PIPEs E-Book

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Bloomberg Professional
• Sprache: Englisch

Seitenzahl: 526

Veröffentlichungsjahr: 2010

Beschreibung

Private investments in public equity (PIPEs) offer a practical financing alternative for companies seeking capital and a unique asset for investors. For practitioners who know how to identify and execute transactions, PIPEs present a growing opportunity. This revised and updated guide presents the views, voices, and invaluable expertise of leading practitioners from all specialties in the field. The book is divided into three parts: "The Business of PIPEs," which provides a historical backdrop and overview; "Regulatory Landscape and Structural Alternatives," which details the legal framework and transaction structures; and "Deal Flow," which offers the investor's perspective on negotiating deals. With detailed discussions, ranging from the origins of the marketplace and deal structures to legal considerations and due diligence, and from finding new opportunities to trading strategies, this book provides a clear window to the inner workings of this active area of the small-cap market. Investors, financial analysts, investment bankers, corporate and securities attorneys, and executives of public companies will find substantial value in the pages of this book.

Leseprobe

Table of Contents

Epigraph

Praise

Title Page

Copyright Page

Dedication

ABOUT THE EDITORS

ABOUT THE CONTRIBUTORS

Acknowledgements

Introduction

What Is a PIPE?

How to Use This Book

PART ONE - THE BUSINESS OF PIPES

CHAPTER 1 - Overview An Emerging Market

Some History

Structural Considerations

Documentation

Issuers

Investors

Pricing and Post-closing Considerations

Regulatory and Other Considerations

The Future of PIPEs and RDs

CHAPTER 2 - The Marketplace A Statistical Summary

The Size and Shape of the PIPEs Market

Public Corporations (the “Issuers”)

Investment Managers and Funds (the “Investors”)

Investment Banks and Placement Agents (the “Agents”)

Security Types

Industry Sectors

Price Types

Downside Protection Versus Price Protection

Enhanced Redemption Rights and Antidilution Protection

Outlook

CHAPTER 3 - A Historical Perspective The Bubble, Converts, and the Birth of ...

Structural Inefficiencies

LESSONS LEARNED (PART 1) - Convertibles Emerge and the Structured PIPE Market ...

LESSONS LEARNED (PART 2) - The Bubble Pops and Investors Assess New Risk

CHAPTER 4 - The Players Issuers, Investors, Agents, and Regulators

Issuers

Investors

Placement Agents

An Evolving and Adaptive Market

PART TWO - REGULATORY LANDSCAPE AND STRUCTURAL ALTERNATIVES

CHAPTER 5 - The Law Legal and Regulatory Framework

Legal and Regulatory Framework

Executing Private Placements, PIPEs, and Other Hybrid Transactions

Conclusion

CHAPTER 6 - Fundamental PIPEs Typical Structures and Transactions

Two Types of Structures

Types of Securities

Issuance Structure and Conversion Price

Registration

Penalties

Redemption, Repurchase, and Forced Conversion

Covenants

Other Legal Issues

Documents

Term Sheets

CHAPTER 7 - Registered PIPEs Registered Direct Transactions

The Shelf Registration

Public Equity Lines

Conclusion

CHAPTER 8 - Litigation Strategies Managing Litigation Risk and Addressing Other ...

History of Litigation and Other Proceedings Involving PIPEs

Litigation Strategies

Drafting the Deal to Protect Against Litigation

Implications of Recent SEC Developments Affecting PIPEs

Conclusions

PART THREE - DEAL FLOW

CHAPTER 9 - Managing Risk Securities Structures, Trading, and Deal Documentation

Structures Utilized

Trading

Documentation

Due Diligence

A Summary of Risk Management

CHAPTER 10 - Due Diligence and Valuation Policy Caveat Emptor Squared

Ten Commandments

The Specialists

Financial Skepticism Is the Best Medicine

Management: The Spin Doctors

The Truth Shall Set You Free

Criteria for Thoughtful Due Diligence

The Business of Valuation Policy

CHAPTER 11 - Reverse Mergers + PIPEs The New Small-Cap IPO

Why Now?

Basics of Reverse Mergers

Advantages and Disadvantages

Legal Issues and Traps

How to Get Started

Conclusion

AFTERWORD

GLOSSARY

INDEX

ABOUT BLOOMBERG

“A complete guide designed by qualified professionals to help companies, investment professionals, and investors better understand PIPEs as a financial tool.”

- Mitch Hull President, Hull Capital Management, LLC

Private investments in public equity (PIPEs) offer a practical financing alternative for companies seeking capital and a unique asset class for investors. For practitioners who know how to identify and execute transactions, PIPEs present a growing opportunity.

This revised and updated guide presents the views, voices, and invaluable expertise of leading practitioners from all specialties in the field. The book is divided into three parts: “The Business of PIPEs,” which provides a historical backdrop and overview; “Regulatory Landscape and Structural Alternatives,” which details the legal framework and transaction structures; and “Deal Flow,” which offers the investor’s perspective on negotiating deals.

With detailed discussions, ranging from the origins of the marketplace and deal structures to legal considerations and due diligence, and from finding new opportunities to trading strategies, this book provides a clear window to the inner workings of this active area of the small-cap market. Investors, financial analysts, investment bankers, corporate and securities attorneys, and executives of public companies will find substantial value in the pages of this book.

Praise forPIPEs: A Guide to Private Investments in Public EquityRevised and Updated EditionEdited by Steven Dresner with E. Kurt Kim

“A valuable and comprehensive update on the PIPEs market, with insights from the bankers, lawyers, and buyers. This is an important reference for anyone working with PIPEs.”

PAUL ROTH Partner, Schulte Roth & Zabel LLP

“A complete guide designed by qualified professionals to help companies, investment professionals, and investors better understand PIPEs as a financial tool.”

MITCH HULL President, Hull Capital Management, LLC

“The PIPE space is made up of so many moving parts, but this book turns it all into a smooth-running machine. Everyone in this business has learned to rely on Steven and Kurt for clarity and understanding.”

MITCH LEVINE Founder and Managing Partner, Enable Capital Management

“Steve Dresner is the most knowledgeable person in the world of PIPEs. This PIPEs book is the bible of the industry and the source for anyone seeking straight answers regarding this otherwise complicated subject.”

DIAN GRIESEL, PHD Founder and Chairman, The Investor Relations Group

“The first book to explain the trends in the PIPE industry, this revised and updated edition is essential reading to keep up with the changes and make the best use of this important financing vehicle.”

RAMNARAIN JOSEPH JAIGOBIND Managing Director, Global Equity Capital Markets, Maxim Group, LLC

“The PIPEs market is one of the most dynamic areas of investment banking today. Whether you are an investor or an issuer, banker, or student, this book is a must-read for understanding this increasingly important area of the equity and equity-linked capital markets. I strongly recommend this publication to both market professionals and laypersons interested in the PIPEs market.”

KIM S. FENNEBRESQUE Chairman and CEO, Cowen and Company, LLC

“This is a must-read for attorneys, hedge funds, investment bankers, traders, and all companies looking to raise capital. This book will become a handy reference to the investment community.”

RON NASH Past president and founder, Nash Weiss & Co.

Praise for the First Edition

“This book is a great reference that all PIPE investors should have in their offices.”

BARRY KUROKAWA Cofounder and Managing Director, ProMed Management

“This collection of essays sheds light on the historical, regulatory, and transactional aspects of these often mysterious securities. Both practitioners and students of the private equity industry should find this book valuable.”

JOSH LERNER Jacob H. Schiff Professor of Investment Banking Harvard Business School

“An impressive array of banking, venture capital, and legal professionals share their insights into this poorly understood but increasingly important financing alternative for smaller to midsize companies. Firms and investment bankers looking to raise capital and investors looking for alternative investment approaches will find this authoritative reference of great value.”

TED BARNHILL Professor of Finance and Chairman, Department of Finance The George Washington University

“This book provides an excellent analysis for issuers, legal advisers, and investors. It is a valuable resource for anyone involved in or considering involvement with PIPEs, or considering issuing or investing in PIPEs.”

MICHAEL B. POLLACK Partner, Reed Smith LLP

“The first truly comprehensive book on PIPEs … as an active participant in the sector, I was impressed by their ability to bring in the best minds in the business for their detailed thoughts on structuring, strategy, and pitfalls for the issuers, advisers, and investors. Great job.”

JONATHAN SILVERSTEIN General Partner, OrbiMed Advisors LLC

“How does one learn to utilize the most popular financial tool for raising equity capital in the next decade? It is by readingPIPEs, the leading guide with the combined expertise of more than a dozen thought leaders, sharing their cumulative knowledge in this field.”

P. MORGAN KASH Cofounder and Chairman, Two River Group Holdings

“A highly useful treatise in an emerging area of the law.”

JOSEPH W. BARTLETT Of Counsel, Fish & Richardson P.C. Founder and Chairman, VC Experts

“In recent years, the importance of PIPEs has grown considerably, but reference material has lagged far behind. This excellent book fills the gap with a comprehensive treatment by highly qualified contributors.”

ANDREW METRICK Associate Professor of Finance The Wharton School of the University of Pennsylvania

ALSO BY STEVEN DRESNER

Reverse Mergers:Taking a Company Public Without an IPOby David N. Feldman with contributions by Steven Dresner

ALSO AVAILABLE FROM BLOOMBERG PRESS

The New Investor Relations:Expert Perspectives on the State of the ArtEdited by Benjamin Mark Cole

Hedge Fund of Funds Investing:An Investor’s Guideby Joseph G. Nicholas

Market-Neutral Investing:Long/Short Hedge Fund Strategiesby Joseph G. Nicholas

Due Diligence for Global Deal Making:The Definitive Guide to Cross-Border Mergers and Acquisitions,Joint Ventures, Financings, and Strategic AlliancesEdited by Arthur H. Rosenbloom

The Securitization Markets Handbook:Structures and Dynamics of Mortgage- and Asset-Backed Securitiesby Charles Austin Stone and Anne Zissu

A complete list of our titles is available at www.bloomberg.com/books

ATTENTION CORPORATIONS

This book is available for bulk purchase at special discount. Special editions or chapter reprints can also be customized to specifications. For information, please e-mail Bloomberg Press, [email protected], Attention: Director of Special Markets, or phone [phone].

© 2003, 2006 by Steven Dresner. Chapters 1-11 and Afterword © 2003, 2006 by Bloomberg L.P. All rights reserved. Protected under the Berne Convention. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher except in the case of brief quotations embodied in critical articles and reviews. For information, please write: Permissions Department, Bloomberg Press, 731 Lexington Avenue, New York, NY 10022, U.S.A. or send an e-mail to [email protected].

BLOOMBERG, BLOOMBERG ANYWHERE, BLOOMBERG.COM, BLOOMBERG MARKET ESSENTIALS, Bloomberg Markets, BLOOMBERG NEWS, BLOOMBERG PRESS, BLOOMBERG PROFESSIONAL, BLOOMBERG RADIO, BLOOMBERG TELEVISION, and BLOOMBERG TRADEBOOK are trademarks and service marks of Bloomberg Finance L.P. (“BFLP”), a Delaware limited partnership, or its subsidiaries. The BLOOMBERG PROFESSIONAL service (the “BPS”) is owned and distributed locally by BFLP and its subsidiaries in all jurisdictions other than Argentina, Bermuda, China, India, Japan, and Korea (the “BLP Countries”). BFLP is a wholly-owned subsidiary of Bloomberg L.P. (“BLP”). BLP provides BFLP with all global marketing and operational support and service for these products and distributes the BPS either directly or through a non-BFLP subsidiary in the BLP Countries. All rights reserved.

PrivateRaise, PrivateRaise.com, and Equity Private Placement (EPP) Database are trademarks of PrivateRaise, L.L.C.

This publication contains the authors’ opinions and is designed to provide accurate and authoritative information. It is sold with the understanding that the authors, publisher, and Bloomberg L.P. are not engaged in rendering legal, accounting, investment-planning, or other professional advice. The reader should seek the services of a qualified professional for such advice; the authors, publisher, and Bloomberg L.P. cannot be held responsible for any loss incurred as a result of specific investments or planning decisions made by the reader.

This book does not constitute or contain advice to enter into any transaction. All legal and regulatory information is provided for informational purposes only and does not constitute advice on these matters. Investments in PIPE securities involve significant risks and are suitable for only certain institutional “accredited investors,” as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended. Prospective issuers of and investors in PIPE securities should consult with their own legal and financial advisors before engaging in any transaction involving the issuance or purchase of a PIPE security.

ISBN-13: 978-1-57660-194-5

The Library of Congress has cataloged the earlier printing as follows:

PIPEs : a guide to private investments in public equity / edited by Steven Dresner with E. Kurt Kim. -- Rev. and updated ed.

p. cm.

Includes bibliographical references and index.

1. Private investments in public equity--United States. 2. Corporations--United States--Finance. I. Title: Guide to private investments in public equity. II. Dresner, Steven. III. Kim, E. Kurt

HG4963.P57 2005

332.6--dc22 2005023535

Acquired by Jared Kieling. Edited by Tracy Tait

To Erica, Max, and Joshua

—S. D.

To Julia, Jonas, and Evalyn

—E. K. K.

ABOUT THE EDITORS

Steven Dresneris the founder of DealFlow Media, an online publishing, database services, and event company with offices in New York, California, and Beijing. DealFlow Media was founded in 2003 with the launch of The PIPEs Report, a premier research tool for those in the equity private placement market. Since its inception, DealFlow Media has distinguished itself as a provider of independent research and analysis of alternative asset markets. DealFlow Media has grown rapidly and now publishes a variety of alternative-investment reports, alternative-investment databases, and weekly newswires. DealFlow Media also produces popular investment conferences including one of Wall Street’s largest annual events, The PIPEs Conference, which is the leading forum for primary market deal structures specific to small- and mid-cap companies.

Prior to founding DealFlow Media, Dresner was an investment banker at Ladenburg Thalmann & Co., and was the founder of VCOM Corporation, a technology development firm focused on the design of Internet-based telecommunications software. Dresner is also a contributor to Reverse Mergers: Taking a Company Public Without an IPO by David N. Feldman (Bloomberg Press, 2006). Dresner has a BS in psychology from the George Washington University and both an MBA in finance and a graduate degree in computer communications and networks from Pace University.

E. Kurt Kim is a partner and chief financial officer of Promethean Asset Management LLC. Promethean invests across asset classes in both the primary and secondary credit, volatility, and equity markets. Kim has spent the past decade in various deal-making and advisory capacities and his experience spans a diverse range of industries and a broad array of investment structures. Prior to being named CFO of Promethean, Kim was primarily focused on leading the firm’s asset gathering efforts from 2004 to 2006. From 1997 to 2000, Kim was an investment manager at Promethean responsible for the origination, structuring, negotiation, and execution of investment opportunities involving equity private placements. Kim founded PrivateRaise LLC (www.PrivateRaise.com), the leading research consultancy for comprehensive market intelligence and analysis pertaining to private placements of equity and equity-linked securities executed by public companies in March 2000 and served as chief executive officer until July 2008. PrivateRaise.com was awarded Forbes’s 2002 Best of the Web designation in the Financial Content Provider category (along with Thomson Financial, Bloomberg.com, and BigDough.com).

Prior to joining Promethean in 1997, Kim worked as a strategy management consultant for Mercer Management Consulting and Towers Perrin in New York. He holds an MBA from the Wharton School of the University of Pennsylvania and a BA in economics and government from Wesleyan University.

ABOUT THE CONTRIBUTORS

Daniel Carlson is the head of trading at BayStar Capital and has more than twelve years of experience in the money management industry, most recently having been head of trading and portfolio manager at Coyote Capital, a SAC-backed biotechnology hedge fund. Prior to that, Mr. Carlson was head of trading at Husic Capital Management where he assisted in the management of hedge fund products. Mr. Carlson started in the alternative investment field as head of trading and analyst at Azure Capital Partners, a venture capital/crossover fund investing in the technology industry. From 1995 to 2000, Mr. Carlson was a senior trader for RCM, where he specialized in trading small-cap and technology issues. Mr. Carlson started his career on the Pacific Coast Stock Exchange where he worked for four years, achieving the level of specialist on the trading floor. Mr. Carlson graduated in 1989 from Tufts University with a degree in economics.

David N. Feldman is the managing partner of Feldman Weinstein & Smith LLP. His practice focuses on corporate and securities matters and general representation of numerous public and private companies, investment banks, venture capital firms, and high-net-worth individuals both in general representation and in transactional and financing activities of all types. Mr. Feldman’s work also includes representation of many small and middle market private companies in general and transactional matters. He is considered one of the country’s leading experts on reverse mergers. Currently writing a book on the subject, he is a frequent public speaker, seminar leader, and counsel on issues related to implementation of reverse mergers.

Mr. Feldman received a BS in economics from the Wharton School of Business at the University of Pennsylvania in 1982 and his JD in 1985 from the University of Pennsylvania Law School. He is an avid supporter of Wharton and the University of Pennsylvania and currently serves as chairman of Wharton’s worldwide alumni association board. He also is chairman and founder of the New York Business School Clubs, an association of New York-area business school alumni groups. Mr. Feldman serves as a member of the Business Advisory Board of Sterling National Bank and he has previously been a member of or associated with the law firms of Feldman & Ellenoff (which he cofounded); Pryor Cashman Sherman & Flynn; Reavis & McGrath (now Fulbright & Jaworski); and Rivkin Radler, LLP.

Stewart Flink cofounded Crestview Capital in September 2000. He has been actively involved in making PIPE investments in small-cap public companies since 1998 and has completed more than two hundred PIPE transactions. He has been quoted on Hedgefund.net and in The PIPEs Report, and has lectured at several universities. Prior to Crestview, he worked in the securities industry for seventeen years at Goldman Sachs, Bear Stearns, and Oppenheimer & Co. He is on the alumni board of the Kellogg Graduate School of Management at Northwestern University and president of the Board of Directors of the Chicagoland Jewish High School. Mr. Flink received his MBA from the Kellogg Graduate School of Management (’83) and a BA from Vanderbilt University (’78). He played on the professional tennis circuit in 1979-1980 and four years of varsity tennis at Vanderbilt. He lives in the Chicago area with his wife and four children.

Brett Goetschius is the executive editor of The PIPEs Report, the leading source of news and analysis on the equity private placement market. He has covered the development of the public and private capital markets for more than fifteen years as an editor and writer for numerous institutional investment periodicals including Buyside, Wall Street Research Magazine, VentureEdge, Venture Capital Investment Review, The REIT Bulletin, and The Wall Street Mortgage Report.

After receiving his BA in political science and writing from Drew University, Brett worked as a reporter for newspapers in New Jersey including the Morristown Daily Record, before joining Crittenden Research in California, were he spent several years developing some of the company’s most successful real estate finance newsletters. Since leaving Crittenden he has produced private equity publications for Reuters and Worth magazine, and been quoted as an expert on the commercial real estate, venture capital, and private placement markets by Institutional Investor, National Real Estate Investor, the San Francisco Chronicle, and the Washington Post. He lives in Sonoma County, California, with his wife and two children.

Lawrence R. Goldfarb is the managing partner and cofounder of BayStar Capital and has more than twenty years of investment banking, trading, and legal experience. His specialties are bridging financial needs of growth companies by making direct investments and structuring transactions that enable companies to grow and provide investor returns. Mr. Goldfarb began his career in 1984 as a tax attorney with the New York offices of Milbank, Tweed, Hadley & McCloy and thereafter Skadden, Arps, Slate, Meagher & Flom, LLP, where he provided tax analysis and consulting services in connection with a wide variety of complex transactions, including financings, mergers, and recapitalizations. In 1987, Mr. Goldfarb joined Credit Suisse First Boston Corporation as a Partner. In 1998, Mr. Goldfarb formed BayStar Capital Management, LLC as a vehicle with which he could focus his efforts in funding growth-oriented, small-capitalization, publicly traded companies, an area that he had focused on while at Credit Suisse First Boston. Mr. Goldfarb is one of the leading experts, speakers, and writers on direct investments and has been asked to speak at numerous industry events and conferences, including Institutional Investor’s Hedge Fund Roundtable and the Alternative Investments Summit, in addition to other private equity and high-net-worth focused conferences. Mr. Goldfarb often serves as a guest lecturer on arbitrage strategies at numerous business schools, including Columbia and Berkeley, and has published articles and books on investing and arbitrage strategies. Mr. Goldfarb received his BA degree from George Washington University and his law degree, cum laude, from Georgetown Law School.

Richard E. Gormley is a managing director at Cowen and Company, LLC, where he co-heads the Private Equity Group and leads the firm’s Private Investments in Public Equity (PIPEs) and Registered Direct offerings (RDs) investment banking practice. He joined SG Cowen from Rabobank International, where he was managing director and global head of equity and debt private placements, as well as of high-yield debt origination. During his nineteen-year career, he has structured, marketed, and closed private placement transactions for both private and public companies approximating $6 billion; securities have included common stock, convertible debt and preferred stock, mezzanine securities with equity participation, senior and subordinated debt, and a variety of 144A securities. Before joining Rabobank, Mr. Gormley was a director at Nesbitt Burns Securities, Inc., where he started and managed the firm’s private equity investment banking practice. Earlier he was a vice president at Security Pacific Merchant Bank/Burns Fry in its private placement group. He began his career at Citibank’s North American Investment Bank. Mr. Gormley received a BA degree, magna cum laude, in philosophy and psychology from Cathedral College and an MA degree in theology and philosophy from Immaculate Conception Seminary.

Eleazer (Ele) Klein is a partner in the corporate department of Schulte Roth & Zabel LLP, where he practices in the areas of securities law and mergers and acquisitions with a concentration in developing and implementing alternative investment structures for private equity investments. Mr. Klein has been active in structuring and negotiating private investments in public equity since the early 1990s and typically works on well over one hundred PIPE and related transactions every year. He has also worked with some of the major investment groups in developing convertible 144A and equity line products.

In addition to PIPEs, his areas of practice include Reg D, Reg S, and Rule 144A offerings; initial public offerings and secondary offerings; mergers and acquisitions; and venture capital financing. Prior to joining the firm, he worked at Davis Polk & Wardwell. He received his law degree from Yale Law School, where he was the senior editor of the Yale Law Journal, and received a BS degree, summa cum laude, from Brooklyn College.

James F. O’Brien Jr. is the founding partner of Promethean Capital Group LLC and its affiliates, a privately held diversified investment organization that has structured and funded direct investments in public companies since 1994. Prior to establishing Promethean, Mr. O’Brien was a managing director in charge of strategic development and implementation for Fletcher Asset Management. He began his career at Salomon Brothers as a financial analyst in the paper and forest products group. Mr. O’Brien graduated with a BA in economics from Bates College.

Anna T. Pinedo, a partner in Morrison & Foerster’s New York office, has concentrated her practice on securities and derivatives. She represents issuers, investment banks, financial intermediaries, and investors in financing transactions, including public offerings and private placements of equity and debt securities, as well as structured notes and other structured products. Ms. Pinedo works closely with financial institutions to create and structure innovative financing techniques, including new securities distribution methodologies and financial products. Ms. Pinedo has particular financing expertise in certain industries, including technology-based (Internet-related, life science, and biotech), telecommunications, health care, financial, REITs, and consumer finance. Ms. Pinedo has worked closely with foreign private issuers in their securities offerings in the United States and in the euro markets. She also has worked with financial institutions in connection with international offerings of equity and debt securities, equity- and credit-linked notes, and hybrid and structured products, as well as medium-term note and commercial paper programs. In the derivatives area, Ms. Pinedo counsels a number of major financial institutions acting as dealers and participants in the commodities and derivatives markets. Ms. Pinedo advises on structuring issues, as well as on regulatory issues, monetization, and hedging techniques. Ms. Pinedo also has advised derivatives dealers regarding their Internet sites and other Internet and electronic signature/delivery issues. Ms. Pinedo received her BSFS degree from Georgetown University in 1990. In 1993, she received her JD from the University of Chicago.

Joseph Smith, widely recognized as a leading expert in the field of private investments in public equity, is a partner of Feldman Weinstein & Smith LLP, where he developed and perfected many of the most commonly used PIPE transaction structures. He also has more than twenty years of experience representing small- and mid-cap public and private companies in all phases of their development, from formation through IPO and subsequent merger and acquisition activity, and helping broker-dealers with their regulatory issues. Mr. Smith spent two years as a managing director and registered principal with Ladenburg Thalmann & Co., structuring and placing PIPE transactions with the leading team in that business.

David W. Stadinski is a principal in the equity capital markets group of Piper Jaffray & Co. where he leads the firm’s PIPEs and Registered Direct effort. He joined Piper Jaffray from SG Cowen & Co. where he was most recently a director in the private equity group focused on the origination and execution of PIPEs and Registered Directs. Mr. Stadinski provides client service and transaction management services to a broad range of Piper Jaffray’s corporate and institutional clients and has considerable experience in equity, equity-linked, and debt capital-raising transactions, both public and private. In his career, Mr. Stadinski has completed more than fifty PIPEs and Registered Direct offerings raising proceeds in excess of $1 billion. Prior to joining the private equity group at SG Cowen, he was a member of SG Cowen’s equity capital markets group where he worked in an origination capacity focusing on public capital-raising transactions for emerging growth companies in the technology and health care sectors. Mr. Stadinski earned his MBA in finance and information systems from New York University’s Stern School of Business and his BS in business administration from the University of Delaware.

James R. Tanenbaum, a partner of Morrison & Foerster LLP and Chair of the firm’s Capital Markets Group, has concentrated his practice on corporate finance and the structuring of complex domestic and international capital markets transactions. He represents issuers, including some of the nation’s largest financial institutions, underwriters, agents, and other financial intermediaries, in public and private offerings of securities as well as issuers, investment banks, and purchasers in hybrid, mortgage-related, and derivative securities transactions. Mr. Tanenbaum works closely with leading investment banks to formulate new methodologies for securities offerings and to structure innovative financial products. He also represents many technology-based companies, including many Israeli companies in the technology and biotech sectors. Born in New York, NY, Mr. Tanenbaum received his BA from Lehigh University in 1971, graduating summa cum laude. In 1972, he received his MA from Fletcher School of Law and Diplomacy of Tufts and Harvard Universities and received his JD in 1975 from the University of Pennsylvania where he was an Editor of the University of Pennsylvania Law Review.

Edward Totino is a partner in the securities litigation practice group of DLA Piper US LLP. He represents domestic and international banks and securities broker-dealers, as well as issuers and investment funds, in securities litigation and complex commercial litigation. Mr. Totino has an AV peer rating from Martindale-Hubbell, indicating the highest levels of skill and integrity. He has been awarded a Certificate of Appreciation by the judges of the Los Angeles Superior Court for service as a temporary judge for each year from 2001 through 2004, and has been named a Southern California Super Lawyer for 2005 in the area of securities litigation by the magazines Law and Politics and Los Angeles. Articles written by Mr. Totino have appeared in The Journal of Investment Compliance and Andrews Derivatives Litigation Reporter. In 1993, Mr. Totino received his law degree, magna cum laude, from Cornell Law School where he was a member of The Order of the Coif.

Perrie M. Weiner, a partner and international cochair of DLA Piper US LLP’s securities litigation practice, represents private equity funds including hedge funds, broker-dealers, and issuers in SEC and NASD enforcement proceedings as well as in individual and class action securities fraud and related claims. He has a national practice with scores of litigation victories and publications widely reported in the New York Law Journal, the Los Angeles Times, Hedgeworld, and The Economist, among others. Mr. Weiner also represents private and public companies in a variety of industries, in both national and international business disputes. In 2004, he was named a Southern California Super Lawyer by Los Angeles Magazine, ranked among the top 5 percent of all lawyers in Southern California, and was one of only sixteen securities litigators to make that list. In that same year, he was listed by the Los Angeles Daily Journal as one of California’s Top Mega-Rainmakers, in the $10 million Club. In 2005, he similarly was named a Southern California Super Lawyer by Los Angeles Magazine.

Mr. Weiner also is an author, speaker, and commentator on cutting-edge securities litigation issues. Most recently he has had securities articles published in The Journal of Investment Compliance, Securities Litigation & Regulation, and Derivatives.

Steven Winters is founder and managing member of Gemini Investment Strategies, LLC, a multistrategy alternative investment firm. Prior to founding Gemini, Mr. Winters was a managing director and portfolio manager for The Palladin Group, LP, where he oversaw multistrategy and structured finance portfolios, sharing responsibility for more than $250 million of investors’ capital, including investment decisions, trading, risk management, hedging, restructurings, and special situations. In addition, he successfully structured, negotiated, and invested in numerous PIPEs. He has worked as director of trading for Promethean Investment Group, LLC and was an equity and derivatives trader for Bernard L. Madoff Investment Securities, LLC. Mr. Winters developed equity, derivative, and tax arbitrage trading and investment strategies for Fletcher Asset Management and began his career in the corporate finance department at Salomon Brothers, where he specialized in raising capital and providing advisory services for mergers and acquisitions. He holds a BS degree in economics from Cornell University.

ACKNOWLEDGMENTS

IT IS MY HOPE that this revised and updated book captures the essence of recent developments in the PIPE market. Once again, it is thanks to the hard work of many people that this second edition went from idea to reality.

For their collaborative efforts, I offer my coauthors my sincere appreciation. Through our work on this project and my affiliation with these people, I am able to keep a finger on the pulse of a business that is constantly changing.

As both coauthor and coeditor, Kurt Kim continues to provide the technical knowledge gleaned from analyzing thousands of PIPE deals. I thank Kurt for being a steady guide, a close friend, and for supplying some great statistics.

Many others have added to the quality of this text through their involvement with DealFlow Media, my publishing and events company. I thank everyone in both our New York and California offices, but most important, I thank Brett Goetschius, who has been a mentor in every sense of the word. Brett, you’re one of the finest people I’ve ever worked with and I hope one day I might find the inner peace that you have.

Worthy of serious recognition is Jared Kieling at Bloomberg Press. Jared listened attentively to my pitch for a second edition at my conference in the fall of 2004 and helped make the idea an actual book only one short year later. Jared, John Crutcher, Tracy Tait, and the rest of the team at Bloomberg Press have once again exceeded expectations.

Thanks to my father, who continues to be my biggest supporter (and I his biggest siphon in terms of lost billable hours). I look forward to tackling new projects with you. Something tells me we’re just getting going.

On the family front, thanks go to my mom for keeping me grounded. And in the tradition of saving the best for last, all my love to my boys Max and Josh, and my wife Erica. Words aren’t enough to express my gratitude.

STEVEN DRESNER

AS WITH THE FIRST EDITION of PIPEs, this work reflects the expertise and effort of many.

I would like to sincerely thank each of my coauthors for their abundant enthusiasm and strong commitment to this project and for their willingness to again share their considerable experience to further market transparency.

I would like to thank my coauthor, coeditor, and good friend, Steven Dresner, for his ceaseless dynamism. From our very first meeting regarding the first edition of this book, his passion and dedication to this subject matter were unmistakable. Our collaboration has resulted in a compelling intellectual journey and a lasting friendship.

I would also like to express warm thanks to my colleagues and friends for their insightful criticisms and comments and for the gentle manner in which they were conveyed.

At Bloomberg Press, Jared Kieling and Tracy Tait have continued to be tolerant coaches while expertly guiding us through the editing and production process.

Most important, I would like to give my deepest love and gratitude to my wife Julia for her unwavering love and support, and to my precious children Jonas and Evalyn who astonished me with patience and understanding well beyond their years.

E. KURT KIM