What's Important

Heading back from our family's annual summer trip, which was incredible bonding time as usual. My two kids, nephew and one of my daughter's friends made it extra special.

There is simply nothing more important in life than the joy of your loved ones. For some people it is a favorite sister or cousin. Some raised by grandparents. Some revel in their spouse, children or grandchildren.

In our American culture summertime offers the opportunity to enjoy what's important. Make the most of it. I recently lost a close friend I've known since high school back in the 1970s, who succumbed to cancer at a way too early age leaving a wife and two young kids. As we watch too many folks taken from us too early, remember that every day is a gift.

Back to RM world this coming week...interesting things coming up..

Where are you from?

An earlier post talked about all the different countries blogees here are representing. I thought I would give you a flavor of what types of companies and enterprises are here. Google has some incredible analytic tools that keep track of what networks our visitors come from- and each month you come from nearly 1000 different network locations. You should always know with whom you are keeping company! Here's my unscientific review of the categories of folks who are here just in the past month (in no particular order):

1. My competitors: I am glad to see a number of my competitors (smaller law firms focusing on this space) are regular visitors. It's OK guys, happy to see you, since you are all friendly competitors. In fact one of my competitors is one of my top visitors (good to see you at the conference this week)!

2. Big law firms: As I have noted in previous posts, I am most heartened to see that large law firms have opened their minds to learn more about reverse mergers and IPO alternatives. Visitors are from the likes of Duane Morris, Skadden Arps, Morrison & Foerster, Troutman Sanders, Cooley Godward, Jones Day, Milbank Tweed, K&L Gates, Kirkpatrick & Lockhart, Kaye Scholer, O'Melveny & Myers, Akin Gump, Andrews & Kurth, Debevoise & Plimpton, Kirkland & Ellis, Pepper Hamilton, Pillsbury Madison, Thelen Reid, Baker & Botts, Clifford Chance, Davis Polk, Fried Frank, Goodwin Proctor, Greenberg Traurig, Holland & Knight, Mayer Brown, Preston Gates, Proskauer Rose, Cahill Gordon, Curtis Mallet-Provost, Dechert, Foley & Lardner, Gibson Dunn, Hale & Dorr, Latham & Watkins, Mintz Levin, Orrick Herrington and Paul Hastings.

3. The regulators: Yep, the US Securities and Exchange Commission monitors us, and I'm very happy to have them. Of course I would never write in any way other than respectfully to our regulators, even when I respectfully disagree. We also welcome visitors from the Nasdaq and the Toronto Stock Exchange to our humble blog. Also FINRA is here (although their network name is still National Association of Securities Dealers, their former name)! We also have visits from the Federal Trade Commission and the US Department of Justice.

4. Dealmakers: I know most of you and thanks for being here! Houlihan Lokey, Gruss & Company, GH Venture, Roth Capital, Jesup & Lamont, Keefe Bruyette, Maxim Group, Rodman & Renshaw, Sanders Morris, etc.

5. The big brokerage houses: CIBC, JP Morgan Chase, Lehman Brothers, Credit Suisse, Morgan Stanley, Royal Bank of Canada, Brown Brothers Harriman, Legg Mason Wood Walker have all taken a look. In truth, every major house is now involved in financings related to reverse mergers and SPACs.

6. Educators & Students are also here from Harvard University, Columbia University, Georgetown University, Dartmouth College, Johns Hopkins University, Northwestern University, New York University, Baruch College, University of Wisconsin (Madison), University of Bologna, Central Missouri State, Concorida University, Fuzhou University, Korea University, Pepperdine University, Southern California University, University of Miami, University of Rochester and University of Stellenbosch. This is cool and bodes well for the future of our industry as those coming from academia learn the benefits of these alternatives.

7. Accountants: My friends from Rothstein Kass, Deloitte & Touche, Stonefield Josephson, and others. Where are the rest of you? Probably too busy!

8. Chinese visitors: My friends from dozens of different locations. Welcome!

9. Press: Welcome Crain Communications, Boston Globe, DealFlow Media and others.

There are many others who visit from bigger networks such as AOL or a cable company that are all lopped together, but I know you are out there! Thanks again to all for your support. In just a week's time I'm off with the family for our annual trip to paradise...see you all soon!

Transitions

My fabulous 18-year old daughter is graduating high school in just a few weeks. She leaves for college at the end of August. We will still revel in the hysterics our 6-year old son brings to every day, thank goodness, but we will miss her tremendously of course (actually my son may well miss her more than any of us).

Of course we will see her every few weeks, we will visit her up there, she will come home (probably to get laundry done). But she will be gone. On her own. We have done a good job and she is ready. Are we ready? Well that's probably another story.

They say when your first goes to college it's all about the child, will they adjust, how will the roommate be, classes, social life and the like. But when your last goes to college it's all about you - the empty nest, new phase of life and so on. Well we have yet a dozen years to deal with that as my son graduates in 2020! So for now, it's all about her..

College is much different today. Laundry service, storage service, there's a service for everything we tough, hardy college students of yesteryear did for ourselves. But at the same time today's colleges are pressure cookers of competition, each angling for that extra point on a test or slighter higher GPA. Just as high school seemed all about getting into college, college nowadays seems all about getting into graduate school for most.

My hopes for my daughter: achieve and succeed academically and find that area of study that sparks excitement. But not to the point of losing perspective. Have fun. Laugh all night and order pizza at 3 am. And explore all that college has to offer from extra-curriculars to community service. And make the most of the faculty that are there - get to know them and have as much one-on-one time as you can. But also - have fun.

Most kids heading to college don't realize that college is for most people the freest time of their life. No restrictions they had growing up, and no responsibilities to a job, spouse, children and so on that await them after. My wife and I envy my daughter as we recall our college years with such fondness. But it is not always a cakewalk - one of the big secrets of college is it isn't always fun.

As I often write here - one can work hard and also enjoy life or as some say - play hard. I hope my daughter finds that fabulous balance we all hope to achieve. And I hope she calls her folks a lot.

Adios Mr. Weiss

Notorious class-action lawyer Melvyn Weiss was sentenced yesterday to 30 months in prison by a Federal District Court judge in Los Angeles. Over four decades he built the biggest powerhouse specializing in suing large corporations for alleged wrongdoing to shareholders. His crime: paying people to serve as "lead plaintiffs" at the ready so he could be the first to file suit, giving him the greatest chance to be lead counsel in a major class action case and reap the largest rewards for his firm.

Paying plaintiffs, of course, is an illegal kickback. Several of Weiss' partners were also convicted, and the firm itself is still under indictment. A class action law passed in 2006 made it harder to bring these cases, which has reduced the overall case load. In the meantime, Weiss personally made over $200 million between 1985 and 2006 and became an active philanthropist and Democratic party fundraiser.

As I reported in my book, at the height of his success in 2005, Mr. Weiss was on the cover of Forbes magazine with the heading, "The most feared man in corporate America." Rumors circulated that associates in his firm rotated spending a week each in front of a Bloomberg screen looking for stocks taking a precipitious drop, which could lead to a lawsuit.

I have heard Mr. Weiss speak several times. There is no question that his eloquent assertions that the "little guy" was being trounced upon by evil management and he was there to protect them were great sound bites. And indeed there were a number of cases where Weiss and his firm took down some serious bad guys.

But I watched too many times where a major class action was brought with no apparent wrongdoing whatsoever - other than a dropping stock price. Some felt it was pure extortion - settle with us or we'll keep you in court for years, etc. Many settled as a cost of doing business. Some fought. Weiss dropped some cases when some fought him too hard.

What does this have to do with reverse mergers and the smallcap market? Everything. Every company considering going public has to take into account the potential negative that being public increases the likelihood of facing lawsuits from shareholders. Our overly litigious society creates this risk and makes it less desirable for some companies to consider taking advantage of the benefits of a publicly trading stock. It also leads some companies, among other reasons, to consider going public outside the United States where the culture is different.

Hopefully the playing field has been leveled a bit in the world of class actions with the fall of Weiss' firm and the new law. The rest will have to wait and see how our US elections turn out in November. But all in all, a positive development for public companies.

Signs of the Times

I went to a dinner this past week for a well-known charity, an advocacy group. It was their annual "Wall Street dinner," run by hedge fund managers and private equity types. Top notch speaker, good food, good company. I had attended the dinner last year. The one difference: last year the room, at famous Cipriani's in midtown Manhattan, was absolutely packed to the rafters - they put tables in places that probably broke the fire codes. This year, tables comfortably spread out and no exits blocked. A visibly smaller crowd.

Another sign - a client who told me a year ago his meetings with potential investors in PIPE deals would end with requests for wire instructions to send money. These days, he says, the meeting ends with investors saying, "Thanks for inviting me, I'll get back to you."

Wall Street is hurting. Major layoffs are taking place at pretty much every brokerage house. The New York Times reported that these layoffs are more "stealth," being done a bit at a time rather than en masse. The M&A world was rocked by the subprime mess leading to tight credit for deals. That is only now beginning to thaw just a bit. The Dow is all over the place. The country is in a recession and real estate values are plunging in many areas.

However, in parts of the finance world, there is continued activity. In the RM world, we see no reduction in deal flow in my law firm. Quite the opposite in fact. There remain many growth companies around that can benefit from being publicly held. They are less concerned about today's market conditions and know that, as always, this down cycle will lead to an up cycle.

PIPEs took a brief pause in the first quarter, but public companies still need money, and they can only wait so long when their stock price dips before they need to raise the money no matter what, so sure enough we are now busier than ever representing investors and broker-dealers in PIPEs. SPACs have slowed slightly, but that appears to be more a function of the need to absorb the deals that are in the marketplace than any negative long term trend.

So it is difficult to watch friends at places like Bear Stearns get hurt. But anyone who has been through a down market knows (a) that it is inevitable and (b) this too shall pass. Next upturn, make sure to put something away for a rainy day. In the meantime, let's be pleased to be in an area of finance that, while it doesn't shoot for the moon when things are great, it also isn't as badly affected when things turn down.

Quality Time

Just got back from a fabulous cruise with my daughter, who's heading to Brandeis University next year. Just the father-daughter thing which was great. Really missed my son (he's 6 in a week), fabulous wife and wonder pup Toby, but had a really great time just relaxing, hitting the islands, nice dinners and yes a few trips to the blackjack table (daughter played too!) to help pay for it all...

In my office I've always had the rule that you lose your vacation if you don't use it. The reason is not to be a Scrooge, but rather the opposite - namely I want my staff to take all the vacation they are entitled to each year. If not, it is too easy to burn out. I've known people who left a job with 3 months of unused vacation, which to me is crazy.

Life is way too short not to make the most of every single stage. So if you are reading this as a young single, recently married, new children, teenagers, grown kids or even ready to retire, take that extra time with all the people who matter to you. No one on their death bed ever said, "I wish I spent more time at the office." Of course, in a perfect world you enjoy your work (as I do) and also make time for family and friends.

The people in our lives also keep us grounded. If anyone ever feeds my ego just a bit, I just have to go home and take out the garbage to put things in perspective. Lean on them as you deal with all that life throws at you. As for my daughter and me, well, that bittersweet moment where she begins life on her own is just a few months away, and I savored every second of our seven days alone together.

OK, back to the RM world this week!

Season of Renewal

Ah Spring. The time for flowers, new relationships, new beginnings. When enjoying a warm, sunny day can elevate one's outlook and mood. For those of us who suffer cold and snowy winters (yes I know you folks in Canada have it rougher than us in New York), it is indeed a wonderful relief to hear the birds singing and my kids' cabin fever finally broken as T-ball, soccer and playgrounds all come back to life.

Not to stretch an analogy, but I feel the RM world has entered its Spring. Some have begun to call this the beginning of the "heyday" of alternative methods of taking companies public and providing financing. To me the door was slammed shut on RM's difficult past when Goldman Sachs recently announced that they are underwriting a SPAC. Citibank, Wachovia and others financing their operations with multi-billion dollar PIPEs. More and more calls to me from large firm lawyers taking venture and private-equity backed companies through reverse mergers with valuations well over $100 million. The IPO market completely shut down, leaving companies that could benefit from being publicly held with no other way to get there. Even the SEC getting into the game by easing the regulatory burden on smaller public companies to enhance the process of capital formation by reducing the Rule 144 holding period and other changes.

As many of us get ready to head to Los Angeles in June for the Reverse Merger Conference, the largest and most prestigious RM conference of the year (though there are a number of other excellent conferences as well), we can pause and possibly even allow ourselves a small victory lap around the Millennium Biltmore Hotel where it will be held.

Just a small one, though. Unlike some of my law clients and friends on Wall Street, while I am a supreme optimist, I worry when any trend heats up too much and too fast. How many of us said, "The Internet boom could last forever." "Real estate prices could continue to rise indefinitely." "Biotech stocks have no place to go but up." "We have defeated the business cycle." Those of us that have been around the block a few times (or the Millennium Biltmore) know that everything in business has cycles.

That said, I have enjoyed the fact that, for the most part, the RM and PIPE worlds are not market-sensitive or cyclical. Our business in both areas have steadily grown each year since the early 2000s. Indeed I was doing many reverse mergers during the Internet boom of the late 1990s, when companies could complete IPOs very easily. The problem then - some companies wanted to be public even faster than the six months or so it took to complete an IPO. So reverse mergers are an attractive alternative regardless of market conditions or the state of the IPO market.

As a entrepreneur, I am always shooting for the sky. Over time, however, watching myself and clients and friends, I have learned that the old adage "slow and steady wins the race" also can be a very successful, very lucrative way to approach one's business philosophy. I do believe that the RM world is not seeing a "bubble" which could burst disastrously as with the Internet boom, but much more of a slow and steady growth. Let's do our best to keep shooting for the sky while keeping our feet on the ground. But a nice little smile on a nice Spring day we have earned.

Video Intro to Reverse Mergers

I was interviewed several months back for Europe-based Money TV International, an Internet TV network. I decided to post the video here on the blog (see link on the right or click here) because, when I took a look at it, I felt it provided a helpful overview and introduction to reverse mergers.

For those who may just be getting started in this area, or those who are experienced but wouldn't mind a refresher as to the basics, as well as a discussion of why these techniques are more popular than ever, take a look. It even promoted the humble blog!

Hope you enjoy this short (8 minute) interview.

Go Denver!

I spent this week visiting clients and contacts in Los Angeles and Denver. I have written before about the burgeoning technology and media sector in LA being underserved by a paucity of capital sources in the City of Angels.

Having made my very first visit to Denver, other than the really cold winters (not my thing), I can totally understand why most of the people I met with are transplanted East Coast folks. Besides being spectacularly beautiful, the cost of living here is dramatically lower than our crazy life in New York, and quality of life better for sure. Class A space at $24 a square foot (in NY top space is well over $100 a foot now). Homes are more affordable. John Elway has opened up several truly fabulous steakhouses.

I said to one of my hosts, "Is there ever any traffic in this city?" The answer: of course, but the traffic always moves at the speed limit, except if you're headed to the Broncos game.

That said, there is some serious business going on. Given that some of the questionable and shady characters in RM's past resided in Colorado, I don't know what I expected coming here. What I found was a beautiful, clean city and a talented, serious group of finance professionals who have made Denver a true financial center. Some major companies like Remax have moved in. I am very impressed with the intensity these professionals bring to their work while still managing to have balance in their lives.

I think LA can only wish they had the number of investment banks and capital sources that Denver boasts of. Kudos to the Mile High City and thanks to all my clients and friends for their wonderful hospitality. I will be back!

Speaking of lawyers...

I know that many of you who are regular visitors are attorneys at some of the largest law firms in the world (Google has a wonderful analytic tool that allows me to see what network visitors come from). Some would say this is of no help to me as I seek to promote my law practice, that I would rather have potential clients visiting. Yes of course I would love that, but I also love you lawyers.

Why is that? There are two very important reasons. First, for many years one of the principal impediments to improving the legitimacy and acceptance of IPO alternatives were the large firm lawyers. They would suggest these techniques were shady, etc.

Over the past 5-7 years, through a variety of methods lawyers have finally understood the value of these approaches. They noticed the SEC tightening up disclosure to add more transparency. They may have read my book. They send their representatives to well-attended conferences. They see the success of many companies going public this way. More recently, some have been involved in some of the largest SPACs. And maybe some have been brought around in part through exposure to my humble blog.

So my view is, the more the merrier. I am thrilled that most large law firms now advise their clients to tread carefully but that reverse mergers, APOs, self-filings and these other options are indeed worth exploring. To me, this means more deals will happen which is good for everyone.

The second reason I love the lawyers is more selfish. More and more large law firms are referring clients to me that are contemplating these alternatives. Since, for various reasons, I am rarely interested in representing the company after it goes public (in part it is because of potential conflicts with our industry leading PIPEs practice which only represents investors and broker-dealers), these firms are comfortable allowing me to come in as "special counsel" while they remain on board with their client as general counsel, working with me on the deal. Once the company is public, I skeedaddle and the client returns to its capable big firm attorney.

The second and a half reason is this. Every deal needs at least two lawyers. Often it is the lawyer for one side who recommends me to represent the other side if they are not already "lawyered up." I also appreciate these relationships in helping me refer business back when I have the opportunity.

So thanks big firm lawyers and I hope you remain loyal blogees (somehow this reminds me of the great "real men of genius" ads). But remember, I get the stats and I know you're out there!!

There's this one about the lawyer...

US Presidential candidate John McCain likes to tell this joke on the campaign trail: what's the difference between a catfish and a lawyer? One's a scum-sucking bottom feeder, and the other is a fish. Lawyers are used to taking heat.

Today I visited a dental surgeon for relatively minor surgery. How many dentist jokes are out there! How many times have I said, "This negotiation is like a trip to the dentist" or "I'd rather be in the dental chair than dealing with this."

Well my surgeon was fabulous and I am doing great of course. So I hope, when we make those jokes about people whose profession we need and should respect, I'll remember the great job my doctor did, and do my best to hold back on that dentist joke.

FAQ and Glossary Added to the RM Blog

In case you hadn't noticed, on the top right of the blog home page, above the picture of the cover of my book, we have added an FAQ (for old guys like me that means "frequently asked questions") about reverse mergers, as well as a good chunk of the glossary already found in my book.

I continue to be astounded by the continuing increase in readership here, thousands each month - and thanks! More important, you must be paying attention because I get regular calls and emails from blogees either thanking me or with a question or, occassionally, new business for my law firm!

My condolences to my friends in New England....last night was quite the moment for our NY Giants!

Winter Contrasts- and a New Idea?

This winter is a study in contrast more than many. During the last week I have been in balmy Los Angeles, chilly Las Vegas, barely freezing New York and then Vermont where the thermometer barely stayed above zero (finally back to New York). The US Presidential race, with no clear front-runner in either party, seems more and more like each candidate declaring themselves to be the opposite of the others. XM and Sirius Satellite Radio both compete with each other and are trying to merge. My 17-year old daughter, now accepted to college (Brandeis), has one foot out the door just as my 5-year old son gets used to a new school and life in kindergarten. These days my music tastes run just as much to John Mayer as John Mellencamp (still John Cougar to me).

In our RM world (you were wondering when I would get there), similarly, we have this dramatic moment when the 8-year old shell-restrictive Worm/Wulff letters are effectively lifted. At the same time the SEC pulled back on allowing shell owners and others the right to sell without registration in six months and now require up to a year. Yes better than before the change, but not as good a deal as some got in the Rule 144 changes. So is the SEC for or against shells and reverse mergers?

Apparently, the answer is yes. There is a strong and growing "glass mostly full" group who believe there is great promise in allowing the growing number of legitimate players to be protected and encouraged in helping companies achieve their goals with a public trading stock.


However, there are some, particularly those who have been around the Commission since the troubled 1980s, who look at the handful of shady players remaining and the enforcement actions against them and do not believe there can ever be a time where APOs and other IPO alternatives can become as legitimate as, say, the IPO itself. Of course they disregard the billions of dollars in fines paid for problems relating to IPOs of the 1990s.

Unfortunately, as indicated in a previous post, a little foonote in the new Rule 144 ruling likely will have the effect of further encouraging the creation of fraudulent shells. My hope is that the SEC pursues a "carrot and stick" approach in this $9 billion a year business. More enforcement dollars should be focused on those creating shells without real businesses or with real intentions masked. Insider trading in shells should be pursued more vigorously. Shell owners who "forget" to disclose their ownership should face consequences.

BUT, at the same time there should be more effort focused on rewarding those who do things the right way. I hope the SEC soon will take another look at the new one-year hold for shell owners and those who invest at the time of a reverse merger. There really is and has been no reasonable explanation for the distinction between these and other PIPE investors who can now sell in six months.

And here's a new suggestion. Maybe, as a counter to the footnote that encourages fraud, we can begin to discuss a "new" Rule 419 to encourage shell creation legitimately. Currently, Rule 419, passed in 1992, requires shares and money from an IPO of a shell to be in escrow pending a merger, and for shareholders to have the right to approve the deal or "opt out" and get their money back. But once approved and closed, the shares originally issued in the shell's IPO can immediately trade. The main problem, of course, is the delay in getting the SEC to approve a proxy statement needed to seek shareholder approval of the transaction.


As a next step, now with 16 years more experience and many more protections in the marketplace, maybe we can consider eliminating the shareholder approval requirement in Rule 419. Instead, one could posit a shareholder "notification" through a super 8-K type document which is filed and mailed to the shell's IPO investors, but not reviewed by the SEC. The holders then could have 10 days after mailing of the notification to opt out if they choose and receive virtually all their original investment back. A shell could still have to find and close a deal in 18 months as currently required. The money and shares can be in escrow, and the deal size could still be required to be at least 80% of the funds in escrow.


This simple, relatively minor change (though a formal SEC rulemaking would seem to be required), which would still protect shareholders, could help bring the end of footnote 32, 172 and their ilk. Rule 419 and the problems it created sent many to Form 10 or "virgin" shells, which were created by the hundreds. The shareholders in those shells have no ability to opt out, no right to vote on a deal, etc. Of course we defend them as protecting the public trading market as no public trading exists until a "super" 8-K is filed and either a subsequent registration is approved, or one year has passed under the new Rule 144 requirements. But again, the Rule 419 protections are not there. It is therefore possible now to get to trading with a virgin shell without ever filing a registration statement- but in all events with a full disclosure super 8-K. In the meantime, since no one is creating Rule 419 shells, their significant protections help no one.


By ensuring the right to "vote with their feet" and opt out of a deal, every investor in a "new 419" shell could have the right to choose not to participate in a merger. But by avoiding the need for a time-consuming, SEC reviewed proxy statement as currently required (and not required in a merger with a virgin shell), the technique will be much more attractive and draw more legitimate players to the possibility of a stock that can trade immediately upon a merger. To repeat: the main advantage is that stock can begin trade following the merger and full disclosure, instead of waiting for a subsequent registration or Rule 144 holding period in a virgin shell merger. I posit there is no real substantive investor protection difference in the two, yet a huge difference to shell founders who do not have to explain the delay in trading as they do in a virgin shell merger.


Do I think the SEC would consider such a thing? Well, after the 2005 rulemaking requiring much more disclosure and the super Form 8-K, I felt it was time to reconsider the Worm/Wulff letters. As reported in my book, I submitted a "no action letter" which I ultimately withdrew with a promise from the staff to address the issue in another way. While most assumed there was no shot, and it did take another two years, that change finally has now been incorporated into the Rule 144 changes. Thus, if the case is made and investors can remain protected in a manner that reduces impediments to capital formation, the SEC will indeed often listen.






Virtually no one pursues Rule 419 shells anymore. The SEC provided too many roadblocks both to taking the shell public in the first place and approving the proxy for the deal once found. Thus, in effect Rule 419 has been a failure unless its goal was to stamp out shell creation (I do not believe that was their goal, and in any event Form 10 shells have proliferated anyway). Removing the shareholder approval requirement in Rule 419, but protecting investors with an opt out feature following full disclosure, would be a reasonable counter-step to foonote 172 of the Rule 144 ruling which will further encourage bad players.

Let's all start a conversation about this.

And speaking of the power of technology...

Thanks to all! Yesterday was a new one-day record for number of visits to our humble little corner of cyberspace known as the Reverse Merger Blog. As we expand the scope of the blog to cover mostly all things small and microcap, I'm thrilled to see that a blog that never even once mentions Britney Spears still manages to attract people.

I am still watching the SEC to find out when we will hear about the new small business proposals. An important event this week is the PLI Securities Regulation Institute, where key SEC folks, including Division of Corporation Finance Director John White, will be speaking. Hopefully they will give some indication of when we hope to finally obtain the relief on 144, S-3 and the like that we've been very patiently awaiting.

Coming Home

A busy week for those of us in smallcap, PIPEs, reverse mergers and APOs as the annual PIPEs Conference convened in NY, so not much else new to write, the SEC has not yet announced anything (although they have declared this Disability Employment Awareness Month), so a moment off to write about, as they say in the Lion King, the circle of life.


My wife and I both attended the same school on Long Island which goes from pre-kindergarten to 12th grade (http://www.lawrencewoodmere.org/). My son is now attending there in kindergarten, his first year. Friday night we attended our first official function as parents, the annual Faculty Show. Yesterday was the school's Homecoming. Though we have attended before as alumni, this was the first year we truly feel as if we are coming home. When my son refers to places in the school that he had music class or an assembly, memories wash over us that are both strange and exhilirating.


Most of us remember our high school years fondly. My wife and I had that rare experience of truly loving school. Great kids, great teachers, great opportunities, great fun. We are so excited that our son has the chance to be just as lucky as we were and so far (well admittedly it is Kindergarten), he is loving school. At the same time, there is a sadness yet serenity that overcomes us as we pass the torch to the next generation. Indeed, in our day there was a ceremony at the end of the school year where a physical "lamp of learning" was symbolically passed from grade to grade; maybe we should do that at home too.

Our older daughter is fabulous but for various reasons did not attend the same school. While we have such pride for her achievements as we slog through the extraordinary fun of the college application process, and have been very active in her school, it simply was not the same as the experience we are having now.

We are very glad to be coming home.

Next, back to RM!

The Week that Hell Brought

I was driving my daughter and her friend to school on a sunny Tuesday morning when it came over the radio. We thought it was a joke on the top 40 station. “A small plane has hit the World Trade Center.” When we realized it was real, I said, well that’s downtown, my office is midtown, I should be able to still head in. I dropped off my daughter and found myself right next to JFK Airport when they reported the second plane hitting. At that moment, all traffic on this normally busy thoroughfare came to a dead halt. As I sat there very confused about what was happening (although immediately Howard Stern said “we’re being attacked”), I remembered the ’93 Trade Center bombing and immediately called the office and closed it, telling everyone to get home and get safe. After 20 minutes of inability to move, I turned around and went home, worried about my daughter at that point. She came home about an hour later.

Our staff first gathered at the restaurant next door to our then office to watch the TV and then realized they needed to scatter. My assistant at the time walked home to Queens over the 59th St. bridge. An associate was worried about his Dad, thinking he was downtown (he was not). A partner's wife came up out of the subway down there and saw everything (she managed to turn around and get out). Another associate walked up to the upper east side to his mother’s and did not get home to Jersey until the next day. My family and I were worried about my brother-in-law next door to the Trade Center at World Financial Center (we did not hear from him until 2pm telling us he was in the hospital treated for smoke inhalation, he got home around 1 am that night after thinking he was not going to make it as the building fell very close to him).

I spent the day watching the TV and emailing basically every person I knew to see if they were OK (it took 3 scary days to find one friend who was out of the country). The next day, with all bridges and tunnels closed, almost all of us made it in anyway. There was no point, as our phones had gone out. We sent an email to everyone we could with our cell phone numbers and such, but no one was calling. We all went for a very long liquid lunch and then went home. That afternoon I reached an old friend who worked at Marsh & McClennan on the 107th floor. Thankfully he was in Florida at a conference. He could barely speak. He told me he supervised a team of 12 people, and had ordered all of them to come in early that day, and they all died.

Then Thursday, more people on the streets, but by noon there were over 100 bomb threats in the city and rumors the trains might shut down, stranding everyone in the city. Still no phones. We closed again and said we’d stay closed until Monday. I remember literally running from the office to the Long Island Rail Road's Penn Station with an associate, stopping only for a moment to pay $2 for a small American flag which still sits in my office. Good thing we stayed closed because hundreds more bomb threats on Friday.

I spent Friday at home wondering what to do. Our phone provider said they had no idea when the phones would be back. Their transformer was at the Trade Center. It wasn’t like you could just call Verizon and ask them to come put new lines in. The city was a mess.

Miraculously, around noon just for fun I called the office and the phone lines suddenly were working. On Monday we all came back, still shaken up but determined. Clients started calling. That deal we were working on before this, let’s get it done. It took a month or so but then things were back to humming as always.

I allowed employees to volunteer down at the site during work time if they wanted to. I offered space in our suite to attorneys whose offices had been destroyed or inaccessible. We did all we could. But we could not bring back the thousands who perished, including so many who died trying to save others.

Now that Osama has discovered Grecian Formula, you can bet he’s determined to do it again. I hope you will take a little time on Tuesday, both to remember the bravery of those who died and those who risked illness to work on the Pile for months, and to remember our need to stay vigilant and resolute in our desire to rid the world of this horrific evil. And also, to remember the wonderful things that happened as the city and our nation came together in those difficult days.

I will remember two that I knew who did not make it that day, Dave Weiss of Canter Fitzgerald and Neil Levin, head of the Port Authority.

Market's Down; RM Blog's Up!

Thanks, thanks, thanks! August 6, 2007 was the second highest one-day total number of visits to this blog since we started back in November. That's in the middle of the summer and there have certainly been more important weeks for the RM world than this one.

Of course we are all worried about the direction of the US and world stock markets and the psychology that is taking a relatively narrow series of issues and causing them to impact on many unrelated aspects of investing mentality.

But let's all keep in mind as we look at deals that today's market conditions are not what really matters when a company pursues a reverse merger. Since it can take a number of months after a deal before "real" trading begins, we end up prognosticating as to how the markets will be in the future, not today. Let's also remember that over any ten-year period, investing in equities always beats out any other type of investing. So if a you take a long term approach, and a broad view of investing in a variety of transactions over a period of time, ultimately you will balance out market conditions to have minimal impact from down markets.

Hang in there everyone, it's still deals-a-plenty from our limited perspective. Thanks again for your continuing, and growing, support for the RMB!

Sorry about the downtime!

To faithful blogees (several of whom emailed me): Unfortunately the blog was "frozen" by the operator temporarily due to technical issues, which have obviously been resolved. As my long-time office administrator constantly reminds me, we are maybe a little too dependent on all the technology in our lives, which is great until it stops working! In any event, my apologies for the downtime and looks like we are back, so keep checking in!

Life Outside RM

As I sit overlooking a magnificent beach enjoying breakfast, I thought I would bring you the latest from the Maui News:

1. Seaweed is beginning to be a problem.
2. Cars are driving too fast.
3. In a report from China, products (non-odorous) are being made from panda poop.

Every once in awhile it's important to put our world in perspective. I hope you are all enjoying summer and the respite it can provide and have a chance to appreciate the joys of life.

See you all soon!

A Worldwide Phenomenon

As we await the full disclosure of the SEC's proposals, your humble blogger has been happily surprised to see a sudden and dramatic increase in visits to this site. Thanks so much! To give you a sense, in just the last month, blogees have come from Riyadh, Bangkok, Moscow, Shanghai, Milan, Taiwan, Tokyo, Seoul, Nairobi, Athens, Madrid, Ireland, Australia, New Zealand, the UK, etc. Of course the vast majority of visitors are from the good old US of A.

I thank you so very much for all your support and repeat visits, and hope all of you are going to buy my book! Seriously, I'm really having fun posting my thoughts and suggestions on here, and as someone who remembers the days when we moved from manual to electric typewriters, still a bit awed and amazed by the entire computer and Internet culture. I will continue to do my best to earn your visits. I welcome any and all suggestions on how to improve the blog, or even the occasional compliment or two!

Oh, those of you in the NY area, be careful on the roads as my 17-year old has now obtained her driver's license! As the kids say...ttys...(for Michael Williams that's "talk to you soon").

Milestones

Dear blogees: It's that time of year, graduations, weddings, award dinners, reunions. From whence we came...

I'm lucky enough to be enjoying three amazing such things this season. First, a charity on whose board I have served for over 15 years, Youth Renewal Fund (www.youthrenewalfund.org), celebrated its 18th anniversary with an amazing dinner fundraiser at the NY Museum of Natural History. For you non-Jews, anything 18 is a meaningful number, so that was quite a feat, and we raised $1.3 million in one night.

Second, I'm here at the University of Pennsylvania this weekend celebrating my 25th college reunion. I'm on campus often as I am Chair Emeritus of the Wharton School's worldwide alumni association board, but this is a special weekend and many old friends are gathering for a great time. Having also attended law school at Penn, I have incredible memories of a very special time in my life, that my daughter, 17, will soon embark upon.

Which brings me to the third, but actually best, great thing. My daughter Sammi, who among other things in her spare time in high school runs her own charity, Kidzz4Kidzz, Inc. (www.kidzz4kidzz.org), had a special honor this week. Back in 5th grade, she received a special award as the most outstanding kid in her elementary school orchestra. She was presented the award by the then-11th grader who had won the award herself six years earlier. At the time we laughed at the notion of Sammi coming back in six years, and how far away that was. This week she came back, now the 11th grader, speech in hand (which she did not even use), to present the award to a 5th grader. She was beautiful and was wonderfully articulate, speaking from the heart about what music means to her and how it can bring people together. My wife and I (and her five-year old brother) are so proud of her we could just burst.

As in some prior posts, I am clearly off the RM message today. But the purpose, I suppose, is to remember, as we rush and do deals and run around the country, what's really important. Luckily I get to love not only what I do, but what I do when I'm not doing what I do. Great week to all.

Leaps and Bounds

Thanks to you my faithful blogees, the Reverse Merger Blog has hit a record for visits this past week, thanks! It looks like about 50% of all visits are new people each week which is great. Thanks to those of you that have come back regularly to see what's up. I even get a sense of where folks are coming from, including law firms, investment banks, almost all continents (OK no one from Antartica yet!), even the SEC!

The world has certainly changed so dramatically since I started practicing law back in the mid-80s. The fax was a new machine and we weren't allowed to use it in our big firm except for international transmissions. The faxes came in on long thermal paper that had to be cut with scissors. Everything else went by courier, regular mail or messenger. Even FedEx was brand new then.

When we worked on corporate transactions, secretaries did not have computers. Shorter documents were typed on typewriters, and pages re-typed when changes were made or even, heaven forbid, changes were made by hand. If changes were too long we added page 2A in between 2 and 3.

For longer documents, we spent hours waiting for our word processing department to input our hand-written changes, then fix what they didn't do right. Then we spent hours "blacklining" by hand to show changes in a document, underlining with a ruler new material and putting a little carat where stuff had been taken out. Then we spent long hours preparing "distributions" of documents, standing at a copy machine that jammed at 3 in the morning making 10 versions of 10 documents that were each 50-60 pages. Then a cover letter to 10 people and 10 sets of mailings every single time documents were revised. Distribution of signature pages back and forth would take days, or require folks to gather in a large conference room to get it done. The manpower to get this done was mind-boggling.

These days of course, we revise documents ourselves on Word with almost no secretarial assistance. A great software program does the blacklining in a matter of seconds. The 10 documents get instantly emailed to the 10 people with no copies made or mailing. Closings are almost always done through distributions of pdf's. Even the fax is almost obsolete at this point.

Why talk about all this? I guess because I can and it's the beauty of having this unique outlet to discuss things. But what does it have to do with reverse mergers? It means for lawyers, investment bankers and others involved in these transactions, the process of doing deals has been vastly simplified because of these dramatic technological advances. It allows sophisticated players who might be in smaller shops to go toe to toe with the larger firms because it is now more about brainpower than manpower.

Sure, if I were doing a multi-billion dollar acquisition of a multinational corporation that had to be completed in 3 weeks, I would only go to a larger firm. But middle market and smallcap deals simply do not require it. It allows players both big and small to have a role in influencing the manner in which deals are completed, and allows us to focus on learning to avoid tricks and traps and constantly improving and evolving our form documents, instead of spending all our time getting distributions out.

As we head to finally enjoy some spring weather, I urge you all to visit my blog one less time this week and stick your head out the window and enjoy! Back to more substantive discussions next time, thanks for letting me muse a bit.