What do you think of this?
Meanwhile, the most controversial banker involved in the HP-Autonomy deal, Frank Quattrone of Qatalyst, represented Autonomy and played a key role in getting HP to pay a high price. … Analysts almost uniformly deemed the $11.1 billion he got HP to pay for Autonomy as overly rich – a compliment to him at the time, but possibly a hollow success if HP’s allegations prove true.
True or false, re: “hollow success”? The article is about how the eight zillion bankers and lawyers and auditors and, I dunno, PR firms swarming around the HP-Autonomy deal failed to notice that Autonomy was a giant fraud due to (1) it not being a giant fraud, (2) it not being their job to notice that it was a giant fraud, and/or (3) their not being good at their jobs.1 Was it Quattrone’s job?2 The capital-markets gatekeeping function, whether in sell-side M&A or in IPOs, exists in irresolvable tension between “getting the best possible price for your client” and “maintaining some credibility with the buy side.” If I were selling my company – fraud or otherwise! – I’d be pretty psyched to hire someone talented enough to get $11 billion for a giant fraud; on the other hand, once you get a reputation for getting top dollar for giant frauds, it becomes hard for you to get any dollar for anything.3
A while back we talked about a sort of amusing article saying that M&A lawyers provide no value because (1) their job is to negotiate the conditions in which a merger will and will not close, (2) mergers always close, so (3) their job is purely decorative. You could take issue with that for a number of reasons; at the time I suggested that one of those reasons would be “well they also add value by doing due diligence” and, heh, so much for that. Read more »
Once disgraced, now rehabilitated, and always mustachioed tech banker Frank Quattrone has gotten some well-deserved congratulations for convincing Google to up its bid for Motorola Mobility from $30 to $40 despite the fact that (1) MMI was trading at $24.47 and (2) there was no other bidder. So, yay. Also his firm, Qatalyst, is getting $40mm in fees (44bps of enterprise value on a ~$9bn EV deal) for 14 days of work; co-adviser Centerview, who presumably did not come up with the plan of “try asking for more money,” is getting a piddling $12.5mm.
All that and more is in Motorola’s merger proxy filed today. Also in the proxy, though, are some internal forecasts from MMI – which might help explain Qatalyst’s success, provide ammunition to Motorola shareholders unhappy with the price, and/or raise questions about the quality of MMI’s forecasting. Read more »
When we saw that three boutique banks represented Google and Motorola Mobility in their deal, we were a little puzzled about why. Not that it’s unusual to hire Lazard, Centerview or Qatalyst, but after reading Felix Salmon‘s lament for the breathless pre-market M&A scoop we wondered if that supplied the explanation. Maybe Google and Motorola left out the big banks because they have kind of a deserved reputation for leaking deals, and because keeping news quiet is easier at a smaller shop than at a place with thousands of public-side employees? But on further inspection that theory kind of fell apart, as trading in MMI suggests that the deal may have leaked last week.
The New York Post has what seems to be the correct explanation: Motorola had actually spent a lot of time with full-service bulge bracket investment banks recently, and had come to the considered conclusion that they’re all a bunch of dicks.
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