In Reel Time

2010.48 2010 ACG Los Angeles Business Conference – my top nine points from day one

1. Business isn’t ignoring politics. Is politics increasingly intruding into business? Austin Beutner, an Evercore investment banker turned First Deputy Mayor of Los Angeles, opened up the conference. For those not reading (my) local media, Los Angeles is in dire straights and Austin, with his business sense and drive, is a great hope to turn some things around. He was followed by Senator Tom Daschle and Senator Bill Frist debating/discussing the new health care law. Of course, to be fair, past conferences have included political speakers also….

2010.47 Reprint of blog on VentureBeat

VentureBeat
Click above to see a re-print (slightly edited) of posting on how emerging companies become consolidating ones.

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?”

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.

2010.44 The Web is dead? Is Wired right or just good at headlines?

I’ll go with the headline option as the other point is nuanced.

The article in question starts with “Who’s to blame?” Chris Anderson takes the ” us” argument with Michael Wolff blaming “them”. The title on the cover, asking whether the Web is dead, is clearly an attention getter, but the related articles are very thoughtful.

What points stuck with me – for those who haven’t read the article (and those who did and may want to discuss related thoughts). I’ll break my argument up by discussing Anderson’s points first….

2010.43 Business valuation: the intangibles

Business valuation is – at its core – essentially numbers driven and many models exist. For indications of value, we can look at comparable company valuations either based on the price of publicly traded stock (adding a premium for liquidity) or a recent fundraising valuation for a similar company. We can use a discounted cash flow model, looking at future expectations of a company’s free cash flow and applying an appropriate discount rate. LBO (leveraged buyout) models, liquidation analysis and industry parameters (number of stores, etc.) can also be analyzed. All of the resulting valuation numbers or ranges can then be aggregated and a reasonable valuation based on the range can be estimated.

The models above are somewhat driven by company projections of future results; as is valuation. A company growing quickly and more profitably will be perceived as having a higher value than will a slower growth (and less profitable) one. Yet, valuation indications are only as good as initial assumptions and projections are often wrong. They also don’t add in surprise events…

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….

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…

2010.40 Stress in Hollywood and recent media services developments

Stress in the media services food chain, as indicated by news out of Technicolor, Grass Valley, Eastman Kodak, Ascent Media…

2010.39 Francisco Partners makes firm offer for Grass Valley Broadcast business

In January 2009 Technicolor announced that it would spin off its Grass Valley business in its entirety. 18 months later, in July 2010 Francisco Partners has made a binding offer for the broadcast business only, and Technicolor intends to divest the transmission and head-end units separately.

Grass Valley’s broadcast business is a leading provider of video creation and video management equipment for broadcasters and teleproduction companies…