planning-and-management-s/ and register.
Super Angel versus Venture Man
There has been much noise recently about who’s the better investor: the newly minted Super Angels, or the traditional venture capitalists of Sand Hill Road.
The debate has been carried out rather openly, and the borders of straight-talk, self-promotion, and honest reflection have become somewhat blurred.
The basic question is whether it’s better to take a limited amount of money from Super Angels – say between $100 thousand and $1.0 million, or shoot for the moon and go to Sand Hill Road where a self-respecting Series A starts with $5.0 million. Super Angels are loosely defined as business angels with more money making a lot more investments. (more…)
December 17, 2010 at 10:58 am Gunther Hofmann Leave a comment
Does 409A kill the IPO Bump?
Several Silicon Valley bloggers have been pondering the question of whether 409A rules are leading to the end of the IPO Bump. The IPO Bump refers to the difference in the exercise price of stock option grants and the offering price of an IPO. In particular, several companies, such as Facebook, have had trades in privately held common stock reported on sites such as Sharespost.com. For instance as one blogger, Don Dodge, put it “The effect of the 409A requirement, and the new movement of private investors buying vested stock options from employees, is that pre-IPO valuations, and thus the employee stock option prices are very close to the expected IPO price. So, how will there be a big bump in the stock price at IPO?” See Will Facebook have an IPO Bounce? Has 409A Changed the Game? for his full posting.
