Players like Lebron James are renowned for their smart decisions when it comes to their money, whereas others like Allen Iverson serve as a cautionary tale. Over the course of his career, Iverson earned approximately $200 million: $155m from his NBA salary and another $40-$50m in endorsements. His lavish lifestyle during his NBA career foreshadowed the financial woes we would experience during his retirement.

How did Iverson manage to go broke?

Aside from showering his entourage with gifts he couldn’t afford and including them in a lifestyle fit for a king, Iverson apparently had a habit of keeping his money in dozens and dozens of garbage bags around his mansion. Some would occasionally go missing. At one point in his career, Iverson arrived back at an airport and had forgotten where he parked his car. Rather than spend time searching the parking lot for his vehicle, he simply found a ride home and bought a new one.

Allen’s financial situation came to light in 2012 after a judge in the state of Georgia ordered him to pay $900,000 to a jeweler. In a December 2012 court filing, Iverson told the judge that his monthly income was $62,500 and his expenses were $360,000. According to the court filing, Iverson monthly expenses consisted of such notable items as $125,000 going to various creditors and mortgages, $10,000 on clothes, $10,000 on restaurants/entertainment and $10,000 on groceries.

So how has Reebok helped Iverson?

Iverson made a decision in 2001 that would inevitably save him from his future self. He signed a unique endorsement deal with Reebok. In addition to paying $800,000 a year for life, Reebok set aside $32 million in a trust fund that Allen will not be able to access until he turns 55 in the year 2030. The deal came to light when Allen’s ex-wife filed for divorce.

Regardless if it is a challenge for Iverson to live with a budget far less than what he was used to during his playing days, someone had the foresight to protect the man from himself.

Whether an endorsement contract or an M&A transaction, every negotiation is unique and needs to be approached with the proper strategy and insight. Talley LLP is uniquely equipped to provide the technical and managerial expertise to help you plan, negotiate, structure and execute on your buy-side or sell-side strategy.

Depending on where you call home, you may have noticed Amazon’s fleet of plain white trucks delivering packages around town.  Amazon is experimenting with a new delivery service intended to make more products available for free two-day delivery and relieve overcrowding in its warehouses, which will push the online retailer deeper into functions handled by longtime partners UPS and FedEx.

Amazon will oversee pickup of packages from warehouses of third-party merchants selling goods on Amazon.com and their delivery to customers’ homes, cutting into the work that is now often handled by UPS and FedEx. Amazon could still use these couriers for delivery, but the company will decide how a package is sent instead of leaving it up to the seller.

The project underscores Amazon’s ambitions to expand its logistics operations and wean itself off the delivery networks of UPS and FedEx. A rush of last-minute holiday orders in 2013 forced Amazon to issue refunds to shoppers who didn’t get gifts in time, highlighting the perils of being overly dependent on partners for an integral component of its business pledge — quick, reliable delivery. Taking over some responsibility for delivery enables Amazon to protect that edge as rivals like Wal-Mart Stores Inc. enhance their own delivery operations.

Amazon’s latest move should not surprise many, as the company has demonstrated its ability to disrupt industries time and time again.

With over 25 years’ experience consulting with industry-leading companies, Talley understands the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability, build your brand through a business transaction or capital raise, Talley is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

Launched just seven years ago, Uber Technologies Inc. is an app-based transportation company headquartered in San Francisco, California. It operates in about 270 cities and more than 60 countries worldwide. As of this June, Uber completed 5 billion total trips. Uber’s recently appointed Chief Executive Dara Khosrowshahi told employees on Wednesday the ride-service company may go public in 18 to 36 months. Will Uber become the next hottest IPO?

Uber Faces Increased Competition

Companies like Lyft, Curb, Southeast Asia-based Grab, India’s Ola, and especially China’s Didi Chuxing are all eating into the ride-hailing market share, becoming huge competitors of Uber. Didi was arguably Uber’s biggest threat overseas, and the ride-sharing giant finally conceded defeat last August, selling its China operations to Didi and ending an expensive, bruising battle between the two companies.

Even Alphabet Inc. (Google) is becoming a threat to Uber with plans to make its self-driving cars unit a stand-alone business. This initiative could put the company in direct competition with Uber since eliminating the need for a driver would keep costs down in the long-run.

But Uber is right on Google’s heels. They’re beefing up their business strategies and focusing on autonomous driving. In September of last year, Uber began testing its self-driving Ford Fusions in Pittsburgh; engineers rode in the driver’s seat, ready to take over whenever things got tricky.

Controversy

While Uber has seen great success, the journey hasn’t been without its bumps. The company has been in and out of the news for years tackling legal battles and dodging scandal. Alphabet is currently suing them for theft of its self-driving car technology. Uber also came under fire earlier this year for sweeping allegations of sexual harassment under the rug. The resignation of Former CEO Travis Kalanick, who many believed the main architect of Uber’s toxic culture, is acknowledged as a step in the right direction for Uber. But, it remains to be seen how the recent hiring of Dara Khosrowshahi will play out.

Uber’s IPO Potential

An IPO for Uber could be massive for both the company and Wall Street. Its current value is around $68 billion after a total of 16 rounds of funding worth $11.56 billion since its launch. And thanks to Uber’s structure—a unique combination of transportation company, mobile Internet company, and real world engineering—the company is touted as one of the best future IPOs.

With over 25 years’ experience consulting with industry-leading companies, Talley understands the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability, build your brand through a business transaction or capital raise, Talley is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

With its $13.7 billion acquisition of Whole Foods Market, Amazon went from testing the waters with its grocery-retail concept store, Amazon Go, to carving a direct path to becoming a major U.S. grocery retailer. While the e-commerce giant doesn’t need to be the biggest grocer in the country, Amazon is aiming to be among the top grocers in key cities, experts say.

Even though their grocery delivery service, AmazonFresh, was launched a decade ago, brick-and-mortar grocery retail is  a category that Amazon has been carefully working its way into over time. By acquiring Whole Foods, Amazon has bought a well-known grocery brand whose customer base overlaps with Amazon’s shoppers, creating a whole that is greater than the sum of its parts. 

For Amazon, the deal marks an ambitious push into the grocery business, an industry that accounts for $700-$800 billion in annual sales in the U.S. With Amazon, Whole Foods gets an owner with significant technological expertise and a willingness to invest aggressively in the grocery retailer’s success.

“The Whole Foods customer is the Prime customer,” said Cooper Smith, director of Amazon research at L2 Inc., a business intelligence firm., who defines the demographic as “high- earning, young millennials.” Amazon is asking itself how it can “capture as much of their wallet as possible.”

To that end, it’s not Amazon’s goal to necessarily be the top grocer overall in the U.S. Rather, according to Smith, Amazon wants to be among the top five in its core markets, places where these affluent millennials can be found: San Francisco; New York City; Boston; Austin, Texas; and Philadelphia.

This acquisition will have an effect beyond these five geographies, experts say. Major players in the grocery space are now in Amazon’s cross-hairs: including Kroger, which had already closed down nearly 19% in Thursday trading and is down again in Friday trading, Target Co. , which discussed the need to transform its grocery business during its analyst event earlier this year, and Costco Wholesale Corp., which has certain pricing advantages but has yet to fully capitalize on them, according to analysts.

“As other brick and mortar retailers have come to realize the hard way that competing with Amazon is a formidable challenge, supermarkets will now have to contend with not only competition with each other and nontraditional grocers like Walmart and Target, but with a retailer like Amazon which has the financial capacity to price aggressively, and the smaller regional supermarket chains and independents will bear the most pain,” said Moody’s Vice President Mickey Chadha, who expects that there will be additional consolidation in the supermarket sector.

Amazon shares were up more than 3% in Friday trading, while Whole Foods shares have skyrocketed more than 27%. Year to date, Amazon is up 32.5% and Whole Foods is up 36.6%.

Growth through acquisition is often mistakenly considered the exclusive domain of the largest companies. However small and midsize company looking to achieve substantial growth can benefit just as well. For more information about how Talley can help you plan, negotiate, structure and execute on your growth strategy, contact us today.

 

Last year, non-tech companies spent nearly $10 billion on venture capital-backed businesses. These days large companies are increasingly partnering with, investing in, and acquiring startups that disrupt their own core business -and doing so at a price premium. Here are several examples of corporate giants thinking outside of the box that provide a lesson to both startups as well as entrepreneurs looking to sell their businesses.
Wal-Mart’s Acquisition of Jet.com
At $3.3 billion, Wal-Mart’s acquisition of Jet.com in the largest deal to date for an online startup. Jet, despite its promised $1 billion run rate, is still burning cash and often not making a profit on sales.
What we miss when we focus just on the above is that Jet is a way for Wal-Mart to counter its greatest weakness and make a play against one of its strongest competitors—Amazon. Despite six decades of success as a brick-and-mortar retailer, Wal-Mart has consistently had issues competing online.
Jet is a real innovator, incorporating dynamic pricing based on warehouse location into its model and incorporating the best of AI to ensure that the client experience is exemplary—a very different selling point than Walmart has traditionally focused on.
The lesson for entrepreneurs: Pay attention to the weak spots of would-be acquirers. How would your strengths complement their weaknesses? If you can identify and demonstrate the ways you can help them patch those holes, you instantly become a more attractive acquisition candidate.
General Motors Acquisition of Cruise Automation
Last spring, automotive giant GM closed on its $1 billion acquisition of Cruise Automation, a startup that hadn’t even launched a product yet. The San Francisco-based startup develops software for self-driving vehicles, a technology that on the surface threatens GM’s core business as a legacy automobile manufacturer.
Some might say GM didn’t have much choice but claim a stake in the self-driving vehicle industry. Its competitors are working to develop new technology for autonomous cars—with Cruise, GM at least has a chance to compete against front-runners like Google and Tesla. GM has high hopes for its self-driving vehicle initiatives. Last January it entered into a partnership with ride-sharing service Lyft that it hopes will result in a fleet of robo-taxis—a pilot program for driverless non-taxi cars to come.
The lesson for entrepreneurs: Don’t be afraid to compete with the big names in your industry—even if they have a head start. When Cruise was founded, Google had already been working on self-driving cars for more than 5 years. But automakers are hungry to own the technology that they see as the future of their industry, and buying Waymo from Google is not an option. It’s no surprise that Cruise got such a high price even in a crowded field.
With over 25 years’ experience consulting with industry-leading companies, we understand the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability, build your brand through a business transaction or capital raise, Talley is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

While most of the retail industry is focused on scaling back their brick-and-mortar presence, Target said earlier this week that their stores, both existing stores and small-format stores to come, will be critical to the growth of the company’s core business.  Given the current trend of shopper’s focusing more and more on e-commerce websites to satisfy their shopping demands, many analysts wonder if the company should consider first shutting down of its low performing assets to free up funds for the many ambitious projects the retail giant has planned.

During the company’s financial community meeting, Target outlined its strategy for the future, which includes a $7 billion investment over the next three years. In that time, the company plans to revamp more than 600 of its approximately 1,800 locations, and open more than 100 small-format stores.

The small-format stores will be focused on metropolitan areas with large populations and college campuses. Thirty of these stores will open in 2017. Target began rolling out smaller stores in cities in 2012, and opened 13 of them in places like Chicago, New York and Philadelphia in 2016. The company is also revamping its supply chain and the way merchandise moves across its network.

The focus on growing stores is a departure from the store closures we’ve heard from major retailers like J.C. Penney, Macy’s and Sears.   While analysts are generally supportive of the changes that Target outlined, some believe a few closures could be a good thing:

“We do have some concerns that Target should consider more aggressively seeking to prune lower productivity stores despite the fact that they are likely cash flow accretive and profitable on a four-wall basis,” said Cowen & Co. in a note published Tuesday. “If this is conducted thoughtfully, store pruning/closing can drive a better overall brand experience, free up capital investment for more productive stores, and improve resource allocation.”

With over 25 years’ experience consulting with industry-leading companies, we understand the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability, build your brand through a business transaction or capital raise, Talley is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

Yahoo Inc. announced Monday it will shakeup its board after completing its $4.8 billion deal with Verizon Communications Inc., and several longtime directors, including CEO Marissa Mayer and co-founder David Filo, will step down as directors. After the sale of its core internet business, the company will also change its name to Altaba Inc., according to a regulatory filing by Yahoo.

All those changes depend on whether Yahoo can actually close the sale: The Verizon-Yahoo deal has become less certain after a second breach of one billion accounts was disclosed last month. The highly publicized breaches have caused Verizon to weigh their options, including potentially paying less than the agreed-upon $4.8 billion.

The pending deal marks a dramatic fall for Yahoo, one of the best known names of the internet boom in the late ‘90s. Prior to the dot-com collapse in 2000, Yahoo, then valued at over $100 billion, was in a position to buy a fledgling Google for $1 million but passed on the opportunity. After declining over the next decade, Yahoo famously turned down a buyout offer from Microsoft for an attractive $45 billion in 2008. Yahoo’s market value is currently close to $40 billion, with a large portion of that value propped up  byits 15% stake in Chinese company Alibaba, a company worth close to $241 billion.

Yahoo remains a major force online, but has struggled with an identity crisis and has fell behind rivals in its ability to ‘monetize’ its audience through advertising that is linked to customers’ browsing and other online activities. 

The Verizon deal is the first major step toward unwinding Yahoo. Next up is a trove of about 3,000 non-core patents, which Yahoo is selling in a separate auction that is expected to fetch upwards of $1 billion. 

Talley & Company understands the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability, build your brand through a business transaction or capital raise, Talley & Company is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

Professional athletes aspiring to dethrone Cristiano Ronaldo as Forbes’ richest athlete might have to put in some extra time gym time. News broke last month that Ronaldo inked a contract with Nike that will reportedly yield him an estimated $24 million per year for the remainder of his life. Ronaldo stands to make more than $1 billion from the landmark deal.

Nike’s lifetime deal with global soccer icon Cristiano Ronaldo is only the third deal of its kind for the $31-billion-in-revenue sports giant, and represents the first non-basketball player to acquire one. The two other athletes are LeBron James, who inked his own lifetime contract (for an undisclosed amount) 12 months ago, and Michael Jordan, who is presumed to have a “lifetime” deal as the name and logo of the Nike-owned Jordan brand.

A contract worth a potential dollar amount north of $1 billion might seem like a lot, but according to a news report from Hookit, a firm that measures the social and digital media value for brands, Nike’s contact with Ronaldo is a steal. They found that Ronaldo’s massive social media presence generated a staggering $474 million in value for Nike this year alone.

“Cristiano is one of the top influencers on the planet who has effectively leveraged his social following and engagement into a media powerhouse to drive tremendous value for his sponsors,” says Hookit co-founder Scott Tilton. “He’s been incredibly effective at integrating his sponsors into the content he shares with his over 240 million global followers.”

Ronaldo’s most valuable post from 2016 was on Instagram after Ronaldo led Portugal to the Euro 2016 title as team captain. Nike’s slogan “Just Do It” was the hashtag, while the same slogan as well as the Nike Swoosh were both in the image for a post with 1.75 million likes and nearly 13,000 comments. Acording to Hookit, the payoff was a staggering $5.8 million in media value for Nike.

While social media marketing metrics and KPIs have been notoriously nebulous with respect to their effects on a company’s bottom line, it would appear the value of Ronaldo’s social media presence combined with the cleats/boots and apparel he helps Nike sell is above and beyond the value of Ronaldo’s contract with Nike. Soccer generates more than $2 billion annually in revenue for Nike.

Whether an endorsement contract or an M&A transaction, every negotiation is unique and needs to be approached with the proper strategy and insight. Talley & Company is uniquely equipped to provide the technical and managerial expertise to help you plan, negotiate, structure and execute on your acquisition strategy.

After months of rumors, the Ultimate Fighting Championship (UFC) announced on Monday that it would be sold for $4 billion to a group of private investors. The deal represent the largest of its kind in the history of professional sports, topping the $2.1 billion the LA Dodgers were bought out of bankruptcy back in 2012. It also marks a staggering profit for the investors who bought the organization back in 2002.
What is remarkable about the sale is that casino operators Lorenzo and Frank Fertitta bought the nearly bankrupt organization in 2000 for $2 million. The $4 billion sales price represents a 72% annual return, every year, on that modest original investment.
“We saw an opportunity,” Lorenzo Fertitta told CNN’s Rachel Crane late last year. “We felt like there was a void in contact sports. We felt…if we put in the right rules and regulations…we could create an opportunity for business.”
UFC is now the world’s biggest and most successful mixed martial arts league. The sport combines all different types of fighting including boxing, wrestling and martial arts.
While UFC was once considered a violent, fringe sport banned in many states, the Fertitta brothers made great strides making the league more mainstream and accepted as a legitimate sport during the 15 years they have owned it. UFC fights now draw stadium crowds of up to 70,000 fans as well as large broadcast and pay-per-view audiences. Bud Light, Reebok, Harley-Davidson, MetroPCS, EA Sports, Toyo Tires and FRAM auto filters are among their many sponsors.
The price paid for UFC is roughly seven times its gross revenue, as chairman Lorenzo Fertitta told CNN that the organization took in about $600 million in 2015.
UFC is being bought by a group led by talent agency WME-IMG. The group includes major private equity firms Silver Lake, Kohlberg Kravis Roberts, as well as the private investment firms of Michael Dell. The Fertitta brothers will retain an undisclosed minority stake in the company after the sale. President Dana White, who owned 9% of UFC, has signed on for five years with the new ownership group, and will receive 9% of the company’s net profits during that time instead of an ownership stake.
Talley & Company understands the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability, build your brand through a business transaction or capital raise, Talley & Company is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.
Microsoft recently announced that it will scoop up LinkedIn for $26.2 billion in the largest acquisition in its history, placing a bet that the professional social network can rivitalize the tech giant’s software offerings despite recent struggles by both companies.
Microsoft’s Chief Executive Satya Nadella is ponying up a hefty sum of cash for a firm that has suffered its fair share of setbacks. Although LinkedIn is the largest professional social network, with around 430m registered users and 100m visitors to its site each month, some analysts have questioned how much growth is left in its tank. While LinkedIn’s revenue growth has been slower than expected, if Microsoft’s CEO can make this deal worth the money and the effort, he could improve Microsoft’s questionable track record with acquisitions. So what potential challenges are standing in his way?
There are three major hurdles Microsoft will have to deal with:
Many analysts are questioning if the deal makes financial sense. Microsoft is spending the equivalent of approximately $260 for each monthly active user of LinkedIn. To keep shareholders content, it will need to grow LinkedIn’s user base amid concerns about slowing growth, or be more explicit on how Microsoft can capitalize financially from obtaining LinkedIn’s data.
Microsoft’s recent history of acquisitions leaves something to be desired. Its purchase of Skype in 2011 for $8.5 billion has not been as fruitful as once predicted. Microsoft squandered over $6.3 billion on aQuantive, an online-advertising firm that it bought in 2007, and $7.6 billion on Nokia’s handset business in 2014. Nadella, not at the helm when these acquisitions took place, is looking to steer the ship in a positive direction with the acquisition of LinkedIn.
A shift in workplace culture and behavior will be required. Nadella wants LinkedIn to become the go-to hub for news and other details about people’s professional lives, but firms are unlikely to want to give their employees more of an excuse to spend time on a social media site, regardless of its professional nature. It’s not uncommon for large firms to block or restrict access to LinkedIn on their networks, which might have something to do with executives fearing that recruiters scouring LinkedIn are out to poach their staff.
While many are questioning the purchase of LinkedIn, only time will tell if Nadella will be able to capitalize on Microsoft’s latest acquisition.
Talley & Company understands the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability, build your brand through a business transaction or capital raise, Talley & Company is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

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