Crains New York - July 30, 2012 - (Page 4)

Man bites dog: Website hopes to rescue brick-and-mortar biz How LuckyAnt.com is helping keep the old East Village alive BY MATTHEW FLAMM There may be light at the end of the tunnel for the St. Mark’s Bookshop. If so, it will be seen on the website of Lucky Ant, the hyperlocal crowdfunding platform that is helping the embattled literary landmark raise the money it needs to move to a cheaper location. The goal is to bring in $23,000 in small donations by Aug. 17. As of last Friday afternoon, the tally on luckyant.com was approaching $4,000. Lucky Ant founder Jonathan Moyal said the dollars were pacing ahead of the only other large-scale fundraiser the startup has held— the $24,000 campaign in May that kept the Living Theatre from being evicted from its Clinton Street home. The Living Theatre had the support of institutions and patrons of the arts, some of whom made donations of up to $1,500, Mr. Moyal said.Contributions to the St.Mark’s Bookshop have been more in the $10 to $25 range, with many of them coming from professors and students at New York University. “It’s the neighborhood rallying around,” Mr. Moyal added. “That’s the whole point of crowd funding.” An East Village fixture for the past 35 years,the St.Mark’s Bookshop has been pushed to the brink by a succession of challenges, including the economic downturn, the rise of online book buying—followed by the rise of e-books—and increases in its rent. The store won a reprieve last fall, when its landlord, Cooper Union, agreed to a temporary $2,500 rent reduction following a petition drive by supporters that brought in more than 40,000 signatures. But the reduction runs out in November, and subsequent hikes will bring the monthly total to nearly $23,000 as of Jan. 1, according to a Cooper Union spokeswoman. The store says it now pays an unaffordable $18,700 per month.“It’s in our interest to move as soon as possible, but we need to raise the capital to do that,” said Bob Contant, one of the owners. He and co-owner Terry McCoy are looking to stay in the East Village and downsize to around 2,000 square feet from 2,700—and pay about half the rent. Mr. Contant said he has seen spaces advertised in the $10,000 to $12,000 range. He is also hoping that Lucky Ant exceeds its $23,000 goal, since a move will likely cost between $50,000 and $100,000. The crowd funder sets what it believes is an achievable goal, since it doesn’t collect the money from pledges unless the campaign hits its target. “You’re working toward a goal, and that goal has to have meaning,” explained Lucky Ant co-founder Nate Echeverria about the rule. Founded a year ago on the Lower East Side, Lucky Ant (the name refers to the communal nature of ant colonies) went live in January and has since helped some 20 small businesses raise capital, usually to expand operations. It takes a commission if campaigns prove successful. The startup sees donations as investments in neighborhoods. And deals for donors. A $25 donation to the St. Mark’s Bookshop, for instance,earns a 5% discount on books for three months. Though the Living Theatre and St. Mark’s Bookshop have helped raise the startup’s visibility, the founders insist they’re not working to preserve high-profile cultural landmarks for sentimental reasons. “They really have a plan to survive,” Mr. Moyal said of the bookstore’s owners. “We wouldn’t have taken on this project if we thought it was a Band-Aid before the store closes in six months.” LISTEN to a discussion at CrainsNewYork.com/podcasts IN THE MARKETS by Aaron Elstein Citi’s parts worth more than whole he odds of Citigroup Inc.’s board of directors listening to former Chief Executive Sandy Weill seem about as remote as the Penn State football team revisiting Joe Paterno’s playbook. But suppose the bank heeded the mind-boggling advice given by its creator last week and broke itself up. What would Citigroup’s various components be worth if they were freed from the conglomerate? Finding out—or at least coming to a reasonable answer— took all of about 15 minutes, a pen and a paper napkin. The short and simple answer: about $38 a share, or 40% above Citigroup’s current price. To get that figure, we applied stock-valuation techniques used by CLSA’s Mike Mayo, one of the best bank analysts in the business, who earlier this year estimated JPMorgan Chase’s breakup value. So, here goes. Citigroup is essentially made up of five different businesses. There is investment banking (about 33% of revenue), retail banking (25%), credit cards (25%) and transaction services (15%). There’s also Citi Holdings, which houses all the unwanted detritus from the Weill era, and we’re excluding that from our analysis because (a) it really complicates matters and (b) the current regime at Citi already is doing its best to get rid of the division. Now, Citi’s investment banking division resembles Goldman Sachs’, and Goldman is valued by investors at around nine times expected earnings. Investment banking makes up a third of Citi’s business, so let’s assign it a weighted price-toearnings ratio of 3.0. Then do the same thing to Citi’s retail banking business,whose closest global peer is probably HSBC, which trades for seven times expected earnings. So, the weighted p/e ratio of the Citibank retail operation is 1.8. On the credit card front, American Express trades for 13 times expected earnings,so let’s assign Citi’s card business a p/e of 3.3. Finally, Citi’s transaction service division is almost the exact same size as State Street, a major processing bank that trades for more than 10 times expected earnings, so let’s give that Citi business a p/e of 1.5. Add those numbers up and you get a p/e ratio of 9.6. That is 40% higher than Citi’s current estimated p/e ratio of 6.7, according to Bloomberg data. Multiply 9.6 by $3.95, which is Citi’s estimated earnings per share for next year, and you get $37.92. Voilà! Of course, there is lots to quibble with here. Goldman and AmEx command premium multiples because they are premier companies; Citi’s equivalents, well, aren’t. There is also the significant issue of how an independent ex-Citi investment bank would fund itself. You also could argue that accurately valuing Citi’s retail banking business requires separately analyzing its segments in the U.S. and abroad, the latter of which are much larger. Anyway, the point is that if Citi were broken up, shareholders would probably be better off. This isn’t a new argument, by any means. Bill Smith, the president of Smith Asset Management, who was advocating a breakup five years ago when Citi was worth a whole lot more, said he’s given up on the idea and moved on. “Now Bank of America,” he offered as an example, “if you break that up, that’s a $15 or $20 stock, more than double the current price.” T Sprinting to raise $23,000 in days GROW. WISELY. Everyone wants to grow. But grow how? In which markets? At what cost? To grow wisely, you need an advisor who really knows your business...and knows you. Who can deliver tailored solutions that create opportunities, maximize efﬁciency and build business. EisnerAmper is that advisor. We roll up our sleeves to get to the bottom of your toughest challenges so you get the advice and strategies you need to create sustainable growth. Charles Weinstein Chief Executive Ofﬁcer 212.949.8700 charles.weinstein@eisneramper.com Howard Cohen Chairman 732.287.1000 howard.cohen@eisneramper.com Let’s get down to business. TM www.eisneramper.com EisnerAmper LLP Accountants & Advisors Independent Member of PKF International bloomberg news NEW YORK | NEW JERSEY | PENNSYLVANIA | CALIFORNIA | CAYMAN ISLANDS -47% DECLINE IN COMPANIES holding initial public offerings so far this year. Few seem eager to repeat the experience of Facebook, whose shares are 37% below the IPO price. 4 | Crain’s New York Business | July 30, 2012 http://www.LuckyAnt.com http://www.luckyant.com http://www.CrainsNewYork.com/podcasts http://www.eisneramper.com http://www.eisneramper.com

Table of Contents for the Digital Edition of Crains New York - July 30, 2012

Crains New York - July 30, 2012
Contents
In the Markets
The Insider
Business People
Real Estate Deals
Opinion
Alair Townsend
Greg David
Small Business
Corporate Finance
Classifieds
For the Record
From Around the City
New York, New York
Source Lunch
Out and About

Crains New York - July 30, 2012