Iknowwhatyoudidtoday: Making Money Through

He and several other high-ranking officials in the organization, including GM Jeff Ireland, seemingly traveled cross country because they felt a sense of urgency with talks between Harbaugh and the 49ers becoming serious.

The Dolphins are going to be a tough franchise to battle for the 49ers. They have some of the deepest pockets in the league. People can say whatever they want about the character of a man or what they might do. It's a lot different when a team is offering you more money than most see in a lifetime.

Even if the 49ers can compete with the Dolphins' offer, which was something to the tune of $7 million, Jed York can't compete in a bidding war with Ross, who is in the top 70 richest people in the world.

The 49ers could give Harbaugh the keys to the franchise. They can remind him he is a superstar in the Bay Area. They can feed him lines about the new stadium, where the franchise is headed, the talent, how much they need him, but he's likely to go with whoever pays him.

The sense of urgency has already allowed Harbaugh to see a salary he might not have even dreamed would come his way. Why wouldn't he just sit back and watch the price tag go up. His best bargaining chip right now is that he is a hot commodity.

Forcing teams to feel like they have to give more and more to reel him in is making them do just that. Nobody is backing off yet, and until teams stop throwing incentives at Harbaugh, he should make everyone believe he is highly interested in everyone.

Until teams start to pull back the reigns, the ball is 100 percent in Harbaugh's court. This will be a fun week for Harbaugh, and he shouldn't cut it short by prematurely signing any deals. The Dolphins looked past the fact they have yet to fire head coach Tony Sparano and throwing record money at him before he coaches one professional game. Other teams may come knocking, and even if they don't, Harbaugh is going to be living comfortably, as one of the league's wealthiest and most powerful coaches.

Facebook has dominated the headlines today with the news that it has raised $500 million from Goldman Sachs and Digital Sky Technologies at a $50 billion valuation.

In addition, the social network intends to raise another $1.5 billion through a “special purpose vehicle” that Goldman Sachs will be setting up to allow some of its clients to indirectly invest in class='blippr-nobr'>Facebookclass="blippr-nobr">Facebook.

There have been a lot of questions about the Goldman Sachs “special purpose vehicle” since the news broke. The key questions: Why is Facebook choosing to raise more money through Goldman Sachs? Will the SEC allow this move, or will it force Facebook to start disclosing its financial results to the public? And when will Facebook finally have an IPO?

SEC regulations and the nuances of private investment are complicated subjects, so we thought we’d try to clarify some of the issues surrounding the Facebook-Goldman Sachs deal, including figuring out the likely date of the Facebook IPO.

1. Why Are Facebook and Goldman Sachs Creating a “Special Purpose Vehicle”?

There is an SEC regulation, set by The Securities Exchange Act of 1934, that requires companies with 500 or more shareholders to disclose their earnings to the SEC. The SEC then publishes this financial information, making it public knowledge.

Facebook doesn’t want that headache at all. It doesn’t want to go through the audits, create the reports, or let its competitors know the details of its earnings and expenditures. However, the social network still wants $2 billion in fresh resources, so Goldman Sachs has come up with a very clever workaround; instead of having thousands of individual investors, Goldman Sachs will represent them all and invest on their behalf.

This is essentially what most brokers do on behalf of their clients, the shareholders. Instead of making a person an investor of record in class='blippr-nobr'>Googleclass="blippr-nobr">Google, Goldman Sachs will invest money on that individual’s behalf, making him or her a benefitting investor

The New York Times‘ Steven Davidoff provides a stellar overview of the SEC regulations in question, but it essentially boils down to this: Goldman Sachs is helping Facebook circumvent the system so it doesn’t have to report earnings or raise money via an IPO.

2. Will the SEC Allow It?

The SEC isn’t stupid; it knew that brokerage firms would try these types of workarounds. The New York Times dug up the SEC’s definition of a record holder, which includes a provision that says if a company creates a vessel for holding securities of record primarily to circumvent The 1934 Securities Exchange Act, then it will deem beneficial owners as record owners.

In other words, the SEC could deem that Goldman Sachs is circumventing its regulations with its “special purpose vehicle” and thus consider all of the investors within it “record owners” of Facebook. That would mean that the social network would be required to report its earnings.

We think it’s likely that the SEC will intervene. The SEC is already investigating the private secondary markets for potentially violating the same 500 shareholder regulation. It wouldn’t be much of a jump for the SEC to tell Facebook that its investment vehicle doesn’t preclude it from publicly disclosing its financial information. In fact, it’s likely to tell Facebook the opposite.

3. So, When Will Facebook IPO?

Now here’s where it gets interesting. Facebook and Goldman Sachs are setting up this “special purpose vehicle” to raise a ton of cash for the social networking company. They’re absolutely aware that the SEC will not be happy with their arrangement, and they also know that the SEC will likely step in and tell Facebook to disclose its earnings to the public due to the existence of the Goldman Sachs vehicle.

So why would Facebook go through all this trouble when the SEC is going to shoot them down anyway?

The answer is that this move buys Facebook more time to grow and prepare itself for an IPO. The SEC regulation wouldn’t take effect until May 2012 because the SEC only requires private companies to start reporting its financial information within four months after the end of its current fiscal year. So if Facebook violates the 500 shareholder rule this year, then it won’t have to start reporting its earnings until May 2012, 120 days after December 31, 2011.

That’s more than enough time for Facebook to prepare for its IPO. When the day comes that Facebook is required to release its financial information to the public, it will probably decide to just go all-in and become a public company, raising even more money in the process.

Essentially, Facebook has set the clock for its IPO to occur on May 2012 or earlier. Part of the reason we predicted no Facebook IPO in 2011 is because 2012 is the year most of our sources say the Facebook IPO is likely to occur. It all fits.

Mark your calendars and set your watches, everyone: The Facebook IPO is likely coming in 12 to 16 months.

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Thursday, January 6, 2011

Making Money Through

1. Why Are Facebook and Goldman Sachs Creating a “Special Purpose Vehicle”?

2. Will the SEC Allow It?

3. So, When Will Facebook IPO?

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