Q3 2022 Acacia Research Corp Earnings Call
Good morning, ladies and gentlemen, and welcome to the Acacia.
Research third quarter 2022 financial results conference call.
At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation.
It is now my pleasure to turn the floor over to your host Rob Fink.
Sir the floor is yours.
Thank you operator.
Hosting the call today are MJ, Mcnulty interim Chief Executive Officer, and Rick <unk> Chief financial.
Officer.
Before beginning I would like to remind you that the information provided during this call may contain forward looking statements relating to current expectations estimates forecasts and projections about future events that are forward looking as defined in the private Securities Litigation Reform Act 95.
These forward looking statements generally.
Late to the company's plans objectives and expectations for future operation and are based on current estimates and projections future results or trends.
Actual results may differ materially from those projected as a result of certain risks and uncertainties.
For a discussion of such risks and uncertainties. Please see the risk factors described in Acacia annual report on Form 10-K, and quarterly reports on Form 10-Q that are filed with the SEC.
I would also like to remind everyone that our press release the skull loading the financial results was issued this morning before the market opened.
This release may be accessed on the company's website at Acacia research Dot com under the news and events tab with all that said I'd like to turn the call over to Jay MJ the call is yours.
Thank you Robyn hi, everyone. Thanks for taking the time to join US This morning.
10 days ago, we announced the completion of a transaction with starboard value.
As you May know our partnership with Starwood began three years ago. When we established the framework to evaluate our corporate acquisition strategy together.
While our initial terms provided adequate capital and the valid and validated the opportunity we learned along the way there were some unintended complexities in our capital structure.
This new agreement provides us the ability to better pair the transactional transactional and operational talent of the Acacia team with starboard platform expertise relationships and capital.
In addition, this transaction streamlines, our capital structure and when complete simplifies our balance sheet without complicated derivatives importantly on a go forward basis. This new structure will provide all shareholders the ability to participate on the same footing and starboard.
Our relationships and starboard to networks, Acacia will have access to larger pools of capital.
That can use that we can use to fund deals.
We believe this transaction establishes our long term operating model positioning us to execute this strategy we have previously articulated.
As part of the transaction, we're pleased to add Gavin Molinelli Astarboard partner and portfolio manager is chair of our board.
And with this milestone transaction now in place Clifford Press Acacia CEO for the past three years has resigned from both the company and our board Clifford played a significant role in establishing this platform implementing the strategy in advancing us to this point with starboard on behalf of the company, we thank him and we wish him well.
With that I have been named to serve as interim CEO for those of you who don't know me prior to joining Acacia in the second quarter. This year I was the Chief Executive Officer, and a member of the board of directors at starboard value acquisition Corp.
Prior to my role with starboard I had a long history in private equity, which included Star investment Holdings that will Mark capital and Sun capital partners over that time, I led numerous acquisitions, including in Acacia focus areas.
With our ownership and capital structure clarify to look forward to advancing the robust acquisition pipeline are talented and expanded team has established since April .
For some time starboard value and Acacia have recognized an opportunity for a corporate acquirer.
Operating in the space between hedge fund activism in private equity.
We've seen firsthand that in some situations actavis do not have the necessary influence to creep required change without the ability to control the business on.
On the other hand private equity construct to create catalysts and are increasingly lapped to participate in structured auction processes, which directly impact valuations.
With Acacia we now have a hybrid solution.
That form and vehicles that we believe brings the most effective parts of hedge funds and private equity structures together.
Since I joined Acacia as Chief operating officer, and head of M&A, We have made significant progress implementing formal and institutional processes to enhance the scale and efficiency of the way, we evaluate potential acquisitions.
First Acacia now has a great execution team comprising proven professionals with public and private company acquisition expertise.
Any experience in working with companies to enable value creation. Our in house team is augmented by a world Class Network Third Party advisors.
As we scale up our team we've refined our processes institutionalizing our investment process from the ground up. This includes how we source potential targets, where we are benefiting from an excellent network of executive relationships augmented by an impressive set of institutional relationships.
We are also clearly defined our screening process and our criteria. We now have a clear set of metrics and benchmarks, we utilized when evaluating potential transactions.
Finally, we have a sophisticated institutional approach to due diligence all of our participants all of our potential acquisitions go through this rigorous process.
Once we complete an acquisition we rely on our own capabilities, but also those of the team we have built with significant operational capabilities.
This network of operating partners with proven experience enables us to identify the merits considerations and future plans for any potential acquisitions quickly and efficiently.
In addition, this network helps us drive operational improvements post closing, we have a great deal of confidence in the professional within this network.
As a result of this hard work our pipeline is now well defined in terms of quantity and quality. It is the most robust robust that we had seen.
The recent transactions with starboard clarifies our structure formalizes, our relationship and bolsters our capital. We now have all the pieces in place to move strategy for.
Currently market conditions had this pipeline more weighted toward public targets as valuations in the private markets have been elevated.
As a result of increased activity from private equity.
It won't always be the case it is today and we're nimble enough to shift our focus based on market realities.
More importantly, we have a pipeline of actionable ideas that are far along in our research process and moving forward, while I would not expect any acquisitions to close before year end. There is an urgency in multiple targets or active actionable and moving through our well defined process that said, we're patient and deliberate in our pursuits, and we will not Jack.
So pfizer principles for the sake of nearly completing an acquisition.
We believe Acacia in partnership with starboard has created a highly differentiated platform, we have a talented team with the.
With a wide range of skill sets and deep experience, we have a topnotch internal team and executive network, bringing us ideas.
She is well capitalized and between our relationships and starboard we had the access to additional capital we can engage to scale up our efforts.
I think it's important to stress that acquisitions are only part of Acacia strategy. Today, certainly it has been and will continue to be the primary area of focus however, when I look at Acacia I think it's important to note the various parts of our business.
First we have our life Sciences holdings, which comprises the assets acquired in the life Sciences portfolio, we continue to harvest gains from our public assets and we maintain significant optimism for our private holdings of this portfolio is.
This transaction has and we believe will continue to create significant value for us.
Second we are public.
Public Company Holdings. Some of these are in the life Sciences portfolio. But this also include stock we have purchased as part of a potential acquisition of initiatives.
We continue to actively pursue this strategy, particularly in situations, where disconnected valuation presents attractive.
Yeah.
Third we continue to effectively we continue to effectively manage and invest in our intellectual property portfolio Mark Booth, our chief intellectual property officer at a talented team and we continue to believe this business can produce attractive uncorrelated returns.
Finally, we have print products, a private operating company.
Acquired this business at an attractive valuation and we're confident and can continue to generate cash to fund future initiatives.
I'd now like to turn the call over to rich to discuss the specific terms of our agreement with starboard and our third quarter financial results.
Thank you Jay let me start by providing an overview of the agreement with starboard, which will be executed in a sequence of transaction starting this month and concluding in the third quarter of 2023.
Ultimately this agreement will significantly streamline our capital structure with all in the money warrants exercised at all convertible preferred shares converted into common stock as well as see starboards invest at least $78 $8 million in new capital to acquire shares at $5 25 per share pro.
Pro forma for each transaction and this agreement Acacia will have $390 million in cash and marketable securities with $308 million of that cash.
First disagreement bolsters, our innovative corporate acquisition platform is Andre discussed starboard will invest at least $245 million of capital in Acacia and as Jay mentioned, our team processes and pipeline are now in a position to deploy capital to pursue our acquisition strategy.
Second our capital structure will be much simpler with all shareholders investing in Acacia on the same basis to achieve the starboard will first exercise its series a warrants, resulting in approximately 11, 5% common equity ownership in Acacia and approximately 27, 5% voting interest inclusive.
Its existing ownership of convertible preferred stock.
This was actually completed earlier this week.
Acacia intends to commence a rights offering in the first quarter of 2023 offering one new share for every four shares one with a maximum offering of more than 38 million shares.
Offering price will be $5 25 per share star.
Starboard has committed to purchase at least 15 million shares in the offering which means an incremental investment of at least $78 $8 million.
Next in the second quarter of 2023 starboard is committed to convert its $35 billion in face value of convertible preferred stock into common stock following approval of amendments to the company's certificate of designation and certificate of incorporation and expect it to be put to a vote of shareholders applications 2023, and you won't.
Either.
Finally in July 2023 upon the maturity of the remaining $60 million in senior secured notes outstanding starboard is committed to exercise its $31 5 million series B warrants at $3 65 per share.
This will result in the pay down of the $60 million of notes and Starboards payment of $55 million in cash to exercise these warrants.
Accordingly, the remaining $68 5 billion series B warrants will be canceled.
Immediately following completion of the rights offering.
In connection with all of these transactions Acacia.
Has agreed to make $75 million in payments to Star Board as compensation for its early exercise of each of these instruments $9 million to be paid at the time of the series a warrant exercises and the balance of $66 million to be paid at the time of the series B warrant exercise.
In July 2023.
This payment was based on a negotiation to reflect the estimated remaining time value of the various securities to be exercised early by spark board and compares with the $91 5 million and warranted.
A derivative liabilities on our balance sheet at September 30, and $133 2 million at June 30.
Reflecting all of these transactions Ah patients pro forma book value will be $520 1 million or $5 22 per share. The ultimate book value may vary upon additional shareholder participation in the rights offering any incremental investment by starboard beyond its $15 million minimum share creep.
And the rights offering and of course any changes in book value.
<unk> to earnings in our business and changes in value in our securities and private physicians.
The full allotment of the rights offering were purchased we would raise an additional $122 million of potential capital beyond beyond Starboards 15 million share minimum commitment.
So in summary, once this process has been completed Acacia will have approximately 100 billion common shares outstanding $60 million of liabilities attributable to the notes will be eliminated and 31 5 million shares of common stock would be issued.
$35 million of face value of preferred stock will be eliminated and $9 6 million shares of common stock would be issued.
$91 5 million of warrant an embedded derivative liabilities would be eliminated.
$67 million of cash would be added upon exercise of the series a warrants sale of 15 million shares at $5 25 per share net of the $75 billion in early termination payments and also net of transaction costs.
Acacia will then have no preferred shares or warrants outstanding starboard value will own approximately 61% of the common equity and Acacia will have a capital base, representing cash and marketable securities of $390 million.
Moving forward with more than $300 million in cash we expect our cash interest income should cover our ongoing parent general and administrative costs, assuming our intellectual property business in our industrial printing business or at least self funding, we expect to be able to fund our operations with little to no cash burn.
As we explore opportunities for value, creating opportunities acquisitions now.
Now, let me turn to the third quarter results.
GAAP book value at September 30 was $282 5 million were $7 33 per basic share compared to $268 2 million or $6 60 per share as of June 30.
$435 million or $8 80 per share at December 31, 2021.
Now remember this GAAP book value includes the impact of all warrant an embedded derivative liabilities on our balance sheet at September 30th which in turn has reflected the increase of the company's share price over time since these instruments were first issue.
These liabilities will be extinguished upon exercise or exploration of these warrants and convertible preferred stock. We think it is more useful to consider our book value should all of these instruments be converted.
As I just described the starboard transactions will result in the elimination of all of these derivative securities and preferred and result in a clean capital structure without any of these liabilities.
For this reason we have presented pro forma book value per share to capture the full impact of this agreement with starboard as this will take place over time. We've also presented these transactions is staged on a quarterly basis over the course of the next year to better illustrate how this will work over time.
We have included this in our earnings release published this morning.
Note you will see by the end of the first quarter of 2023, we will have more than $320 million in cash on our balance sheet. Following the first two steps of the sequence of transactions will start work the series a warrant exercises, which occurred earlier this week and the rights offering expected to be completed in the first quarter.
By July we expect all of the warrants and derivatives to have been exercised and converted.
By which time, we will have a vastly simplified balance sheet with pro forma book value of 520 million diluted shares outstanding of $99 6 million and resulting in a book value per share on a pro forma basis of $5 22.
Now in terms of quarterly performance revenues for the third quarter of 2022 were $15 9 million compared to $1 6 million a year ago.
Within that <unk> contributed $9 6 million in revenue in the quarter with no contribution in the prior year as the transaction closed in early October last year.
Our intellectual property business generated $6 3 million in revenue related to patent assertion compared to $1 6 million in the third quarter of last year. This is a reflection of the uneven nature of revenue timing in this business.
General and administrative expenses were $15 million compared to $10 3 million in the third quarter last year due to the inclusion of <unk> operating expenses and also increased parent business development expense.
Intellectual property G&A expenses were flat to down year over year.
Operating loss was 11 4 million during the during the quarter, a slight improvement of the $12 $7 million operating loss a year ago and breaking this down <unk> contributed <unk> <unk>.
Zero point $4 million in operating income and the intellectual property business had a similarly sized modest loss.
After patent amortization the balance of our operating loss related to parent general and administrative expenses.
Our realized gain on securities during the quarter of $36 million offset a similarly sized unrealized loss in the period. The ladder are a reflection of the decline in share prices of our security positions over the last three months.
Our GAAP net income was $28 1 million or <unk> <unk> per diluted share compared to net income of $89 8 million or <unk> 86 per diluted share in the third quarter of last year recall that during the third quarter of 2021, Acacia recognized $101 million in realized and unrealized.
Gains in the value of the life Sciences portfolio acquired in June 2020, primarily due to the IPO of Oxford down a quarter.
We also recognize noncash income of $41 6 million.
In the quarter related to the change in fair value of the Star Wars derivative warrant and derivative liabilities due to the decline in the case of share price during the third quarter.
Now recall at the beginning of 2021, our net operating loss carryforward, plus our capital loss carryforwards stood at $286 million.
Since that time, we have utilized nearly 90% of that to shelter realized gains.
Cash and equity Securities at fair value totaled $323 2 million at September 30, compared to $670 7 million at December 31, 2021 recall. So we have retired $120 million in senior secured notes during 2022, and we've also repurchased $51 million of our own shares.
And then last that was $61 4 million in senior secured notes issued to Star Board down from $181 2 million at December 31, 2021.
More detail on these results have been made available in the press release this morning and in our quarterly report on Form 10-Q, which we will file shortly.
We believe the new agreement clarifies, our increasingly collaborative relationship with starboard establishes a differentiated and well resource vehicle to pursue corporate acquisitions and removes the most common concern from potential shareholders are previously complex capital structure.
Going forward, we believe the cash and marketable securities per share is an important metric for measuring our progress at September 32022 on a pro forma basis, assuming completion of all phases of the announced Star War transaction, our cash and marketable securities per share would be $3 91.
Essentially where our stock is trading today importantly, this excludes any value from our private holdings, our intellectual property and the industrial businesses all of which are carried on the basis of cost.
Nor does it include any value that we may create from future transactions, so essentially shareholders investing in our stock price today, we're getting all of that for free.
Over time, we do not intend to burn cash in our operations sorted by supported by interest income on our cash holdings and.
In summary, we have and continue to expand our pipeline of potential opportunities to acquire businesses. This pipeline is now larger and more advanced than it has ever been and as Jay noted we have defined processes for moving targets through this pipeline. These transactions can take a long time, we're patient we're disciplined in valuations and.
We are serious and now I would like to turn the call back over to M. J. Thanks, rich. So so to summarize here we've got bill.
<unk> team.
Very strong and institutionalized processes and pro forma for the completion of our transaction with starboard will have approximately $3 91, a cash and marketable securities per share and a book value of $5 22 a share.
As a reminder, as rich said book value includes both our private and our operating businesses at cost. Additionally.
Additionally, as rich mentioned, we do not intend to burn any cash interest earned on our cash holdings will support the pursuit of our acquisition strategy.
And with that we'd be pleased to take any questions.
Thank you ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your Touchtone phone.
Pressing star two.
Moving from the Q should your question be answered and lastly, while posing your question. Please pickup your handset of listening on speaker phone to provide optimum sound quality.
Please hold while we poll for questions.
Once again.
Thats Star one if you have a question or comments on the first question is coming from Anthony Stoss with Craig Hallum. Anthony Your line is live.
Welcome aboard I guess MJ I know you've been there for a short period of time, but as interim CEO .
Let me just let me fire off a couple of questions that I seem to get most often from shareholders.
Most lately with biomet, how do you monetize it.
And what are your plans on monetize environment.
So thanks, Toni so as you know we own approximately 26% of volume, which is in essence, the recipient of royalties and milestone payments.
One we have.
<unk> received we have earned a couple of those milestone payments again this year, one of which in the second quarter was paid in the third quarter was a small milestone payment and then there's a much larger one that we anticipate receiving before the end of the year.
So at a minimum we anticipate receiving those milestone payments and royalty payments.
We're excited about the opportunity that that represents for us if there are opportunities to monetize that differently, we would certainly consider that but but.
But at a minimum the royalty stream is something that we're quite quite excited about.
Got it and since you are holding the mic here Rich let me ask you a question on Opex it always jumps around really difficult.
To predict just like your revenues, but at $17 3 million in September should we think of that as kind of the go forward rate on opex.
Our our patent business has opex that it's going to vary based upon.
The opex debt.
That.
To the extent that that business through some of the partnerships that we've executed begins to grow a little.
More substantially you may you may see that growth.
But for the moment, thats, probably a reasonable level and from a G&A perspective.
Yes.
Our apparent organization and our business development efforts, that's really going to vary based upon the activity that we see in the transactions that we pursue.
So in periods, where there's there's modest activity there'll be less of that.
Will be more of it when we get closer to acquisitions that were diligent same very heavily so.
It's probably not a bad place to start but it is it is going to vary and thats going to be very <unk>.
Based upon sort of success based opportunities if that makes sense.
Got it and then two last questions, it's been a little while.
Since we've had an update on the the Wi Fi IP portfolio. I know you guys are successful out of the gate and I know you have high hopes for it maybe if you wouldn't mind sharing if there's anything to share kind of an update on that and then I'm assuming the last question for Mg.
Sure.
So we.
We often don't have.
Kind of updated commentary around specific IP portfolio is one thing I will say is that that the portfolio that you mentioned is something that we're very excited about.
It's actually more than delivered the capital that we invested in it already which was a lot sooner than we had anticipated. We did have one large settlement last year, which not only was helpful from a financial return standpoint, but also validated the quality of the portfolio in the marketplace and that's actually generated a lot of meaningful.
Discussions that we've had with additional potential licensees. Our goal is to maximize value not to put revenue on the board as quickly as possible. So trust that we're looking to maximize the value of that portfolio, but our enthusiasm for it has only grown since we acquired it.
Got it and then MG a lot of existing shareholders are ones that have exited acacia.
The underlying theme is I don't know what I own am I going to owe.
And a part of coals or what am I going to own a part of so it's been three years since the starboard agreement.
No acquisitions to show for it.
Sciences stuff was kind of ongoing before the starboard agreement.
I'm optimistic with you know there that we can get something hopefully relatively soon.
Nice to it'd be nice to have a large operating business. So investors can actually look at.
What they own and what the true value of the stock is I just love to hear your thoughts on.
Related to that.
Yes, Tony first of all I appreciate the optimism.
And look we share that optimism here.
I think you and I first spoke.
Probably at the end of the first quarter earnings call right after I'd come onboard and since that time.
We have really been.
A considerable amount of effort in defining what it is and who we are.
And putting the processes in the team of platelets in place to prosecute.
Against that strategy.
So you asked a very specific question or we get on calls.
The answer is we're very focused in terms of.
Our goal of acquiring good businesses that we can make better in partnership with excellent executives, whether it's existing our executive.
Bring alongside US we're very opportunistic.
We have several tools in our toolkit to do that including this hybrid private equity hedge fund strategy.
The ability to create a catalyst for ourselves, but thats not the only tool that we have.
We're very focused at the moment in industrials healthcare and mature technology businesses.
That doesn't mean, we're going to limit ourselves to that but we are focused in those areas. If we see something opportunistic that.
Is interesting outside of those areas, we're evaluating things.
And we.
We have spent a considerable amount of time building, what we think is a really attractive pipeline.
And I would say I think I said it earlier.
We can acquire.
Private businesses and regular way bilateral private discussions in an auction process, though the latter is less attractive for us from an allocation of time, our payback on time allocated standpoint, we can acquire other businesses, we can acquire divisions in public businesses.
We're pretty enthusiastic today.
Dr from public to private.
Whereas.
Yes, even as recently as six months ago, certainly 12 months to 24 months ago that are with the other direction. So we're seeing a lot of very interesting opportunities in the public markets, where we can create a catalyst NBA buyer and do some really interesting things with those businesses.
I think rich said and I said it as well.
We have the pipeline we had process we have the team we can do this but we're being very deliberate about our approach and our valuation.
And Tony if I could just I wanted to clarify one point that you made you said that.
The life Science portfolio acquisition was in place before the starboard deal that's actually.
That's not the case and importantly that transaction was really only possible because of Starboards partnership with us. So the starboard relationship was entered into back in November of 2019.
And you recall the kind of at the beginning of Covid. We found this portfolio of life Science investments, which frankly was not something that we were setup to explore evaluate or look for it was not what we were looking to do at the time, but it was opportunistic it was a once in a lifetime opportunity and we had probably a $160 million.
Alrighty cash on our balance sheet at the time of the buy this portfolio, we needed to have approximately $300 million in cash to put up that escrow in order to effectuate. The transaction. So that would not have been possible. If we didn't have the partnership with starboard is the availability of that capital and that transaction, while I know it's been.
It's been.
The primary focus of many of our conversations with you and with others on.
Interested in our company, it's important to recognize that transaction has already delivered $155 million more in capital that we put up for it.
And we still have holdings at book value and as you know that the book value of our private positions is largely based on cost, but an additional nearly $110 million of valuable it's actually more so that.
<unk> has created an incremental $265 million or more in value without a impossible, but hasn't been for the software partnership so I.
I think thats, an important distinction to make.
We're obviously very pleased with that transaction has created enormous value and in many respects it sort of set up a very difficult comparison to do that or that stock, but we're very focused on doing that.
Thanks to both of you guys for those detailed explanations and looking forward to see what comes next vacation. Thank you, yes. Thanks Tony.
Once again, if there are any remaining questions or comments. Please press star one on your Touchtone phone.
Up next we have Brett Reiss with Janney Montgomery Scott.
Please proceed.
Hi, gentlemen.
Hey, Brett good morning, Hi.
In terms of the timing of the first acquisition.
Are there any conditions precedent that have to happen in the simplification of the capital structure before you can pull the trigger on the deal like for example, do you have to have shareholder approval in your pocket before you.
The first acquisition.
Now we go.
Okay. So we're waiting until after the first of the year simply because you're.
Doing additional due diligence or maybe you think this is just another shoe to drop in terms of.
The market volatility.
Yes, Brett I think it's a great question.
As we look at our pipeline, we're advancing a lot of things and they are at different stages of that pipeline.
They are there things that we saw very attractive.
Pricing moved away from US there are things that we thought were very attractive and pricing has moved in our favor.
It's not a question of waiting until the first year, it's really a question of making sure that we're.
Undertaking the rigor of our investment analysis process, such that we're making the right decisions and as you know transactions.
Transactions have lives of their own and so as they advance through the pipeline in the stages of our work and our investment decision making process.
We'll get.
We'll move to the phase, where we can close something Barry there is not something in the pipeline. That's in that final stage of closing a transaction.
So it's not a question of waiting until the beginning of the year, it's making sure that we're advancing as many things as possible to that stage and getting.
As many shots on goal is as we can and if I think about it my children are occupiers Zaki analogy.
We've spent a lot of time with day opposing offense and ours down.
We moved into the neutral zone, and we were doing a decent job kind of making sure that aqua and getting to our zone and now we're in the opposing team zone and we're continuing to take shots on goal and our shop count is going up and as you know the higher the shack count the higher the probability of getting deals done. So that's what we're focused on right right.
Now how important to us is the extra capital that might come in from the exercise of the rights offering at five and a quarter from.
Other shareholders and if the answer is yes, it's important don't to have to make some sort of acquisition.
Attract attention to the the market to the company and hence realize a higher stock price so that shareholders.
Shareholders other than starboard, who is committed to investing the $15 million at five and a quarter will be incentivized to to exercise their rights.
Great question, Brad I mean, we're very focused on driving shareholder value.
We believe that if we can demonstrate to shareholders that theres more than $5 25 per share and value then the rights offering will be attractive.
We can't do that then we understand that investors may not be interested in investing at that price. So.
We work with Star Wars, renegotiated that price, we think it's a price that should prove attractive for shareholders based upon the opportunities that we see.
But we're not going to rush in acquisition earn outs as a catalyst to.
Drive that opportunity, we're going to remain disciplined but.
And we want to be very good stewards of capital and so that's our focus and as far as timing goes it's just important for us to be realistic about timing rather than making predictions of when deals are going to happen. If we can accomplish something sooner we would love to do it if we find something attractive that we can that we can move on quickly and close.
Quickly, we would love to do it but we're not going to make promises that we can close something before a certain date for instance around the rights offering just for the sake of affecting the rights offerings successful.
Alright, one last one.
You read.
Berkshares annual report.
He has got a checklist.
Criteria are in businesses that.
He would like to purchase.
Okay.
In terms of what you're focusing on can you refresh our recollection.
What.
What are we looking.
Four and and is there a minimum and maximum deal size.
Youre kind of sweet spot.
Yes, Brett. So so we also have a checklist of criteria that we go through.
<unk>.
And a checklist of planned to put together once we acquire a business.
So we are admirers of Berkshire in that respect we've adapted that for ourselves.
So we appreciate you bringing that up.
In terms of what we're looking for we're looking for businesses.
That we believe we can make better.
We believe we can make better and partnership in combination.
With existing teams.
With teams that we can bring onboard with operating executives with whom we have relationships.
This is a very valuable area of our partnership with starboard as they they have a lot of relationships and expertise doing that in public companies.
And we're looking to do that.
Private companies the companies within Acacia stable.
And so that's really what we're looking for at least at a high level and that can take many different forms in terms of size of business.
We're not really constrained to the size of business that we can acquire.
As you know we acquired <unk>, almost a year ago as rich mentioned earlier.
That was on the smaller side and we've bid on businesses that you've seen out public that are much larger we have cash from our balance sheet, we have relationships with other large institutional investors.
That like to participate in opportunities like these along side folks like us and so it really comes down to this situation as I mentioned, we are focused on a couple of key areas of the economy right now.
We're not precluded from doing things in other areas of the economy, if we find them to be very attractive we're not precluded from doing something.
A life Sciences portfolio again, if we think that it's attractive but we are.
Trying to stay focused and disciplined on that core mission, which is acquire.
That we think we can make better and ultimately great.
In partnership with really smart people around the table.
Great. Thank you for taking my questions and of course.
Brightcove leg I wish you the best of luck.
Thanks, Brian Thanks, Brad I'll try not to break a leg down.
Okay.
Once again, if there are any remaining questions. Please press star one on your Touchtone phone once again Thats star one question or comment.
We have a question coming from Adam Eagleson with formidable asset management. Your line is live.
Hello, gentlemen, I appreciate the time today again, congrats on the restructuring.
You can see that as a longtime shareholder here.
Question as Rich mentioned I think getting all of the ancillary businesses for free.
Which is great on the one hand, but on the other.
Tell us how youre thinking about the discount between book value and price that narrows between.
<unk> 39, 30, I think in large part because of the buyback.
Maybe walk us through your capital allocation decision appreciate the more shots on goal analogy, but how do you think about your own stock as part of one of those shots on goal.
Thanks, Adam.
Look we've repurchased.
$55 million of our own shares in the last year or so.
We certainly are mindful of the value of our stock.
And the discount that it trades at.
We would certainly consider rizza.
Resuming that.
If.
If we arent able to find better opportunities for capital deployment.
We have been out of the market as you know as we've been.
Dr.
Negotiation.
On.
With the recapitalization with starboard and the simplification of our balance sheet, but first and foremost we liked the idea of having dry powder to commit to opportunities that we think are going to return.
Sure.
Provided very attractive returns on that investment and so that's our primary focus.
Shrinking the capital.
For the sake of obstructing the capital is.
This is not necessarily consistent with that sort of strategic mission, but having said that we're very mindful of where our stock is trading and in periods, where we don't have opportunities to make acquisitions, it's something we would certainly consider.
Got it does that level of discount to book value serve as somewhat of your hurdle rate or how do you think about that.
Yes, I think thats, a good way to think about it I mean, we have opportunities to deploy capital we wanted to deploy it in the <unk>.
Most attractive way possible and we would always measure that against the appeal of buying back our own stock. So we set a high hurdle for us.
Okay Fair enough. Thank you appreciate it.
Yes.
Thank you.
Okay. We have no further questions in queue I'd now like to turn it back to management for closing remarks.
Thanks, Thanks, everyone.
Thanks for the thoughtful questions. Thanks for taking the time with US this morning.
And thanks for the support and the optimism about the platform here.
We will continue to update you as things.
Continue to develop and we have some.
Yields moving forward so.
Well, we look forward to talking to you next quarter.
Thank you ladies and gentlemen, this does conclude today's conference you may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.