In a new white paper, Brattle Principal Ioannis Gkatzimas, Senior Associate Ryan Leary, and Research Analyst Musa Isani examine the transition away from USD LIBOR in the US market, detailing USD LIBOR’s downfall and the emergence of its recommended replacement, the Secured Overnight Financing Rate (SOFR). They also discuss a few market-based alternatives to SOFR, the initiatives and legislation designed to address challenges associated with the USD LIBOR transition, and the economic considerations for potential litigation that could arise related to the transition.

The full white paper, “From USD LIBOR to SOFR: A Look at LIBOR’s Exit, SOFR’s Ascendance, Emerging Alternatives, and Economic Considerations for Litigation,” is available below.

View White Paper 

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“With his extensive expertise in securities trading, valuation, and causation, Drew is a robust addition to our firm’s Securities team,” said Brattle Interim President & Principal David J. Hutchings. “His testifying experience and ability to help parties understand risk in complex portfolios involving options will be a major asset to Brattle’s clients.”

With more than 15 years of litigation consulting experience at top consultancies, Dr. Roper has served as a testifying expert in several high-profile commercial litigation matters, including as a class action certification expert. He has consulted on matters involving options trading, claims relating to risk management, fixed and variable rate annuities, and more.

Dr. Roper’s consulting experience is supported by a strong background in academia. He has held research and teaching positions focused on corporate finance at the Stanford Law School, the University of Wisconsin-Madison, and Duke University’s Sanford School of Public Policy. His work has been published in several leading economic and financial journals.

“I look forward to continuing to build the Brattle brand in securities litigation,” said Dr. Roper. “With the deep bench of expertise already in place and opportunities to invest going forward, Brattle should be on the top of the short list for clients looking for experienced securities experts that use innovative approaches.”

Before joining Brattle, Dr. Roper founded his own litigation consulting firm Catalyst Economic Consulting, and gained prior experience as an Executive Vice President and a Vice President, respectively, at two global economics consultancies.

To learn more about Dr. Roper, please see his full bio.

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In a recent article in The Journal of Alternative Investments, Brattle Senior Associate Dr. Ryan Leary and his coauthors study the characteristics of Shark Tank’s angel investors and their investments. They measure the extent to which individual investor characteristics – such as experience, reputation, and network – affect investment performance, and seek to find insights that may apply to angel investing beyond the glamourized version seen on TV. The authors find that just appearing on the show significantly improves firm performance, though the show’s investors are unable to pick winning investments on average, regardless of their characteristics. Nonetheless, investor characteristics do matter in predicting whether an investor is more or less likely to close deals and on what terms.

Taken together, the authors’ results suggest that the attractiveness of a potential investor to firms as a partner and the angel’s ability to make deals are more important than the ability to pick winners. This indicates that more but smaller investments across new seed-stage ventures may be the best approach to angel investing.

The full article, “Exploring Angel Investor Impact: Diving into the Shark Tank!,” is available below (subscription required).

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The winners of the 2022 Brattle Group Prize in Corporate Finance are:

First Prize, $25,000: Andreas Fuster, Paul Goldsmith-Pinkham, Tarun Ramadorai, and Ansgar Walther
Predictably Unequal? The Effects of Machine Learning on Credit Markets
The Journal of Finance, February 2022

Distinguished Paper, $10,000: Asaf Bernstein
Negative Home Equity and Household Labor Supply
The Journal of Finance, December 2021

Distinguished Paper, $10,000: Isaac Hacamo and Kristoph Kleiner
Forced Entrepreneurs
The Journal of Finance, February 2022

The Brattle Group has funded this annual award for more than 20 years. These prizes are presented at the AFA’s annual meeting, and this year’s awards were announced at the AFA’s Annual Meeting 2023, which took place January 6–8 in New Orleans, LA. All papers published in issues of The Journal of Finance from the first five issues of the given year, and December of the previous year, are eligible. We congratulate the winners on their achievements!

View a complete list of past winners

More about the AFA

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Senior Associate Dr. Adrienna Huffman will join a lunch discussion to explore the current state of equity compensation in unicorn startups. The panelists will discuss the challenges of incentivizing employees in a period of economic uncertainty, new tools and business models for meeting those challenges, and potential litigation risks associated with stock options and other forms of equity compensation. The discussion is a part of the joint Brattle-UC Hastings Law Research project The Unicorn Initiative.

Register and learn more

The post The Current State of Equity Compensation in Unicorn Startups: Dr. Adrienna Huffman to Discuss at UC Hastings Law Event appeared first on Brattle.

In a recent Law360 article, Senior Associates Dr. Nguyet Nguyen and Julia Zhu examine how public market valuation indicators and subsequent markdowns in the value of private VC investments mean the industry will likely face strong headwinds in the coming months. The authors discuss how financing uncertainties and downward pressure on VC valuation – coupled with the fact that the US Securities and Exchange Commission (SEC) is seeking to increase regulatory oversight – could lead to increased disputes and litigation among startup investors, founders, management, and employees.

The full article, “Challenging Times Ahead for  Venture Capital Industry,” is available below.

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SPACs – shell companies created by sponsors who raise funds by selling shares through initial public offerings (IPOs) – skyrocketed in 2021, but the market has cooled in early 2022. SPAC IPOs and initial business combinations (IBCs) have been on a downward trend as of late, while shareholder redemption rates and liquidations are increasing. The authors, citing unfavorable market conditions and increased scrutiny from the US Securities and Exchange Commission (SEC), predict that SPAC-related litigation will rise in the coming years, and share the types of litigation that can be expected from both private and public litigants.

The full article, “Latest SPAC Trends Point To Risk Of Negative Outcomes,” is available below.

View Article

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In a new report prepared in collaboration with the UC Hastings Center for Business Law, Brattle researchers have analyzed the exit transactions of hundreds of unicorns to better understand their outcomes. The authors evaluated data on US unicorns between 2005 and 2021, describing the types of unicorn companies, their financing, and exit status.

Key findings from the report include:

• The number of companies reaching unicorn status has been increasing each year since 2016, and, in 2021, there were a record number of new US unicorns, 334 – a 259% increase from 2020.
• The most common exit for “mature unicorns” – those that reached unicorn status by 2015 or earlier – is an IPO, and the second most frequent exit is a merger/acquisition.
• Mature unicorns that go public via IPO or reverse merger have a post-money valuation that is more than twice as high as those that exit via mergers/acquisitions and have considerably higher private financing.

The report, “The Unicorn Initiative: Exits,” and the accompanying site resulted from a joint research project between Brattle and the UC Hastings Center for Business Law. The full report was coauthored by UC Hastings Professor of Law Abe Cable, Brattle Associate Adrienna Huffman, and former Research Analyst Shuyi Deng. Research Analyst Monet Lee contributed research assistance.

Learn more on the interactive microsite 

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“These talented individuals provide in-depth expertise to a vast array of clients on matters related to financial services, energy, tax, and more,” shared Brattle President & Principal David Sunding. “In addition, they have made exemplary contributions to mentoring and developing their colleagues, and truly demonstrate the exceptional leadership pipeline we are fortunate to have at the firm.”

Our new Principals:

• Hollie Mason | Practice Leader: Broker-Dealers & Financial Services | Chicago
  An attorney with more than 15 years of experience in the financial industry, Ms. Mason provides expert testimony and consulting services concerning securities litigation and enforcement matters. She has deep knowledge of Financial Industry Regulatory Authority (FINRA) and Securities & Exchange Commission (SEC) rules.
• David McKnight | New York
  Mr. McKnight has over 20 years of experience providing expert testimony and consulting services in matters pertaining to mass torts, securities, finance, valuation, and bankruptcy. In mass tort matters, he has worked with liability forecasts, insurance coverage, and discounted cash flows.
• Albert Metz | New York
  Dr. Metz is a securities and finance expert with deep experience in credit analysis, financial modeling, asset pricing, market efficiency, and event studies. He has consulted on asset pricing, antitrust, mergers and acquisitions, market manipulation, collusion, fixed income securities, and various debt derivatives.
• Christine Polek | Boston
  Ms. Polek serves as a consulting and testifying expert in complex litigation requiring the application of economic, financial, and statistical analysis to legal and regulatory issues – with a focus on valuation, tax controversy, and labor and employment.
• Akarsh Sheilendranath | Boston
  Mr. Sheilendranath is an energy economist with a unique blend of expertise in wholesale electricity markets, electric transmission, and regulatory corporate finance. He specializes in transmission policy, utility investment strategy and planning, large-scale renewable integration, and cost-benefit assessments.
• Anul Thapa | Boston
  Mr. Thapa has over 12 years of experience applying economic and finance principles in complex oil and gas-related litigation, arbitration, and regulatory proceedings. His experience in commercial disputes includes damages estimation, valuation, and pricing related to energy assets and contracts.
• Mike Tolleth | New York
  Mr. Tolleth specializes in the economic analysis of energy markets, with expertise in financial modeling and valuation of energy assets, contracts, and businesses. He supports clients in litigation and arbitration matters and provides expert testimony related to cost of service, rate design, cost of capital, regulatory policy, long-run marginal cost pricing, and market power.

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First Prize, $25,000: Peter M. DeMarzo and Zhiguo He
Leverage Dynamics without Commitment
The Journal of Finance, December 2020

Distinguished Paper, $10,000: Itamar Drechsler, Alexi Savov, and Philipp Schnabl
Banking on Deposits: Maturity Transformation without Interest Rate Risk
The Journal of Finance, February 2021

Distinguished Paper, $10,000: Pat Akey and Ian Appel
The Limits of Limited Liability: Evidence from Industrial Pollution
The Journal of Finance, February 2021

The Brattle Group has funded this yearly award for more than 20 years. These prizes are presented at the AFA’s annual meeting, and this year’s awards were announced at the virtual 2022 ASSA/American Finance Association’s (AFA) Annual Meeting on January 7–9. All papers published in the prior year’s issues of The Journal of Finance are eligible. We congratulate the winners on their achievement!

View a Complete List of Past Winners

More about the AFA

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