PIPEs a guide to private investments in public equity revised and updated edition

“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 for

PIPEs: A Guide to Private Investments in Public Equity

Revised and Updated Edition
Edited 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 reading PIPEs, 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



PIPEs



Also by Steven Dresner
Reverse Mergers:

Taking a Company Public Without an IPO

by David N. Feldman with contributions by Steven Dresner

Also available from Bloomberg Press
The New Investor Relations:

Expert Perspectives on the State of the Art

Edited by Benjamin Mark Cole
Hedge Fund of Funds Investing:
An Investor’s Guide
by Joseph G. Nicholas
Market-Neutral Investing:
Long/Short Hedge Fund Strategies
by Joseph G. Nicholas
Due Diligence for Global Deal Making:

The Definitive Guide to Cross-Border Mergers and Acquisitions,

Joint Ventures, Financings, and Strategic Alliances

Edited by Arthur H. Rosenbloom
The Securitization Markets Handbook:

Structures and Dynamics of Mortgage- and Asset-Backed Securities

by 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, , Attention: Director of Special
Markets, or phone 212-617-7966.

PIPEs

A Guide to Private Investments
in Public Equity
R E V I S E D A N D U P D AT E D E D I T I O N

edited by

Steven Dresner
with E. Kurt Kim

Bloomberg Press

New York



© 2003, 2006 by Steven Dresner. Chapters 1–11 and Afterword © 2003, 2006 by Bloomberg L.P.
All rights reserved. Protected under the Berne Convention. Printed in the United States of America.
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
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.
First edition published 2003
Revised and updated edition published 2006
1 3 5 7 9 10 8 6 4 2
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.

ISBN 1-57660-194-3 (alk. paper)

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
Acquired by Jared Kieling. Edited by Tracy Tait

2005023535


To Erica, Max, and Joshua
— S. D.

To Julia, Jonas, and Evalyn
—E. K. K.


CONTENTS

About the Editors .............................................................. ix

About the Contributors ...................................................... xi

Acknowledgments ............................................................ xix

Introduction ..................................................................... 1
St e v e n D r e s n e r, The PIPEs Report

PA RT O N E

|

THE BUSINESS OF PIPES

1 Overview: An Emerging Market ....................................... 9

Richard E. Gormley

C ow e n a n d C o m pa n y, L L C


2 The Marketplace: A Statistical Summary ........................ 27

E . Ku rt K i m

Pr i vat e R a i s e , L L C


3 A Historical Perspective: The Bubble, Converts,
and the Birth of Structured PIPEs .................................. 53
Ja m e s F. O ’ B r i e n J r.

Pr o m e t h e a n C a p i ta l Gr o u p L L C


4 The Players: Issuers, Investors, Agents
and Regulators............................................................... 65

St e v e n D r e s n e r a n d B r e t t G o e t s c h i u s
The PIPEs Report

PA RT T W O

|

R E G U L ATO RY L A N D S C A P E A N D
S T RU C T U R A L A LT E R N AT I V E S

5 The Law: Legal and Regulatory Framework .................... 77

Ja m e s R . Ta n e n b a u m a n d A n n a T. P i n e d o

Mo r r i s o n & Fo e r s t e r L L P


6 Fundamental PIPEs: Typical Structures
and Transactions.......................................................... 129
Eleazer Klein

S c h u lt e R o t h & Z a b e l L L P



7 Registered PIPEs: Registered Direct Transactions ......... 169

Jo s e p h Sm i t h

Fe l d m a n We i n s t e i n & Sm i t h L L P

8 Litigation Strategies: Managing Litigation Risk and
Addressing Other Investor Concerns ............................ 187
Pe r r i e We i n e r a n d E d wa r d To t i n o

DLA Piper US LLP


PA RT T H R E E

|

D E A L F LOW

9 Managing Risk: Securities Structures, Trading,
and Deal Documentation ............................................ 205
St e v e W i n t e r s

G e m i n i I n v e s t m e n t St r at e g i e s , L L C


10 Due Diligence and Valuation Policy:
Caveat Emptor Squared ............................................... 221
St e wa rt F l i n k

C r e s t v i e w C a p i ta l


11 Reverse Mergers + PIPEs: The New Small-Cap IPO ...... 243

D av i d Fe l d m a n

Fe l d m a n We i n s t e i n & Sm i t h L L P


Afterword ......................................................................261

L aw r e n c e R . G o l d fa r b a n d D a n i e l C a r l s o n
B ay Sta r C a p i ta l M a n a g e m e n t

Glossary.........................................................................267

Index ............................................................................283



ABOUT

THE

EDITORS

Steven Dresner is 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 alternativeinvestment 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 Internetbased 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 originaix


x

About the Editors

tion, 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 chairxi


xii

About the Contributors

man 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


About the Contributors

xiii

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, smallcapitalization, 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.


xiv

About the Contributors

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 finan-


About the Contributors

xv

cial 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


xvi

About the Contributors

financial intermediaries, in public and private offerings of securities as
well as issuers, investment banks, and purchasers in hybrid, mortgagerelated, 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,


About the Contributors

xvii

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 cuttingedge 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

xix


xx

Acknowledgments

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