The Money Trap by Alok Sama

Author:Alok Sama
Language: eng
Format: epub
Publisher: St. Martin's Publishing Group

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We received a written response from Stuart on Thursday, July 7: a predictable and categorical rejection. On Monday, July 11, we submitted a revised proposal, raising our bid by 10.7 percent, from the original 1,500 to 1,660 pence, now a 42 percent premium.

By this time, the bankers advising the Arm board would have provided three key inputs. First, they would have canvassed their global network to gauge the likelihood of an interloper willing to match the SoftBank bid. Second, they would have affirmed that the price offered was “fair,” taking into account not only company prospects but also the fact that this was a change of control transaction; a buyer who seeks control is expected to pay a “control premium.” Finally, they would have certified that the SoftBank proposal was airtight, particularly certainty of funds.

Goldman and Lazard were together paid over $50 million in fees for these services. This may seem absurd, but it was in line with precedent. M&A fees are based on transaction value, for when it comes to buying or selling companies with values in the tens of billions, no board takes a chance on a second-tier outfit that might perform identical services at a discounted price. For firms like Goldman Sachs and Morgan Stanley, the M&A business is an enormously lucrative franchise.

Robey wasn’t exactly cut-price, but when it came to negotiating fees, his approach was as classy as I’ve seen from a banker. “I get to choose my clients, and you get to decide what to pay me,” he said, sitting across from Masa and me, in the dining room of Masa’s two-bedroom Opus Suite at the Berkeley Hotel in Knightsbridge. We paid his firm handsomely, well into eight figures.

While the bankers worked feverishly behind the scenes, the back channeling suggested we were within the kill zone. We agreed to meet in London on July 12, at 8 P.M., in Lazard’s offices in Mayfair. At 7:30 that evening, our entourage, about twenty including bankers and lawyers, piled into a fleet of black limousines and rolled past Hyde Park Corner to Lazard’s offices on Stratton Street across from the Ritz Hotel on Piccadilly.

The scheduled meeting was limited to the original Marmaris couples (Masa and me, Stuart and Simon) while the broader team stood by in an adjacent boardroom.

Masa and I arrived first and settled ourselves into a wood-paneled corner meeting room, with side views of Piccadilly and Green Park beyond, the trees bathed in summertime sunlight despite the late hour. Stuart and Simon marched in five minutes late. Perhaps a tactical move to throw Masa off-balance, given the known Japanese obsession with punctuality?

Stuart was in power garb—dark gray pinstripe suit, white shirt, navy club tie. He sat directly across from Masa and looked at him expectantly, no longer the genial sailor we had encountered only nine days earlier, the Mediterranean warmth replaced with British froideur. Marmaris seemed as far away as my childhood.

Masa was taken aback; even the suggestion of rudeness disturbed his aura.

I launched

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