Tuesday, May 09, 2006

How to handle bad publicity, when it happens...

How to handle bad publicity, when it happens... from bCentral

Be Prepared

You can minimise the impact of negative publicity by crisis planning: identifying things that could go wrong and then working out how best to counter them.

"We deal with a whole range of problems and crises for our clients," says Steve Osborne-Brown, managing director at public relations consultancy Hallmark PR. "Although they are all different, proper planning and good procedures reduce the negative effects every time."

• Think about what might trigger any bad publicity for your business. Consider things specific to your sector or industry as well as your particular business. List examples of companies similar to yours that have received bad publicity or areas of weakness within your business. It will help to be aware of which media might be interested in your business.

• There's more good advice on handling crisis from a PR agency here

Corporate Takeovers...

This stuff is important. Whether you are going public, are public, or even if you are private, the information here, from wikipedia, is heavy, yet simple to read and understand.

Forms of takeover

  • A friendly takeover consists of a straight buyout of a company, and happens frequently. The shareholders receive cash or (more commonly) an agreed-upon number of shares of the acquiring company's stock.
  • A hostile takeover occurs when a company attempts to buy out another whether the management of the target company likes it or not. A hostile takeover can usually occur only through publicly traded shares, as it requires the acquirer to bypass the board of directors and purchase the shares from other sources. This is difficult unless the shares of the target company are widely available and easily purchased (i.e., they have high liquidity). A hostile takeover may presage a corporate raid.
  • A reverse takeover can occur in different forms:
    • a smaller corporate entity takes over a larger one.
    • a private company purchases a public one.
    • a method of listing a private company while bypassing most securities regulations, in which a shell public company buys out a functioning private company whose management then controls the public company.


There are a variety of reasons that an acquiring company may wish to purchase another company. Some takeovers are opportunistic - the target company may simply be very reasonably priced for one reason or another and the acquiring company may decide that in the long run, it will end up making money by purchasing the target company. The large holding company Berkshire Hathaway has profited well over time by purchasing many companies opportunistically in this manner.

Other takeovers are strategic in that they are thought to have secondary effects beyond the simple effect of the profitability of the target company being added to the acquiring company's profitability. For example, an acquiring company may decide to purchase a company that is profitable and has good distribution capabilities in new areas which the acquiring company can utilize for its own products as well. A target company might be attractive because it allows the acquiring company to enter a new market without having to take on the risk, time and expense of starting a new division. An acquiring company could decide to take over a competitor not only because the competitor is profitable, but in order to eliminate competition in its field and make it easier, in the long term, to raise prices. Also a takeover could fulfill the belief that the combined company can be more profitable than the two companies would be separately due to a reduction of redundant functions.

Critics often charge that large companies initiate takeovers in order to boost their reported revenue (sales to customers) without giving sufficient regard to profit, which generally takes a hit when a company is acquired because of all the associated costs. Also a premium is always paid if the target company is financially healthy and not already desperate to be taken over.

The target company has several methods to avoid a takeover, if it wishes. These include legal actions, as in the case of the Hewlett-Packard purchase of Compaq, or the use of a poison pill, as set up by Transmeta.

Most dot-com companies were created for the express purpose of being taken over with a consequent immediate profit for their owners, as opposed to the usual purpose of creating a business: to create profit for its owners over time by generating cash which is paid in dividends.

Pros and cons of takeover

Pros and cons of a takeover differ from case to case but still there are a few worth mentioning.


  1. Increase in Sales / Revenues (e.g. Procter & Gamble takeover of Gillette)
  2. Venture into new businesses and markets
  3. Profitability of target company
  4. Increase market share


  1. Reduced competition and choice for consumers in oligopoly markets
  2. Likelihood of price increases and job cuts
  3. Cultural integration/conflict with new management
  4. Hidden liabilities of target entity.

Tactics against hostile takeover

See on wikipedia

Monday, May 08, 2006

McGraw-Hill Higher Education Free Online Courses- Phenominal!

Online Learning Center-

McGrawHill treasure trove of lessons...

Take a look. you won't be sorry!

All you need to know about agreements

I found this really phenominal blog, called "Felds thoughts". it is written by Brad Feld of Mobius Venture Capital.

Some of the great topics he discusses are:

This blog is absolutely amazing, and a must read! I just spent several hours reading and reading the excellent posts and advice!

Enjoy.. and let me know what you think....

Wednesday, February 08, 2006

VC: Reverse mergers..

VC: Reverse mergers

In previous posts, I've mentioned the most common ways in which venture funds 'exit' their investments: acquisition, and going public (IPO). There is a third way, which is mostly seen in down markets: the reverse merger. It's considered rather dodgy, for reasons I'll describe, so it doesn't feature in the usual VC script. Since the venture wire has brought news of two reverse mergers in the last week, Dwango North America and RoomLinX, I thought it might be a good time to describe this particular maneuver.

Reverse merger is a way for a private company to get public without those nasty details of an SEC S-1 filing and an underwriting by investment bankers. To start the exercise, the private company's management or investors locate an already public 'shell company.' A shell company is one that is nominally public, usually listed in the NASD OTC bulletin board or 'pink sheets', but that is pretty much dormant. It will likely have no remaining employees and maybe no management, and it will have ceased any business activities. A 'clean' shell company will also have little or no outstanding debt, will have kept its regulatory filings up to date, the stock will be listed at pennies per share, and majority control will be in the hands of relatively few shareholders.

This is a company that has passed into a coma, rather than dying a violent death.
The object of the exercise is for this moribund, but public, shell company to acquire the assets of the private company, which is a going concern. This will done by a stock swap. First, the owners of the private company must get the controlling shareholders of the shell to agree to the transaction. Often, the shell has already been groomed for such a transaction by a broker and the agreement is in hand.

Next, the investors of the private company buys an overwhelming majority of the shell shares for a nominal amount and/or the shell shareholders vote to authorize the issuance of a new large and highly dilutive block of shares. (For an entertaining dramatization of this process, find a copy of the old Frederick Forsyth thriller "The Dogs of War".)

Finally, the large block of shell company shares that is now controlled by the private company investors are swapped for the shares of the private company, thereby acquiring it. The shell company now owns the assets and ongoing business of the private company, including its name, which it usually assumes. The investors in the private company are now the controllers of the shell, and they have the ability to market their shares on the exchange where it is listed, often free of nasty items like lockup and standoff agreements.


Sunday, February 05, 2006

Serial fourtune 500 company founder and Entrepeneur discusses reverse mergers

Founder and former CEO of Iomega David L. Bailey is the walking, talking definition of a serial entrepreneur. Since leaving Iomega in ’83, the now 62-year-old launched two additional companies, both acquired by major companies, and is in the throes of launching his fourth.


Bailey, recently inducted into UITA’s Hall of Fame, talks about how his search for funding eventually led him to go public using a controversial reverse merger.

Wasatch Digital iQ: Let’s start with a brief description of a reverse merger.

David Bailey: A reverse merger is when a company seeking to go public merges into the shell of an inactive public company. The new company replaces the old, and typically the officers and board of the old company resign and are replaced by those of the new company. The inactive public company could have been a legitimate company doing business that went bankrupt or had problems, or it might have been set up strictly as a shell looking to house a business, and in that case, is called a blank check shell.

DiQ: When and why did your company decide to do a reverse merger?

DB: We’ve been trying to raise money for some time and had a commitment from a group in New York in August of last year. Two weeks later, 9/ll occurred. The World Trade Centers were right out their windows. They stood and watched the planes fly into the buildings; their girlfriends and wives were in them. It created turmoil within the group. The economy turned bad, there was the dot com fiasco during which VCs wished they hadn’t put so much money into the industry and lost millions. They became more interested in trying to save their present companies than looking for new companies to invest in. So the investment climate was paralyzed. And frankly, I was tired of going to venture capitalists and groveling for money.

People began to approach us saying, “If you were public, we could raise money for you.” But the company was not financially positioned to do a traditional IPO, nor was anyone doing them in high tech at the time. The only option available to us was a reverse merger that cost significantly less than a traditional IPO. So that was the attraction.

DiQ: Did you have any misgivings about doing a reverse merger given their questionable reputation?

DB: My reaction was initially very negative to the whole concept because of the baggage reverse mergers have and the negative attitude that exists towards them. “I don’t think I can do that,” I said. “I’ve never done it before and it’s always been the wrong way to go.” The people we were talking to said, “Take a look at it, see what we have to offer.” So I looked at it very extensively, decided it was very viable, and was really quite attracted to the idea.

DiQ: What were some of the advantages?

DB: It’s less expensive and easier than a traditional IPO, therefore it’s kind of like morphine. Properly used in a controlled environment, it can be very beneficial, but it can also be abused and very harmful. That’s how it is with a public shell. Some have abused them and try to make money without bringing a legitimate business into the shell. They scam the public by raising money for an illegitimate business and that’s where they get such a bad name. We investigated that extensively.

DiQ: Why are so many reverse mergers unsuccessful?

DB: We discovered it was because the business moving into the shell wasn’t legitimate. If it was, then it was equally as successful as a regular IPO.

DiQ: What kind of due diligence is performed when doing a reverse merger?

DB: We started talking to lots of people. Accounting firms that had dealt with shells; we got input from them, probably four different firms. At least four different law firms, some that had and hadn’t worked with shells. We talked to people who invest in shells, people who did shells as a business, and when we selected what we thought was the right shell, we went back and asked their opinions again. So we did a lot of background work. I think it’s something you have to be careful with, to make sure you’re dealing with the right people and organizing it in the right way so as to be successful.

DiQ: Which exchange are you on?

DB: Over the counter and we’ll be registered in Europe probably next week.

DiQ: So how has it worked for your company?

DB: It was only completed l0 days ago, but so far it’s worked and we’re very optimistic about it.

DiQ: Have there been any problems?

DB: Not really so far. Again, it’s a matter of making sure you do all the homework, but it’s all gone smoothly. We’re using two investment banking firms, one out of the UK and the other out of New York City, and our law firm is a very reputable one out of Texas working in conjunction with the local law firm of Mackey, Price and Thompson. We used the local accounting firm of Tanner & Company. We’re trying to avoid problems with all our precautions.

Our major concern is making sure we can manage the price of our stock and what we’ve done to try to do that is select a shell with shareholders that were committed to our future with a very small number of outstanding shares held by unknown investors. The majority of shares are being restricted and can’t be sold in the early stages. We think we have it well managed but you never know.

DiQ: I’ve heard it said that naïve people, overexcited about going public, do reverse mergers. But that doesn’t seem to fit your profile.

DB: Typically I would agree with that, people get excited thinking they’re going to make a lot of money on the deal. But I am naïve on this, given that I’ve never done it before, that’s why I’ve been super cautious. We’re in constant communication with the SEC to make sure that we have met all their requirements.

DiQ: Others have called it the poor boy’s way to go public. Can you comment on that?

DB: It certainly is a way to go public for less expense, if that’s what is meant, so yes, that’s one way to describe it.

DiQ: Are reverse mergers good for the shell company’s shareholders?

DB: Hopefully, yes. You try to set it up so it’s win/win for everybody.

continued here

from wasatchdigitaliq.com

Google Ads like.... "Unknown Stock To Explode 800%"

Alot of the ads I see on this page, which are automatically inserted by Google adsense based on the topic or blog subject, seem to be for penny stocks.

Anyone who buys stock in a company because of some BS website on Google ads that is an obvious shill for a company... DESERVES to lose their money.

On that same token, websites like StockLemon are also guilty of many of the same behaviors they claim to guard against.

And I quote from their disclaimer:

"At any times the principles of Stocklemon.com might hold a position in any of the securities profiled on the site. Stocklemon.com will not report when a position is initiated or covered. Each investor must make that decision based on his/her judgment of the market. "

Shame, Shame.....

but then again, anyone that reads a rag on the internet, even a negative one, and makes desicions based solely on the basis on that information...

also deserves to lose their money!!!

food for thought....

Thursday, November 24, 2005

How can someone be selling a public company for $38,500??

Going Public
Reporting public company for sale
$38,500 US for 100%. Find out more

This is an ad that always seems to come up on google during searches for OTCBB, going public, shell companies, reverse merger, and similar searches.

A company where one shareholder has 100% of the stock, is what is called a "grey sheet".

Googled 'grey sheet' and found a great explanation...

Grey Sheet Shell Companies

A Grey Sheet Shell Company is a term of art or colloquialism used throughout the corporate finance industry. It is not a trading forum. Technically it is a Pink Sheet Shell that has not filed a 15c2-11 and is "non-piggyback qualified." This means that each market maker is responsible for conducting their own due diligence and cannot rely upon the due diligence of another market maker who has previously quoted a bid or ask price for the stock. Also, all orders to purchase the accompanying stock must be unsolicited.

A Grey Sheet is a non-reporting entity and is sought out by companies who are interested in going public in the sense that they have a symbol, transfer agent and shareholder base, but do not have the immediate need for high liquidity and high trading volume of their stock. It is a vehicle for companies in need of capital in the amount of $1 million or less and can be ideal for conducting Rule 504 registered public offerings; Rule 504 accredited investor offerings and similar exempt intra-state offerings.

Continued.. (much longer...)

<< out of the blue...>>

Taking a company public is never easy, but at least when you are a big company doing an IPO, there are all the advisors and VC’s (venture capitalists) and hotshots around, not to mention all the people and their dough who came in by purchasing stock before the IPO...

Taking a small business public, whether on the OTCBB or on the pink sheets, however, is another matter. It’s not easy, there are lots of decisions to be made, ups and downs as the timeline seems to expand and contract....

We will discuss there issues. I hope you will find this blog useful in your decision-making and in your research.

Since I am not involved in taking companies public, I feel I can be unbiased, sharing information and PR strategies as well.

Bookmark me! Add me to your feed! :)