Legal Commentary

Accounting for Earn-Outs

Posted on April 28, 2008
There was an interesting article in The Wall Street Journal today about earn-outs. This article pointed out that the payments disbursed under earn-outs are not treated as compensation expense, which is subtracted from earnings. Instead, these payments appear as contingent...

Broken Deals

Posted on April 18, 2008
According to Thompson Financial, some $55 billion worth of acquisitions of public companies by private-equity buyers have fallen through since the start of the 2007 credit crunch (up until April 2008). Conducting with broken deals is an issue that is...

Is Microsoft a Generous Acquiror?

Posted on February 18, 2008
Microsoft has a long history of paying very high premiums for companies it wishes to acquire. According to Dealogic, Microsoft's average one-day premium for companies it acquired since 2000 was 43% compared an average premium for technology acquisitions of 25%...

Every Last Vote Counted in the Presidential Primaries of 1960

Posted on February 18, 2008
Neither Hillary Clinton nor Barack Obama is likely to secure the 2,025 delegates needed to win the Democratic nomination before the voting season ends. Currently Mrs. Clinton is said to have 256 superdelegates versus Mr. Obama's 170. The New York...

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The Secret of Einstein's Fame

Posted on February 16, 2008
Albert Einstein achieved rock star fame during his lifetime. Even today, Einstein is by far the most well-known physicist. The Baby Einstein Company was acquired for $150 million by Disney. Hebrew University in Jerusalem earns tremendous royalties just by licensing...

Trends in Research & Development Investments

Posted on February 14, 2008
According to recent research published by Battelle Memorial Institute, total spending on US R&D is projected to rise about 3% to $367 billion in 2008 from $355 billion in 2007. After accounting for inflation, the growth rate would be about...

Democratic Presidential Candidates' Delegate Counts are Extremely Close

Posted on February 11, 2008
As of mid-February, the Democratic Presidential candidates have extremely close delegate counts. According to the Associated Press, Hillary Clinton has 1095 delegates to Barack Obama's 1070. CNN has Clinton ahead with 1100 to Obama's 1039. It is important to realize...

Financing Mergers & Acquisitions

Posted on February 11, 2008
The credit crisis is impeding mergers and acquisitions. One reason is that the corporate loans used to finance buyouts are languishing in the secondary markets. For instance, loans of Freescale Semiconductor are trading at a 15.5% discount of their original...

Societe Generale Trader

Posted on January 29, 2008
The saga of Jerome Kerviel causing $7.2 billion in losses for his employer, Societe Generale, is a timely reminder of the enormous shocks that small sparks can set. According to The Wall Street Journal, Mr. Kerviel was so low on...

Current Trends in Reverse Break-Up Fees

Posted on January 22, 2008
Traditional break-up fees are paid to suitors when a target withdraws from an acquisition. Reverse break-up fees are paid when an acquirer backs out of a deal. Financial sponsors are becoming more conservative in their deal making. This is evidenced....

There is Still Plenty of Buying Power

Posted on January 22, 2008
We believe mergers and acquisitions activity will remain strong. It is true that private equity players are hampered by an overhang of unsold LBO debt and that the credit markets have deteriorated substantially. However, there is as much as $250...

Blackstone Shakes Off Credit Crunch For A Day

Posted on January 18, 2008
Don't tell Blackstone there is a credit crunch on. Today The Wall Street Journal reports that Performance Food Group Co. agreed to be acquired by an affiliate of the Blackstone Group and Wellspring Capital Management in a deal valued at...

144a Securities Boom

Posted on January 16, 2008
Washington regulators have come up with another way to marginalize the ordinary retail investor by precluding them from participating in some of the more lucrative equity and bond markets. Under present market conditions people may scoff at the notion of...

The Link Between Chinese Demand and Urbanization

Posted on January 10, 2008
Anyone who follows the news can tell you that commodity prices have surged because of demand in China, India, and other emerging markets. Other factors figure into why commodities have boomed the last couple of years, but let us focus...

Selling Your Business

Posted on January 09, 2008
There was an interesting article in The Wall Street Journal today dealing with the long sales-cycle of selling a small business. Some advisors contend that sellers should begin the process of preparing their companies for sale seven years before they...

Price Stability

Posted on January 07, 2008
Just to continue with Friday's theme of this country's questionable monetary policy of the last 30 years I found an interesting passage in Alan Greenspan's book, "Age of Turbulence." The former Fed chairman briefly discusses the heyday of the gold...

Commodity Prices Continue Surge

Posted on January 04, 2008
Huckabee wins Iowa and my faith in the GOP as the vanguard of limited government and fiscal restraint has been destroyed. The only one talking any kind of sense in economic terms is Ron Paul. But the average voter has...

My Worry For 2008

Posted on January 02, 2008
My New Years Eve bubble-induced hangover did not help me forget the many worries I have for 2008. High oil prices (record $100 today), talk of recession, a return of populist politics, housing market crash, a weak dollar, a credit...

China is an Aggressive Acquirer

Posted on December 20, 2007
In 2007, Chinese companies have spent $29.2 billion acquiring foreign companies while investors from the rest of the world have bought $21.5 billion of Chinese companies. In recent months, Chinese entities have taken large stakes in companies such as Morgan...

Patience Is A Virtue

Posted on December 20, 2007
The much talked about era of distressed funds has yet to arrive. Don't get too impatient. Many analysts expect a slowdown in corporate profits over the next 12 months, which means debt-laden companies could struggle and eventually become crippled by....

Indian Pharmaceuticals

Posted on December 17, 2007
There was an interesting article in The Wall Street Journal today about Indian drug firms. According to the article, Indian generics makers such as Cipla and Glenmark are working to increase sales domestically and in emerging markets. Analysts estimate Indians...

Commercial Loans Experience Delinquency Uptick

Posted on December 13, 2007
According to the November edition of Real Estate Forum, "CMBS delinquencies continued to climb for the second straight quarter ... [which] jumped 16.2%, with $1.9 billion in loans being late, up from nearly $1.7 billion during the second quarter. Of....

Business Statistics

Posted on December 10, 2007
There was an interesting article in The Wall Street Journal discussing people's proclivity to commit certain actions based on their names or initials. For instance, some studies have suggested that people with an "A" or "B" in their initials get...

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