No. An unprecedent fraud undid them all. And nobody saw it coming. It took two insiders to roll over before anything came to light (ref: Cendant).
As many people point out, the CEO has some level of fiduciary duty to investors. If you refuse an offer with a 40% or so premium, you are going to be facing down lawsuits.
Finally, while Roberta was enjoying her position, Ken really wanted to quit all of the CEO crap. Finding a CEO to hand things over to is just as fraught as a buyout and probably more likely to bump into bad actors than a buyout.
Put it all together and there really was no good reason to refuse the buyout. If the purchasing company hadn't been a fraud, we'd be lauding the decision to sell instead of castigating it.
> As many people point out, the CEO has some level of fiduciary duty to investors. If you refuse an offer with a 40% or so premium, you are going to be facing down lawsuits.
I think a simple way to avoid this is to ask for a all-cash offer. Naturally it will be either non-existant or much smaller value. If the offer is still good, it is not a problem to accept it.
The problem here was that the sellers were accepting stock as a payment, which was garbage.
I don't think that would tell them much. All-cash requires that the acquiring company either have that cash on hand, go into (further?) debt, or sell new shares to the public to raise the money. Legitimate M&A deals that are in part or even entirely in stock are very common. A refusal to accept anything but an all-cash deal would certainly weed out a fraudster like this one, but it would also eliminate a host of good deals, too.
> Put it all together and there really was no good reason to refuse the buyout.
He claimed he did it to secure Sierras financial future, but didn't see it as an issue when CUC refused to share its financial data.
It might be a hindsight thing, but it seems that at least nowadays larger companies spend a lot of time going over finances and other economic data before they agree to that kind of deal.
> If the purchasing company hadn't been a fraud
They could have been completely honest and still been in a state where the buyout itself would have been enough to break both. Wouldn't be the first time a company overextended itself.
re: Ken and the ceo -- Ken is desperate for people not to understand Ken is an idiot. The article even points out everyone at Sierra told him not to do it.
As many people point out, the CEO has some level of fiduciary duty to investors. If you refuse an offer with a 40% or so premium, you are going to be facing down lawsuits.
Finally, while Roberta was enjoying her position, Ken really wanted to quit all of the CEO crap. Finding a CEO to hand things over to is just as fraught as a buyout and probably more likely to bump into bad actors than a buyout.
Put it all together and there really was no good reason to refuse the buyout. If the purchasing company hadn't been a fraud, we'd be lauding the decision to sell instead of castigating it.