Filed under: Borrowing, Debt

Some time ago, a woman wrote a letter to The New York Times, explaining how her life had been pretty much ruined by a loan shark.

She had borrowed $50 when her daughter was sick and had to pay three consecutive monthly payments of $22. It began a cycle where she wound up broke and then foolishly went to another loan shark. She eventually lost her job (the loan shark went to her boss when she couldn’t make a payment), and finally began working at a new place of employment for a very small salary and naturally couldn’t pay the loan sharks she owed money to. She ended her letter by noting that “the blood-suckers are hounding me to death.”

She signed her letter, “Helpless.”

The year was 1908. One hundred years ago.

Today, that same letter could easily be written, only with the words “payday lending store” in place of “loan shark.” That stated, a payday lending company may telephone a home relentlessly, trying to get their money back and then some. They might sue a person in court. They may help make life miserable for some people, decimate their credit score, send them into bankruptcy and financially ruin them for years to come, but at least they can’t legally send someone to appear in your doorway and threaten your health, or stalk your boss.

Borrowing money with interest rates you can’t afford is still a poor idea — pun intended — but at least predatory lending offers a safer option out there than loan sharks.

Payday lending stores started to swell in the early 1980s when many banks, angling for better profits, moved out of poorer neighborhoods. That’s when the industry truly started to come into its own. It also didn’t help when, in 1979, laws were loosened governing interest rates on loans. Before 1979, each state loan capped how high an interest rate could go.

Arguably, the predatory loan industry can evolve even more beyond not breaking people’s legs — much, much more. On the other hand, with 13 says having banned or virtually eliminated the payday loan practice, and many others looking enjoy it may, one has to wonder if this path is just going to take us back where we started. Sure, plenty of people abuse the system, but I half wonder if this will just encourage anxious, occasionally-cash-strapped citizens who feel helpless to someday do something they never dreamed of doing — like meeting a loan shark in a dark alley.

Geoff Williams is a business journalist and the author of C.C. Pyle’s Astounding Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale).

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Filed under: Top deals, Raising money, Investments, Shareholders, Value and lack thereof, Public or private?

According to a report from the Ernst & Young’s quarterly US IPO Pipeline Report, IPO activity is flattening as companies are waiting and watching to market to make their move. While that observation is obvious as a heart attack, there are some rather good details that may lead to help determine good IPO’s versus bad IPO’s in that report.

In the first quarter of 2008, 90 IPOs sat in the pipeline, the same amount as the last quarter of 2007. New registration was stable across the quarters, but the slide is still downward sequentially. In January there were 10 while February and March saw only 6 and 7, respectively. While the amount the registrations represent grew this quarter compared to last, $16.8 billion up to $17.3 billion, the numbers slowed toward the end of the quarter. It seems pre-IPO companies are holding tight and watching the market.

As expected, first quarter 2008 weakened compared to the first quarter in 2007. In the first quarter of 2007, 103 deals waited in the pipeline compared to 90 in 2008. In 2007, the registrants represented $22.8 billion compared to $17.3 billion in 2007. The average deal size also dropped, down to $192 million from $221 million. The largest deal in 2007, The Blackstone Group L.P. (NYSE: BX) reached $4.0 billion while in first quarter 2008, the largest was American Water Works at $1.6 billion. Visa Inc. (NYSE:V) was left off because of an end of quarter and for size issues as ‘one of a kind.’ Companies are also sitting in the pipeline much longer, 163 days on average compared to 113 in 2007.

Technology takes up the bulk of the pipeline with 26 registrants and $3.3 billion in dollar amount, up from $2.8 in fourth quarter 2007. Technology attracts foreign issuers with four out of five foreign issuers in the technology sector. While technology went up first quarter 2008, oil and gas dropped 60% from $5.3 billion fourth quarter 2007 to $1.9 billion. Biotech accounts for a solid 12 registrants and pharmaceuticals tally 11. California leads on a state-to-state basis, filing 16.7% of the total filings at 15. Texas and New York followed with 11 and 8, respectively.

Also according to the report… Patience and confidence are apt to ebb by June, but if you’re a good company with solid business plans, practices and proven results, opportunities still await you in the markets.

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Filed under: Borrowing, Debt

In the last year, there has been a lot of movement afoot in state governments to either quash payday lending establishments or at least force them to bring down their interest rates. Here’s a quick snapshot of how things are going — or not going.

California: Earlier this month, just as they were going to vote on a bill that would have forced payday loan stores to cap their annual interest at 36%, effectively meaning that for each $100 a consumer borrowed, he would only have to pay back that $100 plus $1.60, legislators pulled back.

Oregon: Last July, a 36% annual cap was put on the payday lending industry, and 80% of the stores closed up and went out of business.

Illinois: In 2005, the say put forth many regulations for payday loans under 120 days. So lenders stopped issuing short-term loans and went for loans longer than 120, meaning their customers wind up paying more and going into more debt.

Ohio: They’re currently trying to pass Home Bill 333, which would do what California was trying to do.

Georgia: Since 2004, payday lending has been a felony. North Carolina has also banned the practice. All in all, there are 13 states in America that have banned or virtually wiped out the industry in their own states: Oregon, Arkansas, Connecticut, Georgia, Maine, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Vermont and West Virginia. They’re also illegal in the Virgin Islands and Puerto Rico.

And our neighbors to the north? Just as the payday loan stores are popping up everywhere in Canada, partially due to the influx of Americans going north to get cash, many provinces like Ontario are looking into legislation to regulate the industry.

Geoff Williams is a business journalist and the author of C.C. Pyle’s Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale).

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Filed under: Debt, Entrepreneurship, Tax, Career, Wealth, Recession, Bankruptcy

Normally, the loss of competitors in your field of business could possibly be considered a good thing, giving a boost of orders and income to your own business or employer. In today’s economic climate however, the loss of competitors gives me pause for concern. Even as we struggle to accommodate growth in our facility, I’m worried by the downfall of some of our wood products compatriots. I know I’ve written that it doesn’t pay to cry over lost manufacturing jobs, but that doesn’t mean we should be without compassion either.

The National Federation of Independent Businesses (NFIB) reports for March that it’s Small Business Optimism Index is at its lowest point since the second quarter of 1980. Businesses are complaining that increased selling prices are not keeping up with overhead inflationary pressures. Nearly one-quarter of the NFIB survey respondents indicated that they raised employee compensation by a margin which is outstripping profitability increases. I believe that therein lies the downfall of my company’s fallen competitors.

One of the biggest concerns I have with these job losses is that they tend not to be felt outside their own regions. We as a country lose a hundred good jobs here or there every day, in a hundred unnamed places. But it doesn’t make the headlines because it doesn’t sell advertising space. Government statistics never paint the whole picture either. The government bean counters expect that we’re too dull to understand that the loss of a well-paid machinist isn’t mitigated by the addition of yet another undocumented food service worker. They only give you the bottom line numbers, painted with a broad and blurry stroke of the brush.

So, my employer’s loss of competitors has a core which tastes quite bitter. As I work my long hours I sometimes take pause to think; Was that competitor we lost as much a buyer of my goods as it was a rival? Could my employer be the next to go under, or my neighbor’s, or yours? Please state a quiet prayer for the unemployed among us, then get back to work. That is, if you still have it.

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Blabatocracy’s new mantra: All Jeremiah Wright, All the Time - CNET News
If my hunch is right, Chris Tolles has a superior shot at representing the future of media than does Chris Matthews and his ilk. And that would be so fine by me–and probably lots of you, as well. At the Web 2.0 Expo last week, I had a long

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April 28: Local News Briefs - Herald-Bulletin
New Hope United Methodist Church, 812 W. 13th St., Anderson, will continue its spring revival today and Wednesday, with services at 7 p.m. Guest speaker will be the Rev. Henry Johnson III. Johnson is pastor of the historic Union Grove Baptist Church

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Colombia says major drug lord killed - Miami Herald
Colombia’s defense minister states police have killed a major drug lord for whose capture the U.S. government offered a US$5 million (euro3.2 million) reward. Juan Manuel Santos stated in a news conference Tuesday that police killed Miguel Angel Mejia in

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Ex-UCLA hospital worker accused of selling celebrities’ records - International Herald Tribune
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President Bush talks at a news conference, Tuesday, April 29,2008, in the Rose Garden of the White Home in Washington. White Home Bush states farm bill wouldn’t help with rising food prices President Bush says Congress has failed to act on measures

Ford Motor Company - Newsday
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Online News Poll - WTAP
A lack of funds to provide raises to personnel sparked heated discussion in Tuesday night’s Wood County Schools Board of Education meeting. The comment period drew many who stood in a rally outside before the Board meeting. The board has proposed no

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Filed under: Business, World wide web, Web services, Social Software, web 2.0

Yelp lets customers write reviews of restaurants, shops, and all sorts of other businesses in communities throughout the country. And that’s the sort of service that makes the site both incredibly useful and incredibly hazardous for business owners.

Now Yelp is giving business owners tools that let them keep a closer eye on the reviews their establishment is receiving. If you sign up for a Business Owner Account, you can track how many people view your business page, update your business profile, and send messages to people who have reviewed your business. In order to get a business owner account, you’ll obviously need to verify that you actually run the business in question.

Of course, there’s no guaranty that you’ll be able to prevent people from writing that your food tastes stale or that your bathrooms are smelly unless you actual improve your food and clean your bathrooms. You know, unless those folks on the internet are lying. But that never happens.

[via TechCrunch]

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Filed under: Deals, Management, Raising money, Investments

Vinum Capital Management has announced the launch of a $250 million fund targeting the California and west coast wine industry, Vinum Capital Partners I, LP. The fund will focus on mid-size premium and super-premium wine properties that produce 20,000 to 150,000 cases per year.

The California-based company plans to acquire wine companies, grow and expand them, and ultimately sell the assets in this industry that receives relatively little attention from equity investors. Vinum put together a solid team with significant experience in the wine industry, totaling $1 billion in winery-related transactions.

I”ll state one thing after reading this new — each worker in private equity probably wants to get hired by this fund.

Investment partners for the fund include Justin Faggioli, former COO of Ravenswood, Scott Setrakian, former Director of Golden Say Vineyards and an M&A and financing expert, G. Craig Vachon.

The portfolio management team for the fund lists Bill Foster from Beringer, Jonathan Pey from Robert Mondavi and Fosters Wine Estates, Doug Rogers from Gallo, Southcorp, and Brown-Forman Wines, and Bob Steinhauer from Beringer.

If you have kept up with the wine, beer, and spirits industry, you’ll get the significance of this as both Beringer and Mondavi are formerly public companies. Fosters acquired Beringer earlier this decade. Constellation Brands (NYSE: STZ) also acquired Robert Mondavi.

Jon Ogg produces and edits the Special Situation Investing Newsletter for 247WallSt.com.

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Filed under: Deals, Raising money, Venture capital industry, Investments

Quaker BioVentures closed its second fund that focuses on life science companies in the Mid-Atlantic region at $420 million, beating a target of $120 million.

The first fund closed for $280 million and invested in 24 companies. The fund has been successful, with Amicus Pharmaceuticals going public last Might, while Eximias and MedMark were each acquired in spring of 2006. BioRexis Pharmaceutical Corp. and Precision Therapeutics are pending acquisitions.

The second fund has already invested in five companies including Argolyn BioScience, Diasome Pharmaceuticals, EKR Therapeutics, Optherion, and Transave. Quaker’s partners for the fund include Sherrill Neff, Brenda Gavin, Richard Kollender, Ira Lubert, Adele Cirone Oliva and Dr. Matthew Rieke. The limited partners for the second fund have not been disclosed, however, Thomson Reuters reported that the Pennsylvania Public School Employees’ Retirement System and the Pennsylvania State Employees’ Retirement System have invested.

Jon Ogg produces and edits the Special Situation Investing Newsletter for 247WallSt.com.

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Filed under: Debt

My wife and I usually take in a few concerts or comedians during the year as well as catching the occasional hockey and baseball games. This year, however, has proven different on both fronts. We missed the entire season of our favorite minor league hockey team, the Ft. Wayne Komets, and passed on seeing the hilarious Jeff Dunham in Michigan last month. We will also be passing on several concerts in the coming months.

These changes in our entertainment habits were spurred by the rising gas prices and tightening our belt due to the current recession. Spending $100 plus dinner on a concert when unemployment is rising, seems rather frivolous. Listening to a the latest album in surround sound or catching an HD concert on cable allows us to work on paying down debt and prepare for any consequences of the current economic downturn.

Even though we’ve cut back, we’ll still plan to catch some minor league baseball, while we root on the Mudhens! Thankfully the tickets are an incredibly good value, and by going with friends we have the ability to keep the gas cost down. We are saving more money by going to the alumni day our alma mater is putting on at the stadium. Group price tickets and a cheap diner nearby make for a fun and frugal night.

While the recession is keeping us from seeing our favorites up close an personal, we don’t plan to sit at home and become spinsters. We will still try to take in concerts comedians and sporting events closer to home and in the company of friends to keep costs down.

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Filed under: Budgets, Debt, Saving

Even those with the smallest amount of money management smarts know that there is a way to be responsible with their “tax rebate” check, and a way to be irresponsible. Our government is hoping you’re irresponsible with yours. The whole point of the checks is for everyone to run out and spend it on things they might not otherwise buy, giving a tiny boost to our economy.

But as prices are rising (and there’s no shortage of people complaining about it) and people more are in debt than ever before, the most responsible thing to do with a tax rebate check for most consumers is to save it or use it to strategically pay off some debt. That’s what Terri Cullen of the Wall Street Journal is hoping her family does with their checks.

But she knows they probably won’t. Why not? Because she states they (and many other consumers) look at these checks as “found money.” It’s an unexpected windfall that’s not likely to happen again, so they feel as if they’ve somewhat of an obligation to run out and spend this free money.
I comprehend the mindset, especially if you’ve been living under a very tight budget for a while. But envision what good could come out of being a tiny more thrifty and saving the money for a rainy day. For one, you could generate some interest on that money. (Maybe not a lot, but it’s still something!) And I guarantee that a few months down the road when your vehicle breaks down unexpectedly or you’ve some other surprise expense, you’ll be happy you set that money aside.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Record-keeping, and is the author of Essentials of Corporate Fraud.

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