Posted by: Rob Hof on September 30, 2008
Actually, Marty Pichinson never left. But the co-founder of Sherwood Partners, a corporate restructuring firm based in Mountain View, Calif. (home of Google), is seeing an uptick in his business. And that means everything’s not hunky-dory in the tech industry.
Pichinson, known in Silicon Valley and beyond as The Undertaker, essentially shuts down companies that have gone under—most recently mobile startup Amp’d and Web phone service SunRocket. His firm sells off the assets to return as much as possible to creditors and venture investors. He has been doing this a long time, as this profile from 2002 by my former colleague Linda Himelstein notes.
Pichinson’s business began picking up, he says, around July or August—he thinks because the IPO market has been dead for awhile and it started to become apparent to VCs that exits just aren’t in the cards for any company that’s struggling. And two weeks ago, right after that ugly weekend on Wall Street, he started getting more calls. By late last week, he was closing a couple of deals a day to shut down companies. “The venture market is getting ready to have a big oompah,” he says. “The financial storm has totally paralyzed exits for VCs.”
I don’t want to overplay Pichinson’s surge in business. He’s got a business to promote, for one. For another, these are not mostly the Web 2.0 startups you might suspect, because those companies generally take so little capital that they either can run for a long time or they have too few assets to bother calling in Sherwood.
In fact, some aren’t even directly related to the economy. Mostly, he’s handling green-tech companies that ran into financial problems (which he’s trying to restructure, not shut down) as well as biotech, medical device, hardware, and software firms—more traditional tech companies that often take more capital, and have more stuff, especially intellectual property, to sell off when they tank.
Still, it’s a warning sign when Marty the Liquidator declares, “It’s our turn now.”