Houlihan Lokey co-president accused of leaking info in takeover deal

A prime Wall Road banker is being accused of weird double-dealing at a California tech agency the place he serves as a board member.

Scott Adelson, co-president of the distinguished funding financial institution Houlihan Lokey, allegedly leaked info to the would-be acquirer of QAD Inc. — a publicly traded software program agency primarily based in Santa Barbara, Calif. — whilst he secretly entered a deal to purchase a non-public jet with the corporate’s CEO, in line with an explosive lawsuit.

Even if Adelson was serving as an impartial director of QAD Inc., the financier was allegedly ferrying info to Thoma Bravo, a giant private equity fund that bid $2 billion in late June to take the software program firm personal, in line with the little-noticed lawsuit, which was filed this month in Delaware by a hedge fund that’s trying to cease the deal.

Adelson served on a particular committee to guage provides to buy the corporate, which makes software program for producers. As an alternative of searching for all shareholders, Adelson was guarding the pursuits of QAD co-founder Pamela Lopker, the swimsuit claims. 

In June, a day after Thoma Bravo introduced a proposal for QAD — a proposal that had been elevated from its unique worth — Adelson signed a letter of intent to purchase a aircraft with Lopker for $4 million, in line with the swimsuit. Adelson allegedly agreed with Lopker to maintain the acquisition “our secret,” in line with the swimsuit filed by Nantahala Capital, a hedge fund with a 5-percent stake in QAD.

A white Houlihan Lokey logo on a blue background
Funding agency Houlihan Lokey has its headquarters in Los Angeles.

Across the time of the deal to buy the aircraft, Adelson, who had been on QAD’s board since 2006, allegedly stated in a message to Lopker “how happy I am that we are partners in this,” in line with paperwork produced for the swimsuit. Adelson didn’t reply to a request for remark. Houlihan declined to remark. 

The claims got here after Nantahala, in line with authorized filings, received permission from a Delaware Chancery Court docket decide to carry depositions and conduct expedited discovery — considerably uncommon in merger lawsuits, sources stated.

Nantahala uncovered the alleged aircraft buy when deposing firm founder Lopker, in line with court docket filings. Lopker and her husband, who died in 2018, have had management over QAD since 2010 when the corporate’s inventory was break up. QAD didn’t reply to a request for remark.  

“There is no way Pam should be buying a plane with the head of the independent special committee,” a supply conversant in the matter informed The Publish.

The alleged buy of the aircraft wasn’t disclosed within the proxy assertion to QAD shareholders that requested them to approve the $2 billion buy supply from Thoma Bravo. 

Shareholders additionally weren’t informed that Adelson, supposedly an impartial QAD director, allegedly had been “leaking” info to Thoma Bravo that helped the hedge fund construction a deal that was favorable to Lopker, in line with the swimsuit. Thoma Bravo didn’t reply to a request for remark.

In the meantime, in line with the swimsuit, Adelson in February had flagged to Paul Zuber, a Thoma Bravo companion, that QAD could be in the marketplace earlier than the particular committee had even been fashioned. Zuber is also on the board of Houlihan Lokey.

Scott Adelson during a TV interview
Scott Adelson, seen at proper throughout an look on ‘Bloomberg Daybreak: Americas,’ is a 25-year Houlihan Lokey veteran.

“Adelson was not authorized to speak to bidders and never disclosed to the special committee that he was providing information to Thoma Bravo,” in line with the swimsuit, which claims Adelson was doing so all through the sale course of.

The sale was organized so QAD founder Lopker would get $1 billion for her stake within the firm — and was structured so a few of her inventory holdings could possibly be rolled again into the newly fashioned personal firm to defer paying taxes, in line with the swimsuit.

Due to that construction, different shareholders like Nantahala Capital gained’t get the perfect deal for the shares of QAD they personal, the swimsuit alleges. Additionally they gained’t get to take part in any upside if the corporate had been to develop considerably or be bought once more — in contrast to Lopker, who may gain advantage as a result of she’d be granted a stake within the new firm, the swimsuit alleges.

Sandy Adelson
Adelson is thought for tending to his agency’s model picture.

Douglas Chia, president of Soundboard Governance, stated the allegations within the swimsuit had been eyebrow-raising. “I think the plane would definitely be of concern to the judge,” stated Chia, who has no involvement within the case. So far as leaking info to a possible purchaser: “If true, that’s very problematic.”

Decide Paul Fiorvanti Jr. will maintain an Oct. 1 listening to to resolve whether or not to approve an injunction to cease the deal.

Adelson has spent 25 years at Houlihan representing purchasers together with Wolfgang Puck and equipment maker Callaway Golf. He handles most company tasks, and particularly is the caretaker of Houlihan’s model picture, in line with an alumni profile on the web site of the College of Southern California.

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