Pricing Technology

Family Valuations


Dyslexic CEO:



Y2K `FaxBack’

Corrections or additions?

These stories by Teena Chandy and Barbara Fox were published in U.S. 1

Newspaper on December 9, 1998. All rights reserved.

Private Records? Not!

You are in court fighting with your ex-wife over the

custody of your child. Your wife’s attorney brings up a medical


you divulged in total confidentiality to your doctor. And how did

they know? Your health care company sent it to them.

Difficult to believe, but it happens a lot, claims Russell


a psychologist with the New Jersey Coalition of Mental Health


and Consumers. The incident above happened with one of Holstein’s

own patients. The health care company made a mistake and sent the

treatment authorization to the wrong address.

The company then made things worse when it tried to correct the


The next time it sent the authorization to the patient’s own address.

Except that the authorization was not for him, it was for a person

living in Massachusetts. Holstein attributes these mistakes to the

"carelessness" of health care companies. "People do not

need their confidential information mishandled," says Holstein,

one of the speakers at the conference organized by the New Jersey

Coalition of Mental Health Professionals and Consumers on


Confidentiality in a Hostile Health Care Environment" on Sunday,

December 13, at noon at the Newark Airport Sheraton. Cost: $20. Call

Karol McNulty at 732-571-1200.

Other speakers include Margo Goldman MD, a psychiatrist with

the Coalition of Patient Rights based in Wakefield, Massachusetts;

Karen Shore of the National Coalition of Mental Health


and Consumers; Rick Marek of New Jersey Clinical Social Workers;

and Gary Herschman of the law firm of Sills and Cummins in


The conference will focus on how confidentiality is being handled

in all healthcare situations with special reference to mental health


Holstein is by no means an unbiased observer of changes in the health

care industry. He is, in fact, suing the company which fired him for

failing to provide information about one of his patients. "It

is not that I did not provide any information, but I did not provide

enough information," says Holstein. "I am licensed to practice

in New Jersey and under state law, a doctor cannot provide


information to a third party. They kicked me out because I refused

to violate the law."

— Teena Chandy

Top Of Page
Pricing Technology

Technology businesses have little or no revenue, and

their chief assets are technology-based, so they are particularly

difficult to value. "Determining the Value of Small,


Businesses" is the topic for Geoffrey D. Dennis and


A. Scribner, both of the valuation services practice of Arthur

Andersen LLP. Sponsored by the Technology Help Desk and Incubator,

they give a workshop on Thursday, December 10, at 8:30 a.m. at the

Rutgers Biotech Center on Cook Campus. Cost: $30. Call 732-545-3221.

A biology major at Denison, Class of 1979, Dennis worked for the


Environmental Protection Agency and then studied accounting at Baylor

and Georgia State, emerging with a second undergraduate degree and

a master’s in tax accounting. He lives in Society Hill, Philadelphia,

and commutes to Manhattan.

"Look at the value from two perspectives," suggests Dennis.

A traditional business is most often valued according to the


ratio, which means that its net income and cash flow drive the stock

prices. "The other way to look at is from the asset perspective,

what are the assets?"

Those assets could include inventory, current receivables, land,


equipment, hardware, or people. Then there are intellectual assets:

patents, software developed on an enterprise system, or technology

used to create a product not patented. (A firm may choose not to apply

for a patent in order to guard against someone reading the public

records on the patent and then using reverse engineering to come up

with an effective substitute.)

"If it is an emerging company, you have to assess what the demand

will be, and the likelihood of success, and where the technology is

in the development process," says Dennis. "If it is in the

tail end of the process, as with a pharmaceutical firm with a product

that has gone through several FDA trials, there is more value than

with an idea at the beginning of the pipeline."

When Arthur Andersen does equity valuations of intellectual assets

for joint venture purposes, it taps industry teams. "These teams

know quite a bit about just every industry," says Dennis. The

process generally takes six weeks and includes a due diligence phase

that involves management interviews.

But you can also do a rough valuation on your own company, whether

you are a boss or a mere employee. Dennis tells how: Find some


companies that are publicly traded. Get the annual report, the income

statement, and balance statement, and follow the stock prices.


the price earnings ratio of several competitors as a proxy for what

your company might trade at if it were public."

For instance, if a competitor’s stock is trading at 10 times earnings,

the P/E ratio would be 10. If your stock is earning a sum equivalent

to $2 per share, the stock could be valued at $2 times 10 or $20 per

share. So a company with 100,000 outstanding shares would be worth

$2 million. But if the competitor’s P/E ratio was 8, the same company

would be worth only $2 times 8 or $16 per share or $1.6 million.

Then you have to factor in some other variables. "A small private

company without access to capital markets, its shares are not as


says Dennis. "And buyers might argue that there are more risks,

or that you don’t have a lot of funds for R&D." So the calculation

might drop from $2 million to $1.8 million. "With greater growth

potential, the company will command a higher price," says Dennis.

How can you keep your company’s value high? The suggestions that


offers seem obvious, but maybe not:

Have a successful business.

Have a successful product that the buying public wants

and appreciates.

Price the product reasonably.

Develop channels to manufacture, distribute, and market.

Maintain momentum with active R&D. Failure to keep up

the research and development, says Dennis, is a common failing.


at how fast computers and software are evolving; the life of a product

could be three years, and your market share could be taken away."

Top Of Page
Family Valuations

If technology businesses are difficult to value, so

are family businesses. Just imagine the sibling arguments that can

erupt when one sibling wants to cash out. Michael A. Cuneo,

a partner with the Philadelphia firm of Howard, Lawson & Company,

will discuss "Unlocking Shareholder Value in a Family Business

. . . Without Firing the Family" for the Venture Association of

New Jersey on Tuesday, December 15, at 11:30 a.m. at the Westin in

Morristown. Cost: $55. Call 973-631-5680 for reservations.

Cuneo will use actual transactions to answer such questions as what

the shares are worth, where to get cash to buy out the selling


and how can the business grow after the buyout. Most important, e

will discuss how to get the deal done and still have family members

on speaking terms.

Top Of Page

Marketing Smart

You don’t have to take credit card numbers to have an

effective marketing scheme on the World Wide Web, says Craig


of Okidata. He and two marketers from Bell Atlantic Mobile —


Brassini and Mark Como — are featured in an electronic

commerce workshop and holiday networking opportunity sponsored by

Technology New Jersey on Tuesday, December 15, at 8 a.m. at the Hyatt

Cost: $30. Call 609-419-4444. Brassini and Como will speak on


Building and Running an On-line Store for the Customer and the


while Broadbent covers "Web Site Success: a Look Behind the


Broadbent majored in marketing at the University of Utah, Class of

1990, and was an independent consultant, a marketer in a small


firm, and an employee at Regis McKenna, a consulting firm in Silicon

Valley consulting. He is manager of electronic marketing at Okidata,

a firm which has chosen not to sell its products from the Internet

but to use its website for pre-purchase marketing and post-purchase

technical support.

One of the biggest mistakes you can make on your website is to make

assumptions about what the visitors to your website find interesting.

"Find out what is really valuable to the user," says


Reports on "hit statistics" for each page are standard. The

Okidata site, for instance, has an overall "hit" record, for

each page view, of six figures on a monthly basis. But these


can be used in innovative ways, he says. Ask your consultant for


on what browsers are being used to access your site. "We know

a majority of people who come to our site are using a specific


and we know what version they use, so we make sure we maximize the

experience for them — to use the latest and greatest things that

their browser provides."

Next find out where your visitors go when they get to the site. For

Okidata, site visitors’ three primary motives are to get information

on new products, to get support for existing products (probably with

user manuals) or to get a driver. "We make those very easy to

find and very easy to use," says Broadbent.

"We also do user surveys; we have asked people to register in

various areas, such as our small business resource center. We offer

a small promotional item such as a free CD-ROM with tips or a free

issue of a small business question." To get this the visitors,

perhaps surprisingly, are willing to fill out a form in great detail:

how many PCs they have installed and what they use their printer for,

for example. "We get a very good response," says Broadbent.

"For example, we’ve gotten 600 people registered over a six-month


Top Of Page
Dyslexic CEO:

Seeing Straight

Don A. Winkler has turned a disability into an

ability that helps him see unconventional approaches to problems.

He is chairman and CEO of Finance One Corporation, a subsidiary of

Bank One Corporation, and he will be the keynote speaker at the


of Light" holiday concert and open house at the Lewis School on

Friday, December 11, at 7:30 p.m. The ceremony is free. Call


The Lewis Clinic’s diagnostic program provides independent educational

testing and contributes to the research of dyslexia. "Learning

problems are understood here at the Lewis School, not as disabilities,

but as differences: the expression of remarkable and diverse


of human thinking and perception," says Marsha Gaynor Lewis,

founder and director.

The tree of light ceremony is an annual fundraiser that supports the

Lewis School Curriculum Development and Scholarship Endowment Fund.

It features the tree with 100,000 lights, symbolizing hope and


for people struggling with learning and literacy. A $10 donation


a light.

Founded in 1973, the Lewis School was the first educational


in the Princeton area that committed its resources and expertise to

the full-time education and advancement of bright learning different

persons. Some 130 students are currently enrolled in pre-school


post-graduate age.

Winkler, a native of Phillipsburg, New Jersey, has overcome learning

disabilities, including dyslexia, to rise to his senior position at

Finance One. As a CEO with dyslexia, Winkler actively advocates for

the challenges of those with learning disabilities. A frequent


on breakthrough thinking at graduate business schools, he has written

many articles on management. Earlier this year, he was profiled in

the Wall Street Journal and quoted extensively in the New York Times.

"I see almost everything backwards," says Winkler. This


has actually helped him in his career path: Because he is unable to

form mental images naturally, he does not take anything for granted.

Top Of Page

Last year Merrill Lynch rolled out an impressively


four-step process to ensure "appropriate" levels of


for its telecommuters. Eileen Keyes, assistant vice president

for private client technology at Merrill Lynch, will discuss her


experience with telecommuting in a workshop for Greater Mercer


Management Association on Tuesday, December 15, at 8:30 a.m. Call

609-452-1491 for information.

As Keyes describes the process (U.S. 1, April 23, 1997), it starts

with employees writing proposals for their managers justifying the

reasons why they wish to telecommute. Then the employee and the


direct line manager go through a one-day training program to learn

how telecommuting will affect their lives, their careers, and their

co-workers. After the prospective telecommuter clears up any home

insurance issues, several meetings are held with managers, staff,

and the employee.

Last year’s plan called for every future telecommuter to report to

a simulated home office on the Scudders Mill campus for two weeks.

This allowed the employee to figure out equipment what he or she


at home in order for work to be completed successfully, and allowed

the manager to adjust to the employee’s physical absence.

Next step: Install two phone lines in the employee’s home, and give

the employee instructions on how to move a PC — how to unhook

it and put it back together again.

And after all that, the office gets inspected: the employee receives

a visit from an inspection team.

Top Of Page

The New Jersey Communications, Advertising, and


Association (NJ CAMA) has opened its 1999 membership drive to


in the communication industry. "Our mission statement `To unite

professionals in the communications industry to advance and improve

the quality of communications, advertising, and marketing’ is more

than just a philosophy on paper. It’s the driving force behind every

program, workshop, seminar, and event," says president Nina

Malone of Thomas Edison State College.

Membership rates are $85 for individual memberships; $165 for company

memberships; and $350 for corporate memberships. Call NJ CAMA


at 609-890-9207 for membership applications; E-mail:

(; or call Susan Tibbetts at 609-275-4501 for

specific information.

As part of its annual community book drive, NJ CAMA members will be

collecting new, unwrapped books for underprivileged children, ages

two to six at its holiday party on Thursday, December 10, at Forrestal

Village’s Tre Piani restaurant at 5:30 p.m. Cost: $35.

Tim Finer of Jersey Printing Associates is organizing the book

drive. The books will be distributed through Mark Ferrante,

the director of Mercer County’s Youth Services Division. Contributions

marked "NJ CAMA Book Drive" can also be mailed directly to

Mark Ferrante, Youth Services Division, 640 South Broad Street,


08650, or to Tim R. Finer, account executive, Jersey Printing


153 First Avenue, Atlantic Highlands 07716. Finer will also arrange

to pick up contributions. Call him at 732-872-9654.

"Publicity on the Internet" ($24.95), a manual describing

how to increase traffic at your website, plan and promote online


get media coverage online and off, launch a new product or business,

and defend yourself from online attacks, will also be available at

the holiday party.

Top Of Page
Y2K `FaxBack’

The U.S. Small Business Administration (SBA) has


a new FaxBack service to help small business owners deal with the

Y2K millennium bug. This service gives small business owners and the

public access to Year 2000 information and possible solutions.

SBA’s Y2K FaxBack service is available 24 hours-a-day by calling a

toll-free number: 1-877-RU-Y2K-OK (1-877-789-2565). The caller can

make a selection from a menu and within minutes receive a fax targeted

to their specific Y2K needs. In dealing with the Year 2000 problem,

SBA urges small business owners to take three immediate steps:

Determine your business’s Y2K risk with affected hardware,

software, or embedded data chips. A self-assessment test is available

on the SBA’s Internet Y2K web page. (

If you are vulnerable, take action now. Don’t wait. Fix

your problem and test the results. Develop contingency plans to deal

with effects of Y2K problems outside your control.

Stay informed. Accurate information may change as



Next Story

Corrections or additions?

This page is published by

— the web site for U.S. 1 Newspaper in Princeton, New Jersey.

Facebook Comments