Bank of America is settling a shareholder lawsuit alleging that the Bank and its officers misled investors about the health of both companies (WaPo report here.) Other than the $2.43B financial cost, the settlement also includes the adoption of several new corporate governance policies, one of which relates to new guidelines for a board committee on future acquisitions.
By way of background, around 25% of all lawsuits filed by shareholders against company directors and officers allege misleading disclosure, while another 25% protest the transaction itself. (This from Alexandra Lajoux's The Art of M&A Integration, 1998 - given that the source is somewhat dated, the percentages should be treated as "directional" rather than precise in today's environment.)
Very interesting article (NYTDealBook) about culture and compensation in law firms, in particular focusing on the imapct of "star systems" where top producers are paid very highly relative to other partners, versus "lock step" systems where the gap between highest and lowest-paid partners is carefully managed. Although it's not explicitly about M&A, the article is very relevant to issues of culture in the M&A context.
Several interesting nuggets over the last couple of days: NYT DealBook suggests that Yahoo may be gearing up for acquisitions, judging by the CFO change initiated by new CEO Marissa Mayer. Tim Morse, who was known for cost cutting, is to be replaced by Ken Goldman, who comes from Fortinet. Reportedly, Marissa Mayer has told employees to expect “acqui-hires” — acquisitions made for talent rather than technology. The article suggests that Yahoo has not been good at doing deals, concluding as follows:
Yahoo has had a difficult time persuading entrepreneurs to join. In 2009, Google’s bid to acquire Yelp fell apart at the last minute after Yahoo offered to pay 50 percent more than Google. According to one person close to the talks, both deals fell apart because Yelp’s management team refused to work at Yahoo and Yelp’s board refused Google’s terms.
More recently, the founder of a start-up, who refused to be named for fear it would jeopardize a business relationship with Yahoo, said Yahoo recently inquired about a potential acquisition.
The person, who has also been courted by Facebook and Google, agreed to a meeting but said the company was turned off by Yahoo executives’ failure to do basic due diligence.
“At Facebook and Google, they know your underwear size before you walk in the door,” this person said. “At Yahoo, it was clear they hadn’t even Googled me.”
On Monday, the announcement came that Waste Connections was buying R360 (NYT story here). R360 is in an interesting space, what we might call the "restoration economy:" the business of cleaning up at oil and gas drilling sites. Companies like R360 help to clean upcontaminated land, reclaim oil from storage tanks, etc. I find myself intrigued by the restoration economy - as the world goes through the turbocharged industrialization that we're in the midst of, there's a lot of associated cleanup and restoration to be done, with some substantial corporations active in the area (such as Clean Harbors).
Given some research work I'm currently doing - into the implications of China's entry into the aerospace sector - I'm wondering how much the talks are driven by the possible end of the Boeing-Airbus duopoly. If China successfully establishes itself as a contender in large commercial aircraft, it will change the dynamics of the industry - suggesting the imperatives of cost reduction, diversification and scale.