In Reel Time

2010.46: LAVA’s annual private equity breakfast

Within the private equity universe the world is back on track and the eighteen-month nuclear winter is over. PE buyers are seeing many more deals and multiples have jumped (up to 12x plus in healthcare deals). One caveat is that getting debt financing to buy a company with less than $5 million in EDITDA remains tough.

Diligence has gotten more rigorous (including from the limited partners who are doing much more themselves – immeasurably so).

Return expectations are down to 20%, with many funds willing to go lower if a provable safety level can be established (lower return but less risk). Deal structures with respect to percentage bought are more flexible; but structures such as PIPES or other creative securities don’t meet the bar with many of today’s more conservative LP’s.

With the public markets having largely recovered institutions are no longer over-allocated in PE funds so funds are raising money again. LP candidates are increasingly foreign, with China and Australia being mentioned during the panel discussion. And the contracts themselves are going to a more “European” model not the straight 20/80 split of yester year…meaning that the investors get their money back and a floor return before the profit is shared. Any terms that used to allocate the GP 20 percent early are being denied by the LP’s.

What are PE investors looking for? Same as always: management team, culture, a good grasp of financials, clear use of proceeds and a competitive advantage (strong business). Twelve to fifteen slides and an executive summary is better than a fifty plus page book.

Exits? Sure. After eighteen months – during which the market often wouldn’t fairly price a good company – a backlog of potential companies to be exited does exist. But all the panelists agreed that while valuations have risen we aren’t at a frothy market top so they are only feeling a slight nudge to sell some portfolio companies. This LAVA panel consensus differs from the opinions of many PE firms focused on larger deals, where enormous dry powder and a strong high yield market are driving multiples.

Good companies, as always, are hard to find. But if you have one and want a private equity partner I can introduce you to four just from this panel who are actively looking.

Panelists:
Steve Moore – Brentwood Associates
Mark Rosenbaum – Aurora Capital Group
Michael LaSalle – Shamrock Capital Advisors
Alain Rothstein – Vicente Capital Partners

2010:44 Due diligence; better to identify problems early on

People entering the panel room.

I was a panelist at the recent Digital Hollywood conference. The topic was Venture Funding, Investment and Mergers. One question made me really think. In the context of a busted deal, we were asked how to head off surprise issues which can crater a potential company sale. The answer is to do your (generally extensive) due diligence both thoroughly and as quickly as possible.

But how exactly does company’s management go about doing that diligence?

Again, an easy answer does exist: hire the right investment bankers, lawyers and perhaps accountants. Sometimes a private investigator is also hired. But that answer only gets someone part way. Because ultimately management will live with the results of that diligence and therefore must stay involved, or appoint someone senior from the company to fill that role.

So what does doing your due diligence entail?

On a typical M&A transaction the bankers or lawyers representing the seller will put together a data room based on an extensive list of documents. We’ll then set up conference calls between the relevant parties to discuss questions that aren’t covered within the documents provided, or that stem from them.

Confidentiality of information is always an issue; even if an NDA is in place. Anything too proprietary must be kept confidential (and can be covered in any purchase or other agreement) and information is typically provided on a need to know basis. Sometimes it can also be disclosed to a company’s lawyers or accountants but not directly to management. Such sensitive information includes: technology, customer information, product sales mix and employee information. Indeed, some contracts may also limit what information can be shared with third parties.

On the disclosure side most bankers (and lawyers!) will encourage their clients to disclose any potential “smoking guns” upfront. If you have an issue which may scuttle the deal better to let the party know before you open the kimono, give them more information and ultimately waste everyone’s time. Either they can accept the information and move forward or not. And, nothing undermines credibility more than such an issue being discovered by the other party later in the process (which can scuttle the deal and possibility lead to a lawsuit).

Experts can also be brought in to do the diligence in niche, specialized areas like technology, industry or product.

What general topic areas are covered in the diligence process? Each list of items is customized for the respective company and its industry. Generally, the basics include: financials (audited, if possible) going back five years, customer and sales information, product information, facilities, legal information, general corporate information (such as articles of incorporation, board minutes, etc), marketing, employee information, retirement and health plans, environmental information, patents or other technology-related information and more.

Due diligence is a process that must be done thoroughly and with care. Missing something important can be a very costly mistake. In the long run, hiring experts when necessary is a wise financial decision.

Guy Hands is a chump; or, M&A 101

In 2007, British private equity firm Terra Firma Capital Partners – controlled by one Guy Hands – bought legendary British music company EMI Group for £4 billion ($6.3 billion).  Citigroup played a dual role in the deal, acting both as sell-side advisor and as provider of acquisition financing for Terra Firma.

The deal has been a disaster.  EMI still owes £3 billion in debt to Citigroup.  The company is groaning under the weight of that debt and the continuing carnage in the music industry, declining sales of music CD’s, widespread piracy and growing but less lucrative sales of digital music.  Citigroup would have already foreclosed on the company if Terra Firma had not put over £100 million of additional cash into the company to make required debt payments.

So now Terra Firma is suing Citigroup, claiming that Citi defrauded Terra Firma when Citi’s banker told Guy Hands that Cerberus was also bidding for EMI and Terra Firma would have to top Cerberus’ bid to win the property.  The trial started Monday in New York.

To which I reply, Guy Hands is a chump.

I don’t know the facts.  Citi could have told Terra Firma anything under the sun as far as I am concerned.  But it doesn’t matter.  Guy Hands and the rest of Terra Firma’s management have a fiduciary duty to their investors.  Even without reviewing the EMI purchase agreement, I am quite confident that there are no seller’s representations or warranties that Cerberus wanted to buy EMI.  Cerberus may have bid, or they may not have; but it doesn’t change the fact that Terra Firma should have done its diligence and concluded that they wanted to buy EMI at the price they paid.

David, you breathlessly ask, does that mean you lie to buyers about what is going on in the sales that you are managing for your clients?  No, it doesn’t mean that.  I play hard for my clients but I play fair.  I would not be stupid enough to answer a buyer’s question unless answering it serves my client.  If a bidder asks me what it takes to win, I will answer as authorized by my client.  If that same bidder asks me where competing bidder XYZ is coming in, I will likely tell that bidder to bid like they may not get another chance to acquire the property, because they might not.

And if a master of the universe like Guy Hands thinks that the company I am representing is worth more because a third party wants it, then I probably won’t go out of my way to disabuse him of that party’s interest.  But I won’t lie to him.

Finally, when you read about this trial in the papers, keep in mind that Citigroup provided over $4 billion in debt financing for the transaction.  Yes, they made two fees on the 2007 transaction – both the sell-side advisory fee and the financing fee.  But the profitability of the transaction is at risk because Citi did not successfully syndicate that debt and so stands to lose serious money if EMI can’t pay them back.  That doesn’t sound like the behavior of a bank that thought they were selling Guy Hands a pig in a poke, does it?

I know business is hardball, and Guy Hands is probably suing Citi to pressure them for concessions on the debt financing.  Maybe it will work.  But it’s bullshit.  Man up, Guy, admit (at least to yourself) that you overpaid for EMI, and don’t go looking for someone to blame for your potentially career-wrecking mistake.

Comments, anyone?

The Wall Street Journal has covered this saga well recently, here, here and here.  Subscription required.

2010.42 Digital Hollywood Day One: Comments about Michael Eisner’s Keynote Interview

Michael Eisner was the first keynote speaker at Digital Hollywood in Los Angeles today. He was engaging and funny. I liked him; and I didn’t have preconceived notions.

Key points:

1. The first thing he wanted to talk about was his new game coming out via Facebook on November 1. Lesson: we are all working at a conference. Don’t lose sight of why you’re really there.

2. He is very positive on the movie industry; the worse shape it’s in, the more he likes it because that focuses creativity.

3. “Making movies for less can often lead to a better movie because you’re forced to be creative”.

4. With a spectacular hit the genre overtakes the industry, whether or not that makes sense.

5. You “should not bring an audience to the cost of a movie”. For them, it’s about the experience. Tiered pricing brings the audience into factors that shouldn’t be allowed to impact their experience.

6. “Nothing will replace 2,000 years of story telling”.

7. “I like going places where you can’t fall off the floor”. Meaning – things are so bad you can only take them up.

8. “The king of bankruptcy and risk is here in Hollywood,” where so many creative projects fail. Keep that investment in a box so that it doesn’t take down the whole organization. Silicon Valley comes next in the risk spectrum.

9. A historic brand is a museum. Ultimately, what matters is the product (stop making product and you’re dead).

10. The changes in the entertainment industry are less than those within the general economy.

11. Social media is just a different business. Like the TV business is different from the toy business.

12. Entertainment, by definition, is about change.

As I write these words of wisdom out I realize that I heard a visionary speak today. He seemed so down to earth at the moment.

2010:40 Exit strategies: practical realities for 2010

As I often say, I grew up in and out of Silicon Valley with a dad in high-tech. So, early on I knew what venture capital is (along with “chips”, “boxes”, “burn rate” and other valley lingo). The valley has changed; most of the orchards are gone and Tully Road is lined with company headquarters not the stables I visited in my teens.

Some things haven’t changed: Steve Jobs, Stanford University and the dead (cell) zone between Sand Hill and Page Mill Roads on 280.

But I’ve been surprised recently by the number of VCs saying – publicly and on panels – that any company looking for funding needs to have an exit strategy based around likely corporate buyers. Basically, a company sale instead of an IPO. The basis? The practical reality is that VC backed IPOs (no, wait, all IPOs) have gotten fewer and harder to complete.

According to PWC in a recent report, during Q2 2010 the number of IPOs filed tripled to 39 (raising $16.6 billion) from 12 (raising $5.1 billion) in 2009. But that number was down from the comparable period in 2007 during which 79 deals raised $21.1 billion. And the numbers being filed have been tapering each month. 15 IPOs were pulled or postponed in the latter two months of the quarter.

While the stats on VC-based M&A exits I’ve heard have ranged – the reality is that company sales are now the prevalent exit strategy for most VC funds. (And, to be fair, I think that any stats with respect to recent exits has to consider the impact of the bad economy over the past two years; the IPO market may not have been open but many companies were going belly up and not deprived of capital due to market issues – though those definitely existed as well – but rather operating ones).

So, anyone can quote numbers. What is the deeper analysis?
Key trends have changed:

1. Being a public company is much more expensive than it was ten years ago (I heard a quote from a lawyer yesterday saying that SOX compliance alone can cost $1 million per year these days).
2. Law suits, director liability, increased governmental encroachment into business affairs, complicated tax structures, uncertainty of future regulations and taxes…
3. I know my part of the world: smaller middle market or growth companies. Scale and deep pockets help in an economic downturn with more limited access to capital.
4. The larger companies are sitting on pools of cash (if lucky) and willing to buy growth.
5. The IPO market is still tough. VCs and their investors don’t always want to, or can’t, wait.
6. Even after a company completes an IPO, it often takes a year or two for the investors to get liquid on their stock – assuming it is still a decent valuation. A sale gets investors all/most of their liquidity at closing.
7. The role of the research analyst has changed (contact me offline on this point, if interested).
8. VC funds have had a bad ten year period overall (with the industry, though not all funds, being down for the period). They need to show some positive returns and M&A has been more closable than IPOs.

I’ll stop there because otherwise I’ll venture too far into opinion and politics.

But the practical lesson is that M&A is now – correctly or incorrectly – viewed as the probable exit strategy. You better know who might be a good potential buyer for your company when meeting with investors.

Saying that an M&A exit was the expected outcome used to be heresy. Now it’s the “new normal” (with a bow to PIMCO for the phrase).

Photo credit to Ana Berman

2010.46 Confidentiality

I was in San Francisco earlier this week meeting with some very exciting companies. These trips are always fascinating as I learn about the related company, its industry and often much more. After the last trip I sat down and tried to encapsulate some of what I learned in a blog posting. And threw what I wrote away.

The posting read like gibberish: in order to honor the requisite confidentiality requirements (inherent in such a meeting) I had to leave the best details out.

I’m like that at dinner parties too. In such a social context I can be the most boring person in the room.

“What are you working on?”
“This and that,” I’ll reply.
“Oh, not busy; too bad,” may be the response.
“No it isn’t that; I just can’t discuss any of my transactions,” I’ll say and get an eye roll and then maybe a joke.

Investment bankers walk a fine line. On the one hand, our core value proposition is what and who we know. We make introductions and can update management on what we’re seeing in the industry and on the financing or M&A front. But we can’t disclose any information that has been shared in confidence. The balance is delicate.

I always say that if I mention a company to someone I’m not currently working with that company (unless I’m mentioning it in the context of bringing you into a deal). But, I have gotten calls from management out of the blue when they received an unexpected offer. Facts change. But the need for discretion does not.

Having been to law school I have an innate sense of caution when it comes to information sharing. Early in my career I then worked with numerous public companies (where the wrong slip can be catastrophic). I also (many moons ago) had a senior managing director threaten me if I didn’t stop sharing confidential information over a cell phone (land line only – not easy in that he traveled 80% of the time – I learned).

On this trip I took a few pictures in San Francisco; one of which headlines this blog posting. None were of buildings in which I had a meeting. Confidentiality agreement or not, we carefully protect the information with which we’re entrusted.

2010.45 Consolidation: or one industry evolution which often repeats

All the lessons of history in four sentences: Whom the gods would destroy, they first make mad with power. The mills of God grind slowly, but they grind exceedingly small. The bee fertilizes the flower it robs. When it is dark enough, you can see the stars.
Charles A. Beard

This morning I was speaking with David Cremin of DFJ Frontier (VC) and drinking some excellent coffee. The topic turned at one point to industry consolidation.

My initial point had been that select media related spaces will likely consolidate at some point (and indeed are starting to do so). This theme has been a big one for me lately and its roots arise from the industry consolidations I saw early in my career as a tech banker in Menlo Park. A number of companies that I’ve spoken to recently have had a potential acquirer lurking nearby – whether or not they are interested in selling.

Why do emerging industries sometimes evolve quickly into consolidating ones?

1. Emerging industries that get press and attention tend to grow quickly, have large markets, attract talented people, have multiple and iterative stages of evolution and scale. All of those factors also enable easier funding – either from business partners or venture capitalists.

2. Sometimes, as a result, they get over funded with multiple VC firms each owning a like company (and all of these heavily funded companies must slug it out in a fast moving, ever changing business sector to win market share).

3. New industries or business segments are hard to build. Business models are often based on precedent: like industries that targeted similar customers and monetized in related ways. In other words, you guess a lot, hopefully making reasoned guesses. A lot of mistakes are made (and some companies blow up) as a workable business model develops through trial and error. Google wasn’t the first search engine.

4. To build market share faster some companies wisely merge. This action can enable economies of scale, a better customer experience (more offerings; better geographical reach; better or deeper management team) and add audience/customers. Should the public markets be open the merger could create an entity large enough to go public; thereby becoming better funded than competitors.

5. The market can only support so many like companies (and it’s better to sell what’s left of a beaten company and realize some value from what you’ve built than none).

6. Buying something (capacity; products; customers; geographies) takes less time and money than developing it does. This factor can also lead to larger public companies buying into a new and emerging sector.

7. Selling later in the consolidation stage is often not as lucrative as selling earlier. The first companies snapped up typically get more resources to build their presence in the industry, giving them an advantage (and harming those that remain independent). The holdouts need to execute very well to maintain an early leadership position.

8. VCs may push for a sale to ensure that their portfolio company partners with other stronger sector players and they get a good return.

Other reasons do exist, including factors unique to different industries and companies.

For any industry in which scale, often ideally built quickly, is important (most) – such as media or (often) consumer technology – consolidation concerns are very relevant. What would you do if your biggest competitor was bought by a Fortune 100 company? Winning over a customer already dominated by a better funded and more established company can be a losing proposition. Best to seize your advantage early on once the consolidation winds start blowing.

2010.42 ESOP: an alternative to a traditional company sale or outside investment

An ESOP is a tax qualified retirement plan in which the ESOP becomes a shareholder of the company and also provides retirement benefits to employees. Unlike most retirement plans it can borrow money to buy company stock while also providing tax benefits to business owners selling stock to the plan. Essentially, in a leveraged ESOP the ESOP or its corporate sponsor borrows money and provides the lender with a guarantee that it will make contributions to the trust enabling the trust to pay back the loan on schedule. Related Internal Revenue Code provisions include 1986 provisions Section 401(a), Section 4975(e) and Section 407(d) (6).

As a defined contribution plan the ESOP must comply with certain requirements. It must meet minimum eligibility and participation levels. It must be non-discriminatory with respect to highly compensated employees relative to those not highly compensated, and meet related limits on contributions. It must be designed to invest mainly in the company’s securities . The purchased stock is held in trust to be released to employees over time. For existing shareholders the plan provides liquidity and a favorable tax treatment when the ESOP buys over thirty percent of the company’s shares. As stock is vested to employees the company gets a tax-deductible compensation expense. Thus existing shareholders can cash out and other employees can purchase company shares. This structure is an alternative to an outright sale of the company and especially useful where the founders or other shareholders want to achieve liquidity while other shareholders want to retain or expand their ownership (but can’t necessarily fund the related share purchases upfront).

Investment in the company’s securities, should, on balance, be over 50% of the holdings. Permissible securities are typically most classes of public and private stock (the latter subject to voting right and dividend preference requirements), with certain debt sometimes making the grade. An independent appraiser must value the securities once a year. The securities of S corporations qualify but the sponsor loses certain tax benefits (and state law must be checked: California, for example, imposes a 1.5% income tax on all S Corporations).

If the requisite conditions are met, capital gains on non-publicly tradable stock of a C corporation can be deferred or permanently avoided. Since ESOP contributions are tax deductable, a corporation which repays an ESOP loan can essentially deduct principal and interest from taxes. And, dividends paid on ESOP stock passed through to employees or used to repay the ESOP are tax deductible if the corporate sponsor is a C corporation. If the sponsor is an S corporation, dividends can be used to pay the ESOP but there is no tax deduction (an S corporation doesn’t pay corporate income tax).
Typically annual contributions of 25% of eligible payroll are allowed, the funds being used to pay off debt principal and interest. Exception on interest payments (allowing them to be paid with contributions above the 25% above) exist.

A participant reaching 55 years old with at least ten years participation in the plan must be given the option to diversify his/her assets outside of the company stock. The percentage goes up over a defined period of years. The diversification can either be done within the plan or cash distributed to the individual for outside diversification.

Some common uses of ESOPS in ownership succession planning:
-Minority interest stock purchase in which only a minority of shares are sold to the ESOP
-100% ESOP leveraged buyout where existing shareholders cash out entirely

This explanation is a very simplified overview of a leveraged ESOP. Check with your advisors for specifics on the applicability for your company.

This data is based upon a more detailed piece written by lawyer Laurence A Goldberg, Esq. of Sheppard, Mullin in San Francisco. Feel free to email me for more information at jones@hadleypartners.com

2010.41 LAVA Los Angeles Venture Capitalist Breakfast

Earlier today I was at the Skirball Center listening to a panel of (thankfully) outspoken and even blunt venture capitalists: Jim Andelman of Rincon Venture Partners; Kevin Jacques of Palomar Ventures; Klaus Koch of Vicente Capital Partners; Sumant Mandal of Clearstone Venture Partners; and Mark Suster of GRP Partners. Stephen Hughes of Silicon Valley Bank and Scott Alderton of Stubbs Alderton & Markiles moderated. I won’t attribute remarks to an individual unless it pertains to a difference in their fund or distinctive (and perhaps not universal) viewpoint.

Among the opening questions was one that got to the heart of the matter: are venture capitalists going away? No, but the industry has changed with many funds (and the industry overall) posting negative returns for the past ten years. There is less money going into venture capital, thus smaller funds and fewer VCs. The funds in northern California are often larger than those here in Los Angeles. Practically, this means that local VCs invest smaller totals into their portfolio companies. And, while venture investing amounts in Los Angeles are up over the past six months – especially relative to other parts of the country – deal numbers are up less dramatically. Additionally, many of the larger investments in southern California have not been made by local VCs (Demand Media and Gravity are two examples). The costs required to start an Internet based business have declined so much that some businesses in this sector are profitable after spending less than $100,000. Since one local pool of talent comes from the media world and often starts such Internet businesses, VCs can often see a working business – with a proven concept – before they need to invest.

Returns are an expected topic and really what enables VCs to raise subsequent funds. Typically, for an early stage investment the VCs agreed that they want a ten times return; which would make up for the inevitable lesser performers. A lower risk, lower return wasn’t of interest as it damped overall returns and the money couldn’t be deployed into potential home runs. For a late stage business (clear monetization and diverse customer base) a three times return was the minimum required and they expected most of these companies would continue their high growth (75 plus % surviving). Total invested over the life of the company ranged between $6 and $25 million.

The IPO market remains somewhat weak so most exits are currently company sales and the lower returns they entail. Hence, when characterizing who should take venture money one criteria stated is that your company should be the type that other companies are interested in buying. Lots of larger companies are looking to acquire (innovation). The company should also be quickly scalable and have a good use for the added resources.

One much discussed topic was how to approach VCs. Mark Suster made a strong point that in this day and age of social networking there is no excuse for any entrepreneur not to manage to find someone who could make an appropriate introduction: ideal is from an executive at a VC portfolio company, next another entrepreneur who knows the VC and third is from advisors who know the VC. Kevin Jacques clarified that an introduction was not the forwarding of a business plan from a random connection on LinkedIn but rather someone who knows the industry and had done work with your company to help guide or mentor you.

And, research (Crunchbase; SoCalTech; Internet) which VCs invest in your type of company, are actively still investing and are the right size/stage. Not doing the requisite work is proof that you aren’t a real entrepreneur.

Power point slides are easier to read than Word documents for someone buried in hundreds of business plans.

The B round was referred to as a “sucker’s round” with fewer VCs willing to do a B round, especially if A round investors weren’t continuing to fund the company. During the 2008 crash VCs were too busy with existing portfolio companies (figuring out who to continue funding and who to let die) to take on anyone else’s mess – the B round. Angels likewise pulled back in 2008 as they worried about their own cross-platform investments. Slowly the angels are coming back but the B round investors aren’t.

So think clearly about which VC money you take (they should be the type who sticks by their portfolio companies for that B round; for the C round your concept is either working or not and funding will depend on that factor). It’s easier to get a divorce than exit this type of partnership, said Jim Andelman. Look at the investment as the beginning of a partnership and not just funding.

Eventual percentage ownership they’d like at a liquidity event ranged from about 25% to 50%; but really varied based on the stage they had invested and whether other investors were involved.

Overall, they were very upbeat about innovation in Los Angeles today. While the talent pool may not equal Silicon Valley’s in some ways other attribute of our local community and talent pool make up much of the difference.

For details on their varying investment types, the industries they favor, fund size and background please do the research. That is what a real entrepreneur would do.

And email me for more details on the panelist’s comment; I took many notes but aim to keep these postings short.

2010.38 Carl Icahn Sues Lions Gate and Rechesky over Debt to Equity Deal: Why Good Advisors Matter When Contemplating M&A

The ten-day truce between Carl Icahn and Lions Gate management is very clearly over.

Icahn has let it be known that he doesn’t support the merger discussions between Lions Gate and MGM.

On July 20, Icahn also launched a new takeover offer for Lions Gate common stock at $6.50 per share, lower than his previous $7.00 offer. The offer is contingent on management not entering into a major transaction outside the normal course of business. The tender offer will expire August 25; Icahn will then nominate a slate of directors to replace Lions Gate’s current board. The election will occur at the company’s annual board meeting; most likely in October.

Lions Gate, in an effort to reduce debt, issued common shares at $6.20 per share to retire $100 million in convertible debt, the stock price represented a 2.8% premium to Monday’s share price. Icahn’s holdings were reduced to about 33.5% from 37.9%. The move doesn’t only dilute Icahn; it dilutes all existing shareholders. The 16.2 million new shares went to Mark Rachesky (MHR Fund Management), who already held almost 20% of the company’s common shares; his percentage is now 29%. The debt, due in 2026 and 2027, was acquired from Kornitzer Capital. Kornitzer also owns a small number of Lions Gate shares which he hasn’t tendered to Icahn.

Icahn must now acquire almost another 17% of shares to accomplish his takeover goal – assuming that management doesn’t convert more debt to equity.

This morning Icahn filed a law suit in New York state court against Lions Gate and Mark Rachesky seeking damages, an injunction rescinding the debt-to-equity swap and the prohibition of the defendants from voting their shares in a vote to elect directors. Icahn also filed a petition to the Supreme Court of British Columbia – a hearing to be held on Wednesday – regarding whether to grant orders against Lions Gate and Rachesky. Both sides are engaging in some general public mud slinging; the specifics of their accusations won’t be covered herein.

The battle continues. Lions Gate stock closed at $6.90 today, July 26.

The fight over Lions Gate reflects the importance of good advisors. Both sides are now exploring creative transactions and strategies to ensure that the outcome of this M&A battle is in their favor. Clearly the bankers and lawyers involved are working hard on behalf of their respective clients.