Deal Prof: Wachtell Did Fine

Wolinsky (r) with Barry Diller, who has been in the middle of a few interesting M&A cases himself. (AP Photo/Rob Carr)

Last week we wrote about Amy Kolz’s piece in the American Lawyer, “The Big Fall: Wachtell was supremely confident of its strategy in the Hexion busted-merger litigation with Huntsman. How did it all go so wrong?” Based on that subtitle, you know where she came out.

To grossly oversimplify, her conclusion was that Marc Wolinsky of Wachtell oversold an aggressive strategy to his client, and the Delaware court threw up all over it.

Steven Davidoff, who writes as the Deal Professor, stepped up to defend Wachtell’s work.

After the jump, Davidoff’s case and the writers’ bona fides.

According to Davidoff, the first flaw in Kolz’s reasoning is the belief that Apollo’s $1 billion settlement payment was a loss. Considering the company was hemorraghing cash, the amount included $250 million in notes, and other deals have had larger breakups, he thinks Apollo got off easy.

Next, he takes issue with a claim that hero-of-the-blog Marty Lipton guaranteed victory to pal Leon Black. (Lipton fans should make sure to check out The Poison Pill, by the way. Even though it hasn’t been updated in a year and a half, it’s a fantastic homage to the legend).

Instead, Davidoff surmises that Wolinsky knew he had a tough row to hoe and a client who was determined to get out of the deal at almost any cost. Given that, he might have made the best out of a bad situation.

But still, if we criticize Wachtell here, it is for misinforming its clients of the risks, and that we just don’t know. It may indeed be that Marty Lipton guaranteed an outcome, or that Apollo was sold a strategy and wasn’t told of the risk of a suit against Leon and Josh and a loss in Delaware. If that was the case, then there would be grounds to say that Wachtell made a mistake. I find it hard to believe that the risk of what actually happened was not discussed by Wachtell and Apollo, and Apollo made the decision here. But unfortunately, this is something that we will never really know.

So, whom to believe? Kolz was an IB associate at Goldman prior to getting into reporting. Davidoff’s background is BigLaw. He was at Shearman and Freshfields in New York and London before getting into academia. He’s currently an associate professor at UConn law.

PS- To our readers from Wachtell (we know you’re looking), welcome!  We’d love to hear from you in the comments or send us an email.

Related posts:

1. AmLaw: Wachtell Blew it for Apollo
2. Did Wachtell Really Get UBS a Good Deal?
3. Bad Blood Building Between Wachtell and Paul Weiss
4. K&S out, Cadwalader in on “Deal from Hell”
5. M&A Rankings Out – Wachtell #1 (and Not #1)