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BLB&G Partner Jerry Silk Discusses Private Equity
Trends and Impact on Shareholders on CNBC’s “Power Lunch”
June 27, 2007 - BLB&G Partner
Jerry Silk was featured
on CNBC’s Power Lunch program, during which he discussed several recent private
equity deals that have short-changed the pockets of shareholders and the general
question of whether private equity buyouts are good for investors. According to Mr.
Silk, management and directors have the "paramount obligation...[of getting] the best price for shareholders"
when considering private equity buyouts, and failure to do so is a blatant breach of
their fiduciary duty to maximize shareholder value.
Mr. Silk argued that private equity firms
sometimes "entic[e] management with riches" in order to ensure their buyout
offer goes through. This, in turn, can create conflicts of interest at the
board and management level and compromise the process of getting the best price
for the shareholders of the companies involved. Citing
In re Ceridian Shareholder
Litigation as an example, Mr. Silk points out that Ceridian directors and
executive officers were promised approximately $50 million in "change in control" payments
as part of their definitive merger agreement with Thomas H. Lee Partners, LP
("THL") and
Fidelity National Financial, Inc. ("Fidelity"). Among several other allegations, the
defendants are also accused of including a $165 million termination fee in order
to deter and preclude any competitive alternatives to the deal with THL and
Fidelity.
Mr. Silk closed by saying that if there is going to be a
take over of a public company, "it has to maximize shareholder value, and the people that are
running that process and conducting that auction have to be free of conflicts
and have to make sure they're doing their fiduciary [duties]."For more information about the
Ceridian case, please click here.
For more information about the firm, please contact us at
blbg@blbglaw.com.
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