Off topic: Frightening events related to Dragon Systems and Goldman Sachs
Thread poster: veratek

veratek
Brazil
Local time: 06:45
French to English
+ ...
Jul 16, 2012

I'm not sure which category to post this under, but I thought many translators might like to read the horrible story of the Dragon Systems deal orchestrated by Goldman Sachs.

Dragon Systems was the furnisher of Dragon NaturallySpeaking software.

NY Times:
Goldman Sachs and the $580 Million Black Hole

http://www.nytimes.com/2012/07/15/business/goldman-sachs-and-a-sale-gone-horribly-awry.html?_r=1&pagewanted=all

Wow.


 

Krzysztof Kajetanowicz (X)  Identity Verified
Poland
Local time: 11:45
English to Polish
+ ...
difficult to judge Jul 16, 2012

As usual, we don't know all the facts, there's ongoing litigation, etc., but the pivotal moment - if you believe NYT - was the sellers agreeing to an all-share deal instead of a cash+share deal. They essentially switched from a disposal to a merger. It was a huge decision to make. They did it on their own, and you can criticise Goldman's absence from the meeting all you want but it was no excuse for making poor decisions. There appears to be no trace of the sellers consulting Goldman before the final vote (which would be in their interest), or Goldman enquiring about the structure of the deal (which would be the ethical thing to do but which was not in Goldman's interest - the sooner the deal closes, the sooner they can go do other things - why cause stir?). Greed is good? Not for everyone.

It seems the interests of the sellers and their advisor were not well-aligned.

[Edited at 2012-07-16 11:12 GMT]


 

Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 11:45
Member (2005)
English to Spanish
+ ...
Too complicated... and it failed Jul 16, 2012

In so many things in life, simple often works best. Wouldn't it have made sense to go to a good lawyer with experience in acquisitions who asked for 5% of the deal, and try to sell the business for the highest amount possible, in cash, directly in exchange of the shares, instead of starting this whole mess?

Even if the deal was for half the money (300 million dollars), it would have been a nice pile of money for two old people who have worked very hard all their life, and maybe a good money for their heirs.


 

veratek
Brazil
Local time: 06:45
French to English
+ ...
TOPIC STARTER
it's the lack of due dilligence Jul 16, 2012

Oh, I am certainly not one who could judge anyone or anything about this story. Nor can I opine on how well the NYTimes wrote the story.

"but the pivotal moment - if you believe NYT - was the sellers agreeing to an all-share deal instead of a cash+share deal. They essentially switched from a disposal to a merger. It was a huge decision to make."

Indeed.

" They did it on their own, and you can criticise Goldman's absence from the meeting all you want but it was no excuse for making poor decisions. "

It's the alleged complete lack of due diligence that I find astonishing. Can it be anything other than orchestrated?

And since there were people (the other big computer software/hardware companies) who wanted to get a piece of this technology, were they the puppet masters behind the deal? And would they do something like this to get this technology for free, as it happened?

Perhaps, as you say, both sides were nothing but greedy, but my impression from the NYTimes is that Goldman Sachs was at the service of greedy heavy-weights.

==================
"Wouldn't it have made sense to go to a good lawyer with experience in acquisitions who asked for 5% of the deal, and try to sell the business for the highest amount possible, in cash, directly in exchange of the shares, instead of starting this whole mess?"

Yes, cash. A "good" lawyer could have made a rotten deal all the same though.

It's sad if they have to stop their research though.


 

Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 11:45
Member (2005)
English to Spanish
+ ...
A lawyer would have pulled it through... to get their share of the money Jul 16, 2012

veratek wrote:
Yes, cash. A "good" lawyer could have made a rotten deal all the same though.

I don't think so. Such lawyer would have made sure that everything went smoothly if his own income was at stake (the 5% commission or similar). After all, big banks' executives were used to getting their pile-o-money anyway, even if the deal went terrible like this time.


 

Krzysztof Kajetanowicz (X)  Identity Verified
Poland
Local time: 11:45
English to Polish
+ ...
"good lawyer" Jul 16, 2012

I'm pretty sure all kinds of lawyers were involved on all sides. The thing is, the buyer probably didn't have $300 million to spend (made all the more likely by the later discovery that the Asian revenue was fake). Since we're in "woulda-shoulda-coulda" mode, let me speculate that a reasonable seller would've gone back to those interested parties that had actual money, even if nobody in that group was willing to pay $600 million, or $300 million.

 

Neil Coffey  Identity Verified
United Kingdom
Local time: 10:45
French to English
+ ...
Unfortunate Jul 16, 2012

veratek wrote:
It's the alleged complete lack of due diligence that I find astonishing. Can it be anything other than orchestrated?


A large corporation being inefficient and incompetent? Sounds fairly unastonishing to me...

Unfortunately, it does also sound like some of the onus will be on the Bakers for somehow agreeing to a transaction whereby they got no cash and (as I understand) no control of the intellectual copyright in the event that things went pair-shaped. In other words, they really did decide to put every single last egg into one basket.

But it sounds like they could have a legitimate claim of some sorts.

On the other hand, I wonder if a judge will agree that Goldman Sachs' incompetence actually amounts to a billion dollars. They may be asked to come up with a more realistic figure at some point.

[Edited at 2012-07-16 16:59 GMT]


 


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