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| Cash-rich companies that do not depend on bank financing will continue to buy up smaller rivals, helping to sustain M&A activity over the next six months, according to a study. M&A activity will also come from companies who are forced to trim down operations due to the economic downturn or private equity firms selling companies as they breach debt covenants or get hit by a worsening global economy, M&A advisors said. |
| (Source: Reuters, 2008-10-23) |
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| The federal government last year fell just shy of its goal of giving small businesses almost a quarter of its contracts, but the U.S. Small Business Administration warned that the error-filled data submitted by agencies may have falsely inflated the government's numbers. SBA acting Administrator Sandy Baruah estimated that federal agencies overstated their progress by $5 billion to $10 billion last year by improperly claiming that small firms received work that actually went to large corporations. |
| (Source: The Washington Post (free reg. req'd), 2008-10-23) |
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| Two new laws affecting importing and exporting enacted this summer impose some of the most burdensome requirements American importers have faced in years. While the intent of these two measures is noble enough -- improving protections against unsafe consumer goods and preventing the illegal logging that's devastating a number of developing countries -- the way they're being implemented is changing the way importers structure their operations and deal with the federal government. |
| (Source: Entrepreneur.com, 2008-10-24) |
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| Despite the federal government's best efforts, banks are hoarding cash. It may be 2010 before the credit climate improves. |
| (Source: BusinessWeek, 2008-10-22) |
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| Silicon Valley and the wider technology industry are bracing for such troubled economic conditions that very few venture capital-backed start-ups will dare make Wall Street debuts before 2010, a new survey suggests -- a prospect that has entrepreneurs and the VCs who fund them reassessing strategic goals. The grim outlook for initial public offerings was a key finding in a survey of senior tech executives that also found that hopes for a short "V-shaped" recession seemed to have all but disappeared: 85 percent of the survey respondents "think we are in for another year or more of the current economic conditions." |
| (Source: SiliconValley.com (free reg. req'd), 2008-10-20) |
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| Successful inventors, entrepreneurs and writers say they are often asked where their big ideas came from. They will acknowledge that serendipity often plays a role. But equally as important, they say, is having an open mind -- especially in tumultuous times like these. |
| (Source: The New York Times (free reg. req'd), 2008-10-22) |
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| By recognizing financial problems early and making moderate reductions, small firms can avoid more severe cuts later on, experts say. Companies that ignore warning signs can erode their profits with rising costs, and those that borrow to meet those costs can wind up insolvent. |
| (Source: BusinessWeek, 2008-10-24) |
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| Private equity houses are having to inject more capital into the companies they own to shore up balance sheets and stave off default as increasing numbers of private equity-owned firms are showing signs of stress. |
| (Source: Reuters, 2008-10-21) |
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| Following two straight years of reporting declines in the number of new lawsuits and regulatory proceedings -- including a drop in large-dollar cases -- U.S. companies now anticipate an uptick in new actions and government probes, as well as the need to hire more in-house litigation staff to help manage the expected rise in disputes, according to an industry study on litigation trends. |
| (Source: Insurance Journal, 2008-10-21) |
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| To preserve cash, many tech start-ups are rushing to lay off employees and cut expenses. They are shelving their dreams of Google-size riches and getting small, humble and thrifty, all with the more modest goal of surviving the coming economic winter. |
| (Source: The New York Times (free reg. req'd), 2008-10-26) |
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| Steve Humke |
John Thornburgh |
The Rise of "Academic Capitalism"
A recent report by the Farm Foundation found an increase in entrepreneurship on college campuses, specifically in the area of crop biotechnology. More and more higher education institutions are maintaining the legal rights to own and control the patents relating to new discoveries which has generated licensing revenue and numerous start-up companies. According to the study, "the values and interests of academic researchers are the primary drivers of university scientists' research agendas."
Read the entire report from the Farm Foundation.
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"It's official: The U.S. IPO market has seized up completely, with a record-setting stretch of inactivity that began in August.
It's been 10 weeks since a company has held an initial public offering in the U.S., the longest period on record since Thomson Reuters began tracking deals in 1980. The last deal occurred on Aug. 8, when Rackspace Hosting Inc. made its debut on the New York Stock Exchange."
Source: Wall Street Journal
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| Steve Humke |
Mergers & Acquisitions magazine recently asked Steve Humke to weigh in about the upswing of the U.S. dollar, and whether its volatility has any implications for the M&A environment. His excerpt appeared in their November 2008 issue.
Here's what Steve had to say:
"We’re still seeing a number of deals in the sub $100 million middle-market. It has certainly slowed down but we remain cautiously optimistic that the next six-to-12 months will continue to be consistent. One trend we are witnessing is that companies are selling divisions that fall outside of their core competencies to help pay down their debt and build up their war chest. Companies are also quicker to sell distressed divisions and less patient when it comes to waiting for revenues.
Finally, like real estate, it’s a buyers market now and we expect to see that trend continue into 2009. We can also expect to see the debt market improve in the next six months. One variable is certainly the outcome of the November presidential election. Many companies are worried what the election will mean to the current tax rate on capital gains. One thing is for sure, everyone from Wall Street to Main Street will be waiting patiently in the wings to see what an Obama or McCain victory will mean for investors."
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November
November 5 - Council for Resource Development's 2008 Annual Conference
November 6 - Indiana Chamber of Commerce's 19th Annual Awards Dinner with Newt Gingrich
November 7 - IBJ's Influential Women Event
November 13 - Keep Indianapolis Beautiful's 2008 A Monumental Affair
November 19 - Ice Miller Labor Seminar: Re-Engineering Indiana's Workforce
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Ice Miller has been active in the private equity industry for over 25 years, representing both management teams building great companies and the private equity firms and individuals that invest in them. We have extensive experience with all types of funds (formations and operations); mezzanine and senior secured financings; leveraged buyouts, roll-ups, build-ups, and consolidations; divestitures and exits; and complex litigation on behalf of investors and privately financed companies.
Read the complete profile of the Private Equity and Venture Services Practice Group.
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