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The Shari & Ari Windfall Strategies

shari redstone
The proposed Ellison deal borders on the insane and should have been rejected out of hand because it will likely end up being patently unfair to the non-Redstone shareholders of Paramount Global. Photo: Jared Siskin/Patrick McMullan/Getty Images
William D. Cohan
April 7, 2024

There are few responsibilities on Wall Street as sacredyes, sacred—as being an advisor to a special committee of the board of directors of a public company. After all, a board of directors only appoints a special committee when it recognizes that the mere specter of a conflict—a deal that involves a large shareholder or another board member or the management of the company—requires an independent advisor to adequately protect the interests of the other, non-conflicted shareholders. Back when I was an M&A banker on Wall Street, there was no assignment I enjoyed more: You had the immense power to evaluate whether a proposed transaction involving insiders was fair from a financial point of view for all shareholders, and the ability to accept it or reject it. Your word on it was pretty much final, too.

The noble purpose, obviously, was to protect minority shareholders from a transaction that unfairly benefitted the insiders at their expense. This sort of structure is perhaps most crucial in take-private situations, when boards need to align the interests of management team members and various shareholders. We just saw that dynamic play out twice in the last week: once, with Silver Lake, the private equity firm, which agreed to acquire the rest of Ari Emanuel’s Endeavor Group Holdings, and then again with the latest twist in the Shari Redstone drama. Interestingly, both of their respective special committees were advised by the much-admired duo of Cravath Swaine & Moore, the Wall Street law firm, and Centerview Partners, the influential investment boutique run by my friend Blair Effron. In my view, they’re well on their way to making a mockery of the sacred role of a special committee, although there’s still time to reverse course, at least in the case of the Paramount fiasco. And obviously, it’s very hard to know what’s going on inside such rooms when you are not in them. The pressures can be immense, to put it mildly.