Professional Documents
Culture Documents
Publications
Agenda
1. Introduction
2. Description of the companies and their
M&A
3. The transaction
4. The investigation
5. Questions
6. Conclusions
1. Introduction
$500 million
3. The transaction
5. Questions
Would you advise Royce Yudkof, Managing
Partner of ABRY, to file the lawsuit? Why or why
not?
What is the upside/downside of filing the suit vs.
settling the complaint for ABRY? For Providence?
Was ABRY defrauded?
If you were a limited partner (investor) in ABRY,
how would you react to news of the lawsuit?
What if you were an investor in Providence?
5. Questions
1. Would you advise Royce Yudkof, Managing
Partner of ABRY, to file the lawsuit? Why or
why not?
We advise to file the lawsuit as many misleading
actions occurred. FW Publications lied intentionally
about the financial statements what resulted in lower
value of the company. Apart from manipulating
F&Ws financial statements, they also overstated its
earnings and artificially inflated EBITDA and as a
result of these misrepresentations, ABRY overpaid for
F&W by approximately $100 million.
In the agreement there was an article that limited the
Providence responsibility to $20m for any postclosing claims and damages, but in this case it is too
little sum of money, thats why we advise to sue the
Providence.
5. Questions
2. What is the upside/downside of filing the suit vs. settling
the complaint for ABRY? For Providence?
ABRY
Providence
Upside
Downside
Upside
Downside
filing the
suit
High
compensatio
n when
winning the
case,
End of deal
High costs of
layers to
cover when
losing the
case
Unreliabale
partner
A chance to
prove the
innocence
A risk of paying
compensation
Drop of share prices
Lose of clear brand
identity
settling
the
complaint
More
lucrative deal
End of deal
Impossible
A chance to
smooth over
ABRYs anger
and make a
counter ofer
Impossible
5. Questions
3. Was ABRY defrauded?
We decided, that it was a fraud in this
case, because in accordance with the
definition of fraud there was an intentional
mislead that was motivated by the desire
to deceive another to his harm.
What is more Providence failed to disclose
all information about the financial
situation of FW Publications and they had
manipulated financial statements what is
also a defence
5. Questions
4. If you were a limited partner (investor) in ABRY,
how would you react to news of the lawsuit? What
if you were an investor in Providence?
Under circumstances of lawsuit, as an investor of
Providence or ABRY, we would like to withdraw
financial sources. The risk of investment would
rapidly increase. The probability of incurring
additional cost is very high. As a result we would
take under consideration to sell shares of those
companies.
6. Conclusions
The Share Purchase Agreement is essential
therefore both buyers and sellers should:
carefully neogtiate the idemnification
provisions to ensure appropriate risk
allocation,
carefully negotiate the no reliance
provision describing the information the
buyer relies on so even if the seller acts
recklessly or with gross negligence, one will
not be able to insulate itself from potential
liability by contract against its own lies,
intentional misrepresentations or fraud.