Intellectual Property and Exit Strategies
My last newsletter just before Christmas predicted a smooth transition to the new Labour Government with confidence strong. While it’s still early in the new year, and we’re waiting for Parliament to resume on 30th January, this seems to be the case.
Come writers and critics
Who
prophesize with your pen
And
keep your eyes wide
The
chance won't come again
Bob
Dylan - The
Times They Are A-Changin’
My last newsletter just before Christmas
predicted a smooth transition to the new Labour Government with confidence
strong. While it’s still early in the new year, and we’re waiting for
Parliament to resume on 30th January, this seems to be the case.
An article by Bernard Hickey out today asks “Are New
Zealand's business leaders jumping in fright at shadows because 'their'
National-led Government is no longer in power? Or is something more substantial
changing in the bowels of the economy and the Government to justify their
darker outlook?”
In his view “So far, the jury is out, but there is plenty of evidence to suggest
the pessimism is not justified by what is happening in the wider global economy
or in the accounts of the businesses themselves.”
And as I said in that Christmas newsletter I feel this confidence in the
economy will encourage investors to enlarge and diversify their asset holding
outside their residence and create substantial returns.
Investing
in Businesses
Looking at investment opportunities in 2018 I’m reminded of a newsletter I
wrote about 2 years ago that was prompted by an article in the NZ Herald at that time written
by Paul Adams, CEO of EverEdge IP.
Here’s what Paul said then.
“Last
week I received one of those emails that kick your thinking into a higher gear.
It contained four simple statements:
- Uber - the world's largest taxi company owns no vehicles.
- FaceBook - the world's most popular media owner creates no content.
- Alibaba - the world's most valuable retailer has no inventory.
- AirBnB - the world's largest accommodation provider owns no real estate.
“These four statements neatly capture one of the mega trends revolutionising the economy. Over the last 35 years the West has undergone a massive economic inversion.
“Corporate balance sheets, once cluttered with tangible assets such as property, plant and equipment have been inverted. Airlines don't own aeroplanes anymore. Hotels don't own their buildings. Car manufacturers are now outsourcing production lines.
“This of course begs the question: if all the heavy stuff, the tangible assets, are gone - what replaced it?
“The answer is both profound and simple: balance sheets today are dominated by intangible assets: brand, content, data, know how, confidential information, design, inventions, code - in short intellectual property.”
The article goes on to give examples of these changes and their effect on financial institutions. It’s well worth reading.
Exit Strategies
While the evolution of technology makes many businesses less reliant on hard assets and less constrained by international borders, what’s not so obvious is the ease in which this change facilitates exit strategies via sale, mergers or acquisitions.
A year ago an article in Forbes suggested the technology industry, which has been one of the most active sectors, should continue seeing high M&A rates. They say internet, tech-enabled services, financial technology and healthcare IT will all experience more consolidation.
Here at TBK our capital raising offers are mainly businesses looking for working capital to expand. See these on our website. Some of these are seeking investors to simply grow the business. Others wish to grow to a stage where they become a takeover or amalgamation target.
I’ve got one of the latter now in the technology space that’s got a clear exit strategy and would be happy to look at taking on a new shareholder. Minimum investment say $500,000. It’s not on our website and is subject to the current owners’ consent as to the potential investor. If you qualify as a “Wholesale” investor and this may be of interest please reply to this email or give me a call.
Valuing Businesses
At TBK Capital, when we’re raising loans or equity for business or property - see my previous newsletters Raising Equity for Business and Property and Debt Finance Options Available - potential lenders and investors are obviously interested in the current “value” of the entity they’re about to be connected to.
The way to value a property is pretty much the same as it’s always been. Residential based on similar sales and commercial and industrial on yield – both of course qualified by location/position. Businesses are more difficult to value – especially if they are new.
Luckily valuing businesses is something TBK Capital and our sister company Tabak Business Sales, are very familiar with. So if you’re interested in selling a business, raising equity or are looking to refinance, and you require a valuation, reply to this email or give me a call.
Always happy to hear from you – in the meantime Happy New Year.
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Any
reference above to investment is not an offer of financial products that
requires disclosure under the Financial Markets Conduct Act 2013 (Act) and is
available only to wholesale investors as defined by that Act. It
is intended for distribution only to selected people to whom, under the
relevant laws, it can be lawfully distributed. It cannot be distributed in any
other jurisdiction, or to any other people. It is not an offer or solicitations
in any jurisdiction in which such offers or solicitations are not authorised,
or in which the person making such offers or solicitations are not qualified to
do so, or to any person to whom it is unlawful to make such offers or
solicitations. Any representation to the contrary would be unlawful. No action
has been taken by any person that would permit a public offering in any
jurisdiction where action for that purpose would be required.
Cheers
John Paine B.Sc., Dip BIA
TBK Capital Limited
Level 10, 120 Albert Street
Auckland 1010, New Zealand
Phone +64 9 307 3257
Mobile +64 21 902 901
Email john.paine@tbkcapital.co.nz