Just because Microsoft didn’t end up acquiring Yahoo! doesn’t mean our colleagues didn’t get paid. In its 10-K for the year ended December 31, 2008, Yahoo! disclosed just how much it can cost to fend off, then court, then be spurned by a suitor (emphasis added):
Other expenses increased $703 million for the year ended December 31, 2008, as compared to 2007 mainly due to restructuring charges, net of $107 million, the goodwill impairment charge of $488 million, and increases in third-party service provider expenses of $125 million. For the year ended December 31, 2008, the increases in outsourced service provider expenses were primarily the result of incremental costs incurred in general and administrative expense of $79 million for 2008 for outside advisors related to Microsoft’s proposals to acquire all or a part of the Company, other strategic alternatives, including the Google agreement, the proxy contest, and related litigation defense costs.
Skadden was Yahoo!’s outside counsel; Goldman Sachs and Lehman (now Barclay’s) were the financial advisors. Financial advisors often don’t get paid when deals don’t close, but here they might have gotten paid for services rendered in defending against the takeover.
In another deal that didn’t close, Huntsman reports that it paid Shearman & Sterling and Vinson & Elkins $43 million in 2008 and $10 million in 2007 for fees relating to its failed acquisition by Hexion. According to AmLaw Daily, the majority of the fees went to V&E – the firm led the post bust-up litigation and shared the transactional work with Shearman.
It’s nice that our colleagues are getting paid even if the deals aren’t getting done. Especially since it looks like sellers and buyers aren’t seeing eye-to-eye yet on pricing. Google CEO Eric Schmidt, speaking at the Morgan Stanley technology summit, said
“The good news is we have lots of capital. The bad news is we’re still trying to get everybody into the model that we really want in terms of M&A,” Schmidt said, without explanation. “And I think it’ll start soon, but it’s pretty inactive right now.”
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