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jerryking : selling_off   9

Secondaries Report
Jul 1, 2003 | Venture Capital Journal | by Carolina Braunschweig.

While the jump in corporate sales is primarily due to macroeconomic factors, each sale is unique. Details on some of the more p...
corporate_investors  secondary_markets  selling_off 
4 weeks ago by jerryking
Vulture Capital
Jan 7, 2002,

** Scavengers pick through a killing field of corporate investment portfolios.

It's garage sale time at Polaroid. Now in bankruptcy, the company is selling.....an investment portfolio with stakes in a handful of tech startups, including Colorado MicroDisplay and ActivePhoto of Sunnyvale, Calif.......Such clearance sales are becoming commonplace.... The secondary market saw $1.5 billion in sales in 2001, a 150% increase since 1997. Faced with recession and a collapse in their once-buoyant tech speculations, some firms are rushing to unload venture portfolios, either by closing the fund and writing down the value or by selling the portfolio. Lucent and mobile phone retailer Hikari Tsushin are just two of the companies said to be looking to dump VC portfolios........One of the scavengers picking through the detritus is Nick Harris, general partner of Lexington Partners in New York. Last year Lexington paid $1 billion for 70 partnership interests from Chase Bank after it acquired J.P. Morgan. Lexington dropped another $1 billion buying a portfolio from Royal Bank of Scotland.

With $5 billion under management that it raised from banks, insurance companies and other institutions, Lexington is one of the biggest buyers of secondary stakes. In the mid-1990s buyers got an average 25% discount from the original investors' prices; today they buy at up to 40% discounts. Desperate sellers have even given away their portfolios for free in exchange for a share of future returns. "In some cases we're happy to pay a good price for the assets," says David Park of Paul Capital, in San Francisco. "In other cases they need to give us an extreme discount.
corporate_investors  culling  exits  secondary_markets  selling_off  start_ups  vc  venture_capital 
december 2019 by jerryking
CIBC Acquires Accenture's Tech Venture Portfolio - WSJ
Aug. 6, 2002

In a move that surprised some secondary market executives, CIBC World Markets said Tuesday, Aug. 6, it has purchased most of Accenture Ltd.'s venture capital portfolio for an undisclosed price.

The Hamilton, Bermuda, consulting firm will retain 5% of the portfolio, which comprised 80 early- to mid-stage technology companies, mostly in software. Accenture has paid about $325 million for minority stakes in them.

Accenture, which rode the venture capital investment wave starting in 1999 with an intent to invest $500 million, is one of many corporate venture capitalists to exit the industry now that returns have soured. It has shopped the portfolio around to secondary-market buyers at least since March, when Accenture said it was halting new venture capital investments and selling its venture portfolio because of its losses. At that time, it reported a book value of about $95 million for the portfolio and said it would take a charge of $212 million in the second quarter to cover anticipated losses from the sale. No additional charges are expected in connection with this sale.

CIBC, the New York investment arm of the Canadian Imperial Bank of Commerce, was a surprise buyer. It has not been an active buyer of secondary private equity interests for at least 18 months, despite frenetic dealflow coming from corporate venture portfolios.

"Acquiring portfolios with direct investments is a much different game than buying limited partnership interests in venture funds," said Scott Conners, a principal at Landmark Partners Inc. of Simsbury, Conn. "It's much less diversified, and managers of corporate venture units don't normally have the same disciplines as the traditional venture fund managers. Also, even if they had the requisite management skills, why not handpick your own investments rather than acquire other people's baggage?"

According to sources, Accenture had been negotiating with frontrunner Thomas Weisel Partners LLC of San Francisco. Credit Suisse First Boston, retained as investment adviser, was also believed to be a potential buyer. Neither could be reached for comment.

CIBC gave no details on the transaction, due to close at the end of the year. As with all secondary market transactions, it remains subject to transfer approvals from companies within the portfolio.

Some secondary market sources said they had given Accenture's offer a "quick look" but declined because the portfolio consisted of direct investments that are tougher to manage or require undetermined extra financing to make them viable.

"They've been trying to sell for a long time now, and it didn't look spectacular to me," said one potential New York buyer.

Conners added: "Many corporate venture deals tend to be 'me-too' deals that they pay a high price for."

CIBC executives described the deal as "an attractive investment" opportunity.

"The acquisition clearly demonstrates our commitment to the technology sector generally and software specifically," said Marshall Heinberg, a CIBC World Markets managing director and head of U.S. corporate finance, in a statement.

It isn't clear whether the transaction will include the transfer of any managers from Accenture Technology Ventures, the Palo Alto, Calif., business unit that made the original investments, to help manage the assets.

CIBC's venture group, consisting of six investment professionals, makes direct investments as part of CIBC Capital Partners. Its portfolio currently includes about 50 companies, primarily in North America. Since its inception in 1989, CIBC Capital Partners has invested more than $1 billion.

The firm would not elaborate on its secondary market activities, but one New York-based secondary specialist said CIBC hasn't bought such interests since a $300 million purchase nearly two years ago.

Accenture, which split from Arthur Andersen LLP and was formerly known as Andersen Consulting, said it will continue its existing client relationships with companies in the portfolio.

Accenture made only direct investments in companies, putting in $2 million to $30 million, according to New York financial markets research firm Capital IQ. Portfolio companies include AltoWeb Inc., a Palo Alto-based supplier of application production platforms, and Epylon Corp., a San Francisco-based online procurement company.

Accenture and CIBC World Markets also said they plan to join an alliance to offer CIBC access to Accenture's technology-sector knowledge.
Accenture  CIBC  corporate_investors  early-stage  economic_downturn  exits  mergers_&_acquisitions  portfolio_management  secondary_markets  selling_off  start_ups  venture_capital 
november 2019 by jerryking
Labels in finance have become meaningless     | Financial Times
OCTOBER 18, 2019 | Financial TImes | by Tom Braithwaite.

In the hunt for returns, investment banks now offer credit cards and hedge funds sell books

Some of Goldman’s investment bankers fear the company’s diffuse range of activities dilute its core role. Once, Goldman Sachs touted itself as “a leading global investment banking and securities firm” advising on mergers and trading debt and equities, Goldman is now: a venture capitalist investing in the likes of Uber and WeWork; a retail bank offering accounts and short-term loans to ordinary consumers; a credit card issuer in partnership with Apple; and a software developer with a suite of applications. ....The finance industry is now full of companies uncomfortable in their own skins and trying to adopt more fluid identities. Blackstone, notionally a private equity firm, today makes more money from property. BlackRock, famous as one of the world’s biggest owners of public equities, is now getting into private equity buyouts. Elliott Management, an activist hedge fund, has ended up owning a football club, AC Milan, and two bookstore chains, Barnes & Noble and Waterstones. Barriers are breaking down and labels are fraying......It is this yield-starved world that sends financial companies roaming far and wide in a hunt for returns.....the IMF has pointed to renewed risks from pension funds’ headlong rush into alternative assets. The allocation to alternatives such as property and private equity has risen from just over 5 per cent in 2007 to more than 20 per cent today. The IMF warns of Woodford-like runs on a grand scale when investors rush to withdraw assets from such “open-ended funds”, yet another misnomer. “Such runs could force fund managers to engage in fire sales, further depressing asset prices, inflicting losses on other market participants, and, in the extreme case, increasing the risk for the financial system,” the economists warned. Always read the label, but never rely on it.
alternative_investments  Blackstone  BlackRock  Elliott_Management  finance  Goldman_Sachs  layer_mastery  selling_off  special_sauce 
october 2019 by jerryking
How One Investor Made a Fortune Picking Over the Retail Apocalypse - WSJ
By Khadeeja Safdar and Miriam Gottfried
March 21, 2018

While private-equity firms and public investors have been shying away from traditional retail, Sycamore has made bigger bets on the sector. It bought Staples Inc. in September for $6.8 billion—the largest U.S. leveraged buyout of 2017.... strong demand from pension funds and other institutions to co-invest to tap Sycamore’s retail wizardry.

With Sycamore’s strategy, it isn’t necessary to spruce up a purchased company. The firm often buys struggling retailers and sells off their most valuable pieces. It cuts costs at whatever remains, sometimes using the savings to extract dividends.

The firm tells investors its returns “need not depend” on successfully identifying growth opportunities for its retail targets, according to documents for its new fund.

Sycamore also extracts returns from clothing chains by acting as a middleman between them and suppliers, using a company it owns to sell inventory to the retailers, sometimes as they struggle to remain solvent, according to industry executives and court filings.....“Sycamore is the best of the bunch in the retail sector,” .....Sycamore’s team doesn’t usually get involved in day-to-day operational decisions such as selecting merchandise and designing store layouts, preferring instead to hire consultants and veteran retail executives, said former executives at some of its portfolio companies.
apparel  bricks-and-mortar  cost-cutting  investors  private_equity  retailers  selling_off  Staples 
march 2018 by jerryking
Imagine if Merrill had been smart like Goldman | Features
13 October 2011 | | Breakingviews |By Rob Cox

Imagine if Merrill Lynch had been smarter, like Goldman Sachs, a few years ago. The investment bank would have realized it was holding too many dodgy mortgage securities and sold them off to buyers who didn’t yet think the market would blow. Those clients might have then landed in trouble. But Merrill would have avoided a fire sale to Bank of America.

That’s the basic premise behind the latest film to emerge in the financial crisis genre, “Margin Call.” The movie, which premiered at Sundance and is slated to open in U.S. theaters next week, presents, however clumsily, a fictional morality tale with real parallels in the Wall Street banking panic that began in 2007.
Merrill_Lynch  Goldman_Sachs  films  movies  economic_downturn  Wall_Street  selling_off 
october 2011 by jerryking
No time like bankruptcy for squeezing competitors
July 13, 2009 |The Globe & Mail | George Stalk Jr.

In bankruptcy, your competitor's major issue is a shortage of cash - which is what led it into bankruptcy in the first place. Take advantage of it.

You can put pressure on that shortage by further straining your rival's ability to generate cash, or boost the cash it needs to run its business, forcing your competitor to yield market share, customers, product and service offerings. It is fight versus flight for the bankrupt competitor.

How to raise the cash ante? Consider some of the following tactics:

Introduce extended terms. Offer your competitors' customers longer payment terms. Your rival will either lose the business of customers that bite, or be forced to do the same, thus reducing its ability to generate much-needed cash.

Consignment pricing, where the customer pays only after the product is sold, is the ultimate extended term and will be difficult for a competitor in bankruptcy to match.

Boost marketing expenditures. Raising your advertising and point-of-sale spending will have a similar effect: Either your competitor will also have to spend more, or risk losing customers that you attract.

Lengthen the "tail" of the revenue stream. Add more after-sale services and spiffs - if your competitor has to do the same, it will raise the cash costs of getting and keeping customers.

Launch more products. New product development and introduction eats up a lot of cash - and a cash-short competitor is unlikely to be able to do the same. If you go all out, introducing many more new products than a bankrupt competitor possibly can, you could make your rival's offering obsolete in the minds of customers, forcing it into fire sales in a panic to raise cash.[JCK: panicked selling off of assets]

Pursue your competitor's most profitable customers (perhaps identified via geofencing). Good management teams know where their company makes and doesn't make money. Great management teams know this about their competitors.

This insight can be used to target customers, geography, products and services of the bankrupt competitor to gain market share.

The competitor will be hesitant to counter your move against its most profitable customers because it needs the cash these customers generate. It will be more likely to maintain the status quo with these customers in the hopes the cash will keep coming.

Lawsuits. Now is the time to file the lawsuit you've always wanted to. Your bankrupt competitor will not have the discretionary resources to fight and will likely come to terms quickly.

There are also broader strategies to consider. Among them:

Sell against the competitor. When companies are in trouble, customers may worry that they won't be around to service products or provide future upgrades.

This fear can be a powerful weapon: These customers may be persuaded to take their business to companies on a sounder footing.

Go after the best talent (poaching). Anxiety about the plight of the competitor will be just as rampant among your rival's employees and suppliers as it is among customers. You can leverage that angst by going after top talent and strong suppliers - and offer terms and conditions that your competitor will have a tough time matching.

Force the sale of attractive assets held by your bankrupt competitor. A competitor in protection is not its own boss. The creditor committee is likely to care more for the cash it can get from an asset sale than who buys the assets.
bankruptcies  BCG  competition  competitive_advantage  consignment_pricing  geofencing  George_Stalk_Jr.  hardball  lawsuits  marketing  new_products  offensive_tactics  poaching  product_development  selling_off  supply_chain_squeeze  tough-mindedness 
july 2009 by jerryking
Information Haves and Have-Nots - WSJ.com
Sept. 22, 2008 | Wall Street Journal | by L. Gordon Crovitz.
Piece on the ramifications of not having access to good information has
had on pricing securities. No one asks the right questions as research
analysts desert Wall Street.
======================================
...The credit crunch can be reduced to a single word. Not "greed," which also exists in stable markets. The word is "information," the absence of which has put taxpayers on the hook for billions, ruined Bear Stearns and Lehman Brothers, and led to the fire sale of Merrill Lynch and AIG. The continuing absence of information about the true value of underlying securities means no one knows when the market has hit a new normal for the important purpose of rebuilding.

Why did so many smart people at so many top firms make dodgy investments? Why were there so many unknown unknowns, now at least becoming known unknowns? One explanation is the absence of warnings from research analysts. For decades, the large Wall Street brokerages had armies of analysts who, when they did their jobs right, asked the hard questions and issued tough reports that often alerted both company executives and public investors to market-moving issues.

There are now about half as many Wall Street analysts as in 2000......."Research analysts have gone the way of high-button shoes and buggy whips." Alas, unknown risks have not. The now-former senior executives at Bear Stearns, Lehman and Merrill must wish they had been able to retain all their star banking analysts. Those analysts just might have waved enough red flags -- in public or even in the hallways of the banks themselves -- to alert management to risks in their portfolios......a few of those analysts left these Wall Street firms for the "buy side," such as hedge funds, which keep their research proprietary, for their own trading. Predictably, it was well-informed short sellers at these firms who first alerted the market to the true value of credit derivatives and other mispriced instruments by driving down shares of firms such as Lehman.

At a time when real understanding is at a premium, we're increasingly in a world of information haves and have-nots......A corollary is that proprietary information will be more valuable than ever, giving well-informed traders an even bigger edge.

What's the solution? The temporary ban on short selling of financial firms will have the unintended effect of worsening the information gap. Professionals will perform the equivalent of short selling through nontransparent instruments and markets, leaving individual investors to be guided by public share prices that no longer reflect all known information......Part of the answer came in news earlier this month that Credit Suisse will make macroeconomic research from its analysts available to noninvestor clients of Gerson Lehrman Group, a powerful force in the world of independent research such as for hedge funds. Equity researchers from Credit Suisse joined the some 200,000 expert consultants that Gerson Lehrman has attracted to its network.......Clients of Gerson Lehrman pay hefty fees to tap this deep knowledge through one-on-one phone calls and meetings. Serving these clients will help Credit Suisse fund its 700-person research department.

When Gerson Lehrman launched a decade ago, it was to serve the deep information needs of investors in highly technical areas such as health and biotechnology. As Wall Street analysts began to leave the scene, it brought on experts in virtually every industry globally, with 150 research managers to help clients conduct more than 10,000 consultations monthly. These are often on arcane topics, such as the likely growth in salmon farming in Norway, or the odds of success for a particular drug trial. Perhaps some research was even done on, say, the proper pricing of derivatives.

Regulators can try to put genies back in bottles, but complex financial instruments that, when properly used, create value will only become more commonplace. Innovation will also be required for better-informed markets. By recruiting a huge number of experts and using online social-media tools to connect them to clients, firms like Gerson Lehrman can bring information, knowledge and insights to the people who most value and need it.
arcane  asking_the_right_questions  buy_side  equity_research  expert_networks  financial_instruments  Gerson_Lehrman  hedge_funds  information  information_gaps  information-poor  information-rich  L._Gordon_Crovtiz  market_intelligence  proprietary  regulators  research_analysts  selling_off  short_selling  uncertainty  unintended_consequences  unknowns  Wall_Street 
january 2009 by jerryking

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