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Company Valuator

An exclusive monthly news report for private company CEO's
July 6, 2005
Sign of the Times
Did You Know
Ask the Expert
Market Stats
Helpful Links
Quote of the Month:

"We all hate getting old but we sure try hard to get there."???????????????

---Staff Commodore Bruce Munro, St. Francis Yacht Club

Sign of the Times

A monthly market commentary

“Weep for London...not for Ebbers”

Poor Bernard Ebbers. In tears. I wonder how many former WorldCom stockholders and former?employees cried as well? None you say? Cmon, not even tears of joy, relief, vindication or closure?

Ebbers, who was once the swashbuckling, swaggering CEO of WorldCom, oversaw the largest corporate fraud in U.S. history. He wept in court earlier today when a judge sentenced him to 25 years in prison--the toughest sentence yet in the string of recent corporate scandals.

Ebbers, now 63, would?go to prison in?October and not be eligible for release until he was 85.

At the sentencing hearing, Henry J. Bruen Jr., 37, a former WorldCom salesman, told the court the company's collapse caused "untold human carnage" and put him through "sheer hell". He lost all of his savings and couldn't get another sales job.

I'm not exactly sure about the "human carnage" aspect, but "sheer hell" must have been shared by hundreds, if not thousands of others. Bye bye Bernie, umm, Bernard.

GO LONDON....London is one of the most phenomenal cities in the world. I said phenomenal, not cheap. This time of year London vibrates with activity from gorgeous flowers punctuating the landscape to millions of tourists from around the globe.

One of the centerpieces for London's summer is Wimbledon. Grass courts. Refrigerated Slazenger balls. Strawberries and cream. Kings and queens. History and tradition make it one of the yearly events like Christmas, the Super Bowl and the Oscars.

Last week began normally with the "Breakfast at Wimbledon" resulting in Roger Federer and Venus Williams' wins. The weekend in London also featured "Live 8", the brainchild of Bob Geldof adopted by Bono to promote assistance to Africa. Performers from Madonna to Stevie Wonder helped bring attention to what is one of the embarrassments of our time--the plight of Africa.

Wednesday in London brought the surprise announcement that the city had been selected to host the 2012 Summer Olympics. That London had been the first city ever to host the Olympics for the 3rd time was a source of pride and joy.

Then Thursday morning hit. London was rocked by terrorists exploding bombs in the tube and on a bus killing over 50 people and injuring another 700. The horror and tragedy of these events can't be captured by words or numbers. However, the courage and resolve of the British people is breathtaking.

What most observers predicted and the terrorists expected was a London that cowered with the threat against its people's safety. What they got was a London that showed a "stiff upper lip" and an attitude that defied the pathetic terrorists. Go London Go.

While pundits feared a 9/11 reaction to 7/7--stocks last week showed the steely resolve of the British people. For the week, the small cap Russell 2000 was up +3%, the NASDAQ was up 2.7% and the S&P 500 was up 1.5%. Breadth was good with the NYSE advancers/decliners at 12 to 5 and on the NASDAQ 11 to 5. Particularly impressive was companies making new highs to new lows---928 to 142--very bullish.

Go London.....Go America

Just in...Colin Powell has signed on with long time venture capital firm Kleiner, Perkins, Caufield & Myers as a "strategic limited partner"...hmmmm.

Did You Know

“The Secret of Successful Aging...Avoid STRESS !”

We all know the basics about staying healthy which hopefully will increase our longevity. Eat well, don't smoke, don't abuse alcohol,?manage your weight, excerise, and obey your spouse--not necessarily in that order.

Knowing?that, probably the biggest culprit in unhealthy aging also gets the least respect from both the medical community and individuals: stress, let me repeat, stress. Increasingly, researchers are viewing stress--how much stress we face in a lifetime, and how well we cope with it--as one of the most significant factors for predicting how well we age. It may be hard to believe that stress, which most people view as an emotional state, can wreak such havoc on our physical well being. But aging studies consistently show that the healthiest agers are particularly adept at shedding stress.

What Do We Do About It?

At some point in life, everyone faces chronic stress--whether it's uncertainty at work, in a marriage or about health. Successful agers have faced the same stressors as the rest of us. They just have better coping skills. The good news is that the rest of us can change and learn better coping strategies.

Seek control when you can. The issue of control--or the lack of it--is a common theme among stress researchers. Successful agers typically feel in control of their day-to-day lives, but they don't fret about issues they can't control. So while work stress is inevitable, it's less harmful if you work to control those aspects of the day you can. The more you control what you can, the less you will worry about those areas where you don't have the control you would like. It's about knowing you are doing the best you can rather than abdicating.

Information can relieve stress. Stress doesn't take as much of a toll if we can predict it. If you are worried about a competitor, the market, or even an errant child?(Would you like to be Michael Jackson's parents?)?the more you arm yourself with the proper?information, the more likely you will feel confident?making the best decisions about moving forward.

Even something as ominous as an individual?facing cancer, while certain to cause significant stress, the overall stress of the illness can be minimized by learning about treatments and side effects so you know what to expect. As I am writing this, my father in law is hospitalized at Stanford?Hospital?after undergoing a bone marrow transplant, the conclusive step in managing a battle against multiple myeloma, a cancer of the plasma cell. While it is incurable, it can be managed. They are experts at Stanford in bone marrow transplants and they have done a marvelous job of preparation, explanation, what to expect, a running timeline for the treatment-- a well developed?chronology of the steps. While it is still a stressful time for him and the family, a lot of stress has been mitigated by the process that Stanford employs. Truly marvelous.

Keep family and friends close. Well, of course. Study after study has shown social support makes a measurable difference in how we cope with stress and how we age.

Exercise you hate won't help as much as exercise you like. Exercise is the solution for pretty much every health problem, but it especially makes sense in dealing with stress. That's because the stress response is all about boosting energy to the muscles, so using those muscles during exercise is the obvious outlet for releasing stress. Be aware, however, not to overdo it as that can have a negative impact.

Important as well is finding an exercise you like as it will increase the likelihood you will stick with it. An example of that concept in action is my wife who loves to exercise but also has a motto about a particular strengthing component---lifting weights. According to her, "Life is too short to lift weights".

In terms of exercise and stress reduction, it's also important to know that the benefits of exercise disappear almost overnight. "It's the exercise you're doing now that's important," Dr. Snowden says. "If you were a college athlete, it's not going to do anything for you in middle age."

The good news is that it's never too late to reap the benefits of exercising. In fact, the older you are, the more immediate benefit you get from exercise.

Get more sleep. When you start to lose sleep, your body responds the way it always does in a crisis--it activates the stress response.

Pick and choose your stress relief. In the end, everyone deals with stress and aging differently. Stress-management classes, meditation, massage, yoga, religious services--all of them can relieve stress in the right person and cause stress in the wrong one.

Even successful agers differ according to how they handle their life experiences. It's something individuals have to manage themselves. You know if you're in trouble.

Ask the Expert

“Making A Strategic Move to Exploit Opportunities”

We're all seeing the mega-deals going on out there. Obviously the biggies get most of the press attention but there is also a flurry of mid-market transactions going on. Hey, life is good. Get on board.

As I have mentioned before, more than one factor is fueling this new wave of mergers and acquisitions activity: Companies feel greater pressure to further globalize their business, companies have exhausted opportunities for growing internally, the "Asian" factor, Interest rates are still relatively low---but they are rising, private equity financing is also plentiful, U.S. tax rates on capital gains remain low, and the U.S. dollar is at a low valuation point compared with other major currencies---although the dollar has rebounded recently against the Euro and Pound. Maybe the vacation in Paris is a good idea afterall.

All these factors make this a great time to contemplate your next smart move. Is this the time to sell, to acquire or just buy back some shares of some minority investors. Before you take the plunge, consider the steps you should take to prepare your company for its next phase:

Solidify your balance sheet. With today's still relatively low interest rates, set up lines of credit and refinance expensive existing long term debt by lengthening maturities at today's rates

Solidify your shareholder base. This may be the time to offer share buybacks to less enthusiastic minority owners. A unified shareholder base is a most important asset as you consider your next move.

Establish or refine your strategic direction. Look at your core competentcies (no, not golf) and identify an area of growth that will enable you to become No. 1, 2 or 3 in your global market.

Growth can include product expansion into new markets (geographic), organic growth in exisiting markets with existing products, company reinvention with new products, and product innovation in exisiting markets. What's your best shot?

Understand the Value of your Company. Recognize the shareholder value and how it can create opportunity. Knowing how much your company is worth will help prepare for the potential (it has to happen at some point, right? Why are you waiting?) approaches from interested buyers or even the integration of an acquisition.

Whichever strategy you pursue, today's economic environment is unusually inviting. Seize the moment.


Market Stats

“Hired Guns of the Global Economy”

In this ever more interconnected world, where doing business in San Francisco, Barcelona, and Beijiing increasingly feels (and acts) like they were next-door neighbors, what kind of management talent is in the most demand? According to executive-development giant DBM, a full 91% of DBM's coaches and consultants say that the hottest specialty going is international contract management. Say what? Sometimes called interim or independent executives, contract managers are the hired guns of the global economy. They swoop in to achieve a short-term, clearly defined goal--manage a project or work with local managers until an overseas business unit is up and running--and when their contract is up, say sayonara, goodye, au revoir, ciao--whatever. Bottom line, they are outta there.

More and more companies are looking for those candidates that can come in, solve a problem quickly, and move on. Employers don't want to spend an inordinate amount of time finding the right person to come in and fix a situation that may be too late to fix. It's now time.

Companies are now calling temp-recruiting firms and asking who can start this week.  Don't be confused about the difference between contract management and consulting. Consultants give advice, submit their bill, and walk away. With this, you stay until the job is done.

It helps to be quick off the mark as well. A new Boyden study veals that what makes or breaks an interim executive is that he/she typically has only five days to do the things most newly appointed executives take 100 days to tackle. Identify quick fixes, establish credibility, and build relationships across the organization. It's called going from "zero to hero".

Only the politically savvy have the best chance for success. Nothing will ever change on separating the politics of an organization from the reality.

Helpful Links

Over the past year I've been talking a lot about the opportunities that private equity groups can bring to the table. The premier online website for private equity is This website was launched in April, 2000 and currently has 40,000+ registered users. Journalists from New York & London post stories throughout the day on the people, the deals, and the firms that are shaping the industry.

While this website is primarily geared for private equity professionals, it's a great way to get a peek into their world and see their perspective on the merger and acquisition environment, where they see the market going, and where they see the opportunities. It's worth a look.


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