10.20.2016 maximizing value for distressed venture companies
TRANSCRIPT
Moderator: Alexander B. Kasdan, Senior Managing Director, DelMorgan & Co.
Panel:
• Kimberly A. Posin, Partner, Latham & Watkins LLP
• Haim Zaltzman, Partner, Latham & Watkins LLP
• Richard Munro, Managing Director, Newport Board Group
• Neil Morganbesser, Co-Founder, President & CEO, DelMorgan & Co.
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MAXIMIZING VALUE FOR DISTRESSED VENTURE COMPANIES
October 20, 2016
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MODERATOR: Alexander B. Kasdan, Senior Managing Director,DelMorgan & Co. With extensive experience in investment banking, corporatelaw and restructuring at world’s leading firms, including Credit Suisse FirstBoston, O’Sullivan Graev & Karabell LLP (now O'Melveny & Myers LLP), BattleFowler LLP (now Paul, Hastings, Janofsky & Walker LLP) and Schlumberger Ltd.,and as a founding partner of Convergence Capital Partners, Alex brings more thantwenty years of senior-level Wall Street advice to middle market companies,entrepreneurs and institutional investors.
Alex is a Senior Advisor to Governance and Transactions LLC, an advisory firmestablished in 2003 by Mr. James L. Gunderson, former Secretary and GeneralCounsel of Schlumberger Limited, to assist boards, management and owners withcorporate governance, compliance, structuring and strategic transactions.
Alex is a frequent moderator and an interviewer at Expert Webcast roundtablediscussions attracting business leaders and leading professionals from around theworld.
Alex graduated magna cum laude from Middlebury College with a B.A. degree inEconomics and Italian and was elected to Phi Beta Kappa during his junior year. Inaddition, he holds a J.D. degree from Columbia University Law School and hasstudied at the University of Florence in Italy. He is admitted to the Bar in the Stateof New York.
100 Wilshire Blvd.Suite 750Santa Monica, CA 90401+1 310 980 [email protected]
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Panelist: Kimberly A. Posin is a partner in the Los Angeles office of Latham & Watkins LLP and is a member of the Finance Department and the Restructuring, Insolvency & Workouts Practice.
Ms. Posin specializes in representing corporate debtors and secured lenders in all aspects of bankruptcy proceedings, but she has also represented unsecured creditors’ committees and equity holders.
Ms. Posin previously served a two-year term on the firm's Associates Committee and is presently co-managing the firm's bankruptcy training program and serving on the firm’s Pro Bono Committee.
Ms. Posin holds a JD from University of California, Berkeley, School of Law (Boalt Hall) and a BS from University of Southern California.
355 South Grand AvenueLos Angeles CA [email protected]
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Panelist: Haim Zaltzman is a partner at Latham & Watkins LLP and specializes in technology, energy and healthcare financings, with a particular emphasis on the emerging growth space.
Over the course of the last few years, Mr. Zaltzman has closed more than US$3 billion in venture, structured and royalty debt financings in the healthcare, energy and technology emerging growth space, and his expertise has been featured in CFO Magazine, The Recorder, the International Financial Law Review, Law360 andVCExperts.com.
Mr. Zaltzman also advises on a wide range of other finance-related transactions: he has advised on renewable energy finance transactions of more than US$3 billion for wind, geothermal and solar facilities, led almost US$2.5 billion of technology-related private equity credit financings, and represented lessors and lessees in almost US$1.5 billion of capital and operating lease transactions. Mr. Zaltzman also has deep experience with syndicated credit facilities, middle market transactions, asset-based lending, and secured transactions matters involving intellectual property. Mr. Zaltzman represents companies, lenders, funds and venture capital firms.
Mr. Zaltzman was named a “Rising Star” by Super Lawyers magazine. He was the editor of the Stanford Journal of International Relations and served as a Fulbright Scholar in Russia. Mr. Zaltzman received a JD from Harvard Law School, a MA from the Russian Academy of Sciences and a BA from Stanford University. Prior to joining Latham & Watkins, Mr. Zaltzman practiced law in the New York office of Skadden, Arps, Slate, Meagher & Flom LLP.
505 Montgomery StreetSuite 2000San Francisco, CA [email protected]
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Panelist: Richard Munro is Southern California Managing Director for Newport Board Group,, a unique national professional services firm with 75 partners in 18 major US markets. Newport Partners each bring over 20 years of active Board and CEO level experience in multiple industries and diverse markets, and work with their clients to drive significant enterprise value improvement from serving as Directors, and advisory and consulting services.
Richard has 30 years’ experience bringing effective leadership to growth and underperforming businesses and improving their performance, measured by outstanding growth in revenue and market share, profits, return on capital employed, and value to shareholders. He has held senior management positions as a CEO, CFO, COO, and CRO, Court appointed Receiver and strategic advisory positions, and has served as a Director on public and private company boards. He combines the unique experiences of a Director, CEO and CFO, and has extensive international experience in growing the top line and bottom line in companies with a strong focus on managing operations and increasing cashflow and enterprise value for shareholders.
(949) 910-6600Richard.Munro@NewportBoardGroup.comwww.NewportBoardGroup.com
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Panelist: Neil Morganbesser is co-Founder and President & CEO of DelMorgan & Co. where he provides senior leadership within the firm and helps oversee all client engagements. Mr. Morganbesser is also CEO of Globalist Capital LLC, DelMorgan’s broker-dealer affiliate. Mr. Morganbesser has over 20 years of experience providing financial and strategic advice to a full range of clients, including entrepreneurs, large corporations, governments, family businesses, private equity funds, and special committees of public companies.
Mr. Morganbesser has been affiliated with some of the leading institutions in the world, and his experience ranges from representing the offshore owners in the sale of a small, private U.S. company for $10 million to representing the special committee of a large, public company in a $9 billion negotiated management buyout with a highly complex financial structure.
Mr. Morganbesser has truly global experience with the most sophisticated transactions, across a broad range of industries and in a large number of jurisdictions, as the lead banker on a wide variety of transactional and other advisory assignments, including domestic and cross-border mergers, acquisitions, joint ventures, sales and divestitures, restructurings, special committee assignments, unsolicited acquisitions and hostile defense. With transactional experience in over 30 countries, Mr. Morganbesser has successfully advised on over 75 transactions.
Until May 2008, Mr. Morganbesser was the head of West Coast and Asia Mergers & Acquisitions at Bear Stearns & Co., as a Senior Managing Director based in Los Angeles. Prior to joining Bear Stearns in May 2001, Mr. Morganbesser was an investment banker in the Mergers, Acquisitions and Restructuring Department at Morgan Stanley (in New York from 1993-1998 and in Los Angeles from 1998-2001). From 1990-1993, Mr. Morganbesser was a corporate and M&A attorney at the preeminent New York law firm of Wachtell, Lipton, Rosen & Katz.
Mr. Morganbesser graduated with an A.B. magna cum laude in Applied Mathematics / Economics from Harvard University (Phi Beta Kappa) in 1986 and received his J.D. and M.B.A. degrees (Order of the Coif, with honors) from Stanford University in 1990.
100 Wilshire Blvd.Suite 750Santa Monica, CA 90401(310) [email protected]
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MAJOR TOPICS
• Financial v. operational distress• Turnaround options• Restructuring v. sale• Treatment of intellectual property• Valuation issues• Capital availability and financing alternatives• Accounting considerations
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3 Stages of Business Decline
Resulting from distress
1. Early Stage
2. Mid Stage
3. Late Stage
Management’s Response• Resistance to environmental change• Delusion• Business as usual• Denial• Lack of granular analysis & info• Uncontrolled costs• Reluctant to seek expert advice• Blame everyone else - lenders• Leadership crisis• Panic • Forced to relinquish control
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5 Steps in Crisis Situation
1. Triage - check the vital signs- Buy time, formulate plan, business viability?
2. Change the leadership, if necessary3. Restore credibility with lenders & creditors4. Execute turnaround plan5. Restore business to financial sustainability or asset
dispositionCrisis - No place for elegance or “white gloves”
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6 Steps for PE/Venture Investors in Crisis
• Face reality about the trends, & act decisively• Early intervention is always better
• More options, cheaper solutions, more time to execute rational plan
• Retain independent expert professionals for best results• Time is the enemy in cash sensitive situations• Crisis business situations require unique experience & skillsets• Bring credibility to external stakeholders, lenders & creditors• Get stakeholder buy in for a viable turnaround & restructuring plan
• Get granular on financial performance & trends• Focus on cash and current value – ignore sunk costs• Consider the interests of creditors in addition to equity
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Wisdom
The first responsibility of a leader is to define reality. Max De Pree
The biggest curse a company can have is 20 years of success.Peter Drucker
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