Guhan Subramanian is the Joseph Flom Professor of Law and Business at the Harvard Law School and the Douglas Weaver Professor of Business Law at the Harvard Business School. He is the first person in the history of Harvard University to hold tenured appointments at both HLS and HBS. At HLS he teaches courses in negotiations and corporate law. At HBS he teaches in several executive education programs, such as Strategic Negotiations, Making Corporate Boards More Effective, and the Advanced Management Program. He is the faculty chair for the JD/MBA program at Harvard University, the Harvard Program on Negotiation, and the Mergers & Acquisitions executive education course at HBS. Prior to joining the Harvard faculty he spent three years at McKinsey & Company.
Professor Subramanian's research explores topics in corporate law, corporate governance, and negotiations. He has published articles in the Stanford Law Review, the Yale Law Journal, the Harvard Business Review, and the Harvard Law Review, among other places. Eleven of his articles have been selected as being among the “top ten” articles published in corporate and securities law in their respective years, among the 400+ articles that are published each year, by scholars in the field. The two-volume treatise Law & Economics of Mergers & Acquisitions, which includes 33 “seminal” articles from the field over the past 45 years, contains four of his articles, more than from any other scholar. His article “Corporate Governance 2.0” was selected as a McKinsey Award finalist, for best article published in the Harvard Business Review in 2015. His book Dealmaking (W. W. Norton 2011) synthesizes the findings from his research and teaching from the past two decades. It has been translated into Chinese (Mandarin), German, Japanese, Portuguese, and Spanish. He is also a co-author of Commentaries and Cases on the Law of Business Organization (Aspen 4th ed. 2012), a leading textbook in the field of corporate law.
Professor Subramanian has been involved in major public-company deals such as Cox Enterprises’ $9 billion freeze-out of the minority shareholders in Cox Communications, Exelon’s $8 billion hostile takeover bid for NRG, and the $26 billion management buyout of Dell, Inc. He also advises individuals, boards of directors, and management teams on issues of dealmaking and corporate governance. Over his nearly two decades on the Harvard faculty Professor Subramanian has been involved as an advisor or expert witness in deals or situations worth over $150 billion in total value. He is the lead independent director of LKQ Corporation (NASDAQ: LKQ), a Fortune 500 company in the automotive sector.
Professor Subramanian holds degrees in Law, Economics, and Business from Harvard University.
Featured Work
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Dealmaking
The New Strategy of Negotiauctions
Informed by meticulous research, field experience, and classroom-tested strategies, Dealmaking offers essential insights for anyone involved in buying or selling everything from cars to corporations. Leading business scholar Guhan Subramanian provides a lively tour of both negotiation and auction theory, then takes an in-depth look at his own hybrid theory, outlining three specific strategies readers can use in complex dealmaking situations. Along the way, he examines case studies as diverse as buying a house, haggling over the rights to a TV show, and participating in the auction of a multimillion-dollar company. Based on broad research and detailed case studies, Dealmaking brings together negotiation and auction strategies for the first time, providing the jargon-free, empirically sound advice professionals need to close the deal.
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Commentaries and Cases on the Law of Business Organization
Fourth Edition
This text offers a unique real-world perspective on laws related to business organization. Logical and flexible chapters can be taught in any order to accommodate alternative teaching approaches. Chapters One through Four cover the fundamentals of organizational law in a business setting. Chapters Five through Thirteen address the legal regulation of a variety of actions, decisions, and transactions that involve or concern the modern public corporation. Introductions and transitional text, clearly and concisely written, provide context and perspective. Rich commentary in the form of explanatory notes facilitates teaching and understanding. The Fourth Edition is completely updated throughout.
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Understanding how to arrange the meeting space is a key aspect of preparing for negotiation. In this video, Professor Guhan Subramanian discusses a real world example of how seating arrangements can influence a negotiator's success. The discussion was held in his negotiation training workshop "Setting the Stage for Productive Negotiations" in the Program on Negotiation for Senior Executives.
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O termo foi criado pelo professor de Harvard, Guhan Subramanian, e se refere a estratégias para negociar em ambientes altamente competitivos. Mas a técnica também pode ser aplicada em negociações de todos os dias, que todos precisam fazer no ambiente de trabalho e até na vida particular. A reportagem é de Patricia Buneker.
Publications
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Book
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2012
Commentaries and Cases on the Law of Business Organization
William T. Allen, Reinier Kraakman and Guhan Subramanian
This fourth edition is completely updated throughout. It now includes excerpts from important recent cases such as "Air Products v. Airgas" and "In re CNX Gas" and provides commentary on current developments, such as "Say on Pay," proxy access and the Dodd-Frank Act of 2010. A new chapter on executive compensation appears. The fourth edition provides additional contextual background for certain cases to help students better understand the court’s reasoning. The text continues to provide additional questions, connections to the empirical literature, and cross-country comparisons.
Keywords: Business Organization;
Lawsuits and Litigation;
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Article
| Harvard Law Review
Go-Shops Revisited
Guhan Subramanian and Annie Zhao
A go-shop process turns the traditional M&A deal process on its head: rather than a pre-signing market canvass followed by a post-signing “no shop” period, a go-shop deal involves a limited pre-signing market check, followed by a post-signing “go shop” process to find a higher bidder. A decade ago one of us published the first systematic empirical study of go-shop deals. Contrary to the conventional wisdom at the time, the study found that go-shops could yield a meaningful market check, with a higher bidder appearing 13% of the time during the go-shop period. In this article, we compile a new sample of M&A deals announced between 2010 and 2019. We find that go-shops, in general, are no longer an effective tool for post-signing price discovery. We then document several reasons for this change: the proliferation of first-bidder match rights, the shortening of go-shop windows, CEO conflicts of interest, investment banker effects, and collateral terms that have the effect of tightening the go-shop window. We conclude that the story of the go-shop technology over the past ten years is one of innovation corrupted: transactional planners innovate; the Delaware courts signal qualified acceptance; and then a broader set of practitioners push the technology beyond its breaking point. In view of these developments in transactional practice, we provide recommendations for the Delaware courts and corporate boards of directors.
Keywords: go-shop process;
Mergers and Acquisitions;
Negotiation Process;
Negotiation Deal;
Performance Effectiveness;
Technological Innovation;
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Chapter
| The Corporate Contract in Changing Times
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2019
Appraisal after Dell
Guhan Subramanian
This essay presents new data on appraisal litigation and appraisal outs. I find that appraisal claims have not meaningfully declined in 2016 and that perceived appraisal risk, as measured by the incidence of appraisal outs, has increased since the Dell appraisal in May 2016. After reviewing current Delaware appraisal doctrine, this essay proposes a synthesizing principle: if the deal process involves an adequate market canvass, meaningful price discovery, and an arms-length negotiation, then there should be a strong presumption that the deal price represents fair value in an appraisal proceeding; but if the deal process does not have these features, deal price should receive no weight. This approach would represent a middle ground between the competing approaches advanced by 29 law, economics, and finance professors in the DFC Global appraisal, currently on appeal to the Delaware Supreme Court.
Keywords: Valuation;
Contracts;
Negotiation Process;
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Article
| Journal of Law & Economics
The Effect of Prohibiting Deal Protection on M&A Activity: Evidence from the United Kingdom
Fernán Restrepo and Guhan Subramanian
Since 2011, the UK has prohibited all deal protections—including termination fees—in M&A deals. Prior to 2011, the UK permitted termination fees up to 1% of deal value and there was no prohibition on other protection devices. We examine the effect of this regulatory change on deal volumes, the incidence of competing offers, deal jumping rates, deal premiums, and completion rates in the UK, relative to the other European G-10 countries. We find that M&A deal volumes in the UK declined significantly in the aftermath of the 2011 Reforms, relative to deal volumes in the European G-10 countries. We find no countervailing benefits to target shareholders in the form of higher deal premiums or more competing bids. Completion rates and deal jumping rates also remained unchanged. We estimate that the incidence-rate ratio of UK deals to non-UK deals after the reform was approximately 50% the incidence-rate ratio of UK deals to non-UK deals prior to the reform. In addition, we estimate USD 19.3 billion in lost deal volumes per quarter in the UK relative to the control group due to the 2011 Reforms, implying a quarterly loss of USD 3.2 billion for shareholders of UK companies. Our results suggest that deal protections provide an important social welfare benefit by facilitating the initiation of M&A deals.
Keywords: Mergers and Acquisitions;
Governing Rules, Regulations, and Reforms;
United Kingdom;
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Article
| Stanford Law Review
The New Look of Deal Protection
Guhan Subramanian and Fernán Restrepo
Deal protection in mergers and acquisitions (M&A) evolves in response to Delaware case law and the business goals of acquirers and targets. We construct a new sample of M&A deals from 2003 to 2015 to identify four such areas of evolution in current transactional practice: (1) termination fee "creep," which was pervasive in the 1980s and 1990s, seems to have gone away by the 2000s; (2) match rights, which were unheard of in the 1990s, became ubiquitous by the 2010s; (3) asset lockups, which disappeared from the landscape for thirty years, have reemerged, though in a "new economy" variation; and (4) practitioners have begun implementing side agreements to the deal that have a commercial purpose along with a deal protection effect. We offer three recommendations for how the Delaware courts should approach this "new look" to the deal protection landscape. First, courts should clarify that lockups must survive Unocal/Unitrin "preclusive" or "coercive" analysis in addition to Revlon "reasonableness" review. Second, Delaware courts should apply basic game theory to identify the deterrent effect of match rights and new economy asset lockups. And third, Delaware courts should take a functional approach to deal protection, meaning that collateral provisions that have a deal protection effect should be scrutinized under deal protection doctrine, even if these agreements have a colorable business purpose as well.
Keywords: Mergers and Acquisitions;
Practice;
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Article
| Harvard Law Review
Deal Process Design in Management Buyouts
Guhan Subramanian
Management buyouts (MBOs) are an economically and legally significant class of transaction: not only do they account for more than $10 billion in deal volume per year, on average, but they also play an important role in defining the relationship between inside and outside shareholders in every public company. Delaware courts and lawyers in transactional practice rely heavily on “market-check” processes to ensure that exiting shareholders receive fair value in MBOs. This article identifies four factors that create an unlevel playing field in that market check: information asymmetries, valuable management, management financial incentives to discourage overbids, and the “ticking-clock” problem. This taxonomy of four factors allows special committees and their advisors to assess the degree to which the playing field is level in an MBO, and (by extension) the extent to which a market canvass can provide a meaningful check on the buyout price. This article then identifies more potent deal process tools that special committees can use to level the playing field: for example, contractual commitments from management that allow the board to run the process; pre-signing rather than post-signing market checks; information rights rather than match rights; ex ante inducement fees; and approval from a majority of the disinterested shares. This article also identifies ways that the Delaware courts can encourage the use of these more potent devices when appropriate: through the threat of entire fairness review, the application of Revlon duties, and the weight given to the deal price in appraisal proceedings. The result would be improved deal process design in MBOs and improved capital formation in the economy overall.
Keywords: management buyout;
deal structuring;
Acquisition;
Design;
Fairness;
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Article
| Harvard Business Law Review
The Effect of Delaware Doctrine on Freezeout Structure and Outcomes: Evidence on the Unified Approach
Fernan Restrepo and Guhan Subramanian
Historically, Delaware corporate law provided different standards of judicial review for buyouts by controlling shareholders (also known as "freezeouts") based on what transactional form was used: deferential business judgment review for freezeouts executed as tender offers, and stringent "entire fairness" review for transactions structured as mergers. Subramanian (2005), Subramanian (2007), and Restrepo (2013) provide doctrinal and empirical evidence that transactional planners responded to these differences in standards of judicial review; that these differences in judicial scrutiny created differences in outcomes for the minority shareholders; and that differences in outcomes created a social welfare loss, not just a wealth transfer from minority shareholders to the controlling shareholder. Over the past decade, in a series of important decisions, Delaware law has migrated toward a "unified approach" to freezeouts regardless of transactional form. In this paper we present empirical evidence on all freezeouts of Delaware targets during this period of doctrinal evolution. In general, we find that deal outcomes have converged in the eight years since the Delaware Chancery Court's decision in Cox Communications, but approximately half of merger freezeouts in the post-Cox era still did not follow the procedural template provided by the unified approach. Our findings suggest that (1) transactional planners seem to respond to even probabilistic changes in the Delaware case law; (2) the social welfare loss identified in Subramanian (2005) seems to no longer be present; but (3) the Delaware Supreme Court may nevertheless wish to "finish the job" by endorsing the unified approach, in order to ensure adequate procedural protections to minority shareholders.
Keywords: Laws and Statutes;
Business and Shareholder Relations;
Delaware;
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Article
| Delaware Journal of Corporate Law
Delaware's Choice
Guhan Subramanian
This article first documents the shift to annual elections of all directors at most U.S. corporations and argues that the alternative of "ineffective" staggered boards would have been more desirable, as a policy matter, but is now a missed opportunity. Using this experience on staggered boards as a motivating case study, the article then examines a policy choice regarding Section 203 of the Delaware corporate code. Four facts are uncontested: (1) in the 1980s, federal courts established the principle that Section 203 must give bidders a "meaningful opportunity for success" in order to withstand scrutiny under the Supremacy Clause of the U.S. Constitution; (2) federal courts upheld Section 203 at the time, based on empirical evidence from 1985 to 1988 purporting to show that Section 203 did in fact give bidders a meaningful opportunity for success; (3) between 1990 and 2010, not a single bidder was able to achieve the 85% threshold required by Section 203, thereby calling into question whether Section 203 has in fact given bidders a meaningful opportunity for success; and (4) perhaps most damning, the original evidence that the courts relied upon to conclude that Section 203 gave bidders a meaningful opportunity for success was seriously flawed—so flawed, in fact, that even this original evidence supports the opposite conclusion: that Section 203 did not give bidders a meaningful opportunity for success. The constitutionality of Section 203 is therefore "in play," and, with the decline of the poison pill, a constitutional challenge against Section 203 will eventually come. Delaware could avoid this showdown by lowering Section 203's 85% threshold to 70%. Like the middle-ground approach on staggered boards, this amendment—to a single number—would also represent good policy: facilitating high-premium offers that attract a supermajority of disinterested shares, but also providing companies with reasonable insulation against opportunistic low-ball offers.
Keywords: Governing and Advisory Boards;
Laws and Statutes;
Policy;
Delaware;
Citation:
Subramanian, Guhan. "Delaware's Choice." Delaware Journal of Corporate Law 39, no. 1 (2014). (Delivered as the 29th Annual Francis G. Pileggi Distinguished Lecture in Law in Wilmington, Delaware in November 2013. Selected by academics as one of the “top ten” articles in corporate/securities law for 2014, out of 560 articles published in that year.)
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Article
| Journal of Law & Economics
Does Shareholder Proxy Access Improve Firm Value? Evidence from the Business Roundtable Challenge
Bo Becker, Guhan Subramanian and Daniel B. Bergstresser
We use the Business Roundtable's challenge to the SEC's 2010 proxy access rule as a natural experiment to measure the value of shareholder proxy access. We find that firms that would have been most vulnerable to proxy access, as measured by institutional ownership and activist institutional ownership in particular, lost value on October 4, 2010, when the SEC unexpectedly announced that it would delay implementation of the Rule in response to the Business Roundtable challenge. We also examine intra-day returns and find that the value loss occurred just after the SEC's announcement on October 4. We find similar results on July 22, 2011, when the D.C. Circuit ruled in favor of the Business Roundtable. These findings are consistent with the view that financial markets placed a positive value on shareholder access, as implemented in the SEC's 2010 Rule.
Keywords: Financial Markets;
Business and Shareholder Relations;
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Article
| Harvard Business Review
A New Era for Raiders
Guhan Subramanian
The article presents information on corporate methods of preventing hostile takeovers by corporate raiders, such as the poison pill strategy. It is noted that some of these techniques have become less popular and effective. An argument is presented that Section 203 of the corporate code of Delaware, which has been in force since 1988, could be overturned, which would further reduce antitakeover protections for the majority of U.S. firms.
Keywords: Strategy;
Mergers and Acquisitions;
United States;
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Article
| Business Lawyer
Is Delaware's Antitakeover Statute Unconstitutional? Evidence from 1988-2008
Guhan Subramanian, Steven Herscovici and Brian Barbetta
Delaware's antitakeover statute, codified at Section 203 of the Delaware corporate code, is by far the most important antitakeover statute in the United States. When it was first enacted in 1988, three bidders challenged its constitutionality under the Commerce Clause and the Supremacy Clause of the U.S. Constitution. All three federal district court decisions upheld the constitutionality of Section 203 at the time, relying on empirical evidence indicating that Section 203 gave bidders a "meaningful opportunity for success," but leaving open the possibility that future empirical evidence might change this constitutional conclusion. This article presents the first systematic empirical evidence since 1988 on whether Section 203 gives bidders a meaningful opportunity for success. The question has become more important in recent years because Section 203's substantive bite has increased, as Exelon's recent hostile bid for NRG illustrates. Using a new sample of all hostile takeover bids against Delaware targets that were announced between 1988 and 2008 that were subject to Section 203 (n=60), we find that no hostile bidder in the past nineteen years has been able to avoid the restrictions imposed by Section 203 by going from less than 15% to more than 85% in its tender offer. At the very least, this finding indicates that the empirical proposition that the federal courts relied upon to uphold Section 203's constitutionality is no longer valid. While it remains possible that courts would nevertheless uphold Section 203's constitutionality on different grounds, the evidence would seem to suggest that the constitutionality of Section 203 is up for grabs. This article offers specific changes to the Delaware statute that would preempt the constitutional challenge. If instead Section 203 were to fall on constitutional grounds, as Delaware's prior antitakeover statute did in 1986, it would also have implications for similar antitakeover statutes in 32 other U.S. states, which along with Delaware collectively cover 92% of all U.S. corporations.
Keywords: Courts and Trials;
Opportunities;
Bids and Bidding;
Laws and Statutes;
Decisions;
Change;
Acquisition;
United States;
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Article
| Harvard Business Review
Negotiation? Auction? A Deal Maker's Guide
Guhan Subramanian
What's the best way to buy or sell an asset? Should you hold an auction and accept the most attractive offer? Or should you identify the most likely prospects and negotiate with them privately? Auctions became increasingly popular after the internet opened wide the universe of potential bidders. The wrinkle is, auctions often set up win-lose relationships between buyers and sellers, says Subramanian, a professor at Harvard's schools of business and law. In many situations, negotiations lead to better results. Before you decide on a process, carefully consider the nature of the buyers, the characteristics of the asset in question, and your own priorities. If you can get enough of the right buyers to participate, an auction generally makes sense - unless you expect a wide range of valuations. In that case, an auction could leave a lot of money on the table - as it did in the sale of Cable & Wireless America. CWA's assets were uniquely strategic to the winner, but because it had to beat the second-highest bidder by only a little bit, the company got them at a price far below the value the deal actually generated. Can you write exact specifications for an asset? Then you probably won't go wrong with an auction. But specification can discourage creative collaboration between buyer and seller. If that will add value to your deal, or if a relationship is important, pursue a negotiation. Finally, examine your priorities. When discretion is critical, a negotiation will work better, but when you need a transparent, speedy process, an auction is the more sensible choice.
Keywords: Mergers and Acquisitions;
Decision Choices and Conditions;
Auctions;
Market Transactions;
Negotiation;
Relationships;
Strategy;
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Case
| HBS Case Collection
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February 2019
(Revised January 2020)
Pierre Foods Acquisition of Advance Foods (A)
Guhan Subramanian and Mike Harmon
This case (A), and its related cases (B-E), establish a setting to discuss an M&A transaction and some of the key legal contracts that are associated with it. In 2010, private equity backed food manufacturer Pierre Foods is contemplating the acquisition of a key competitor, Advance Foods. The acquisition would be debt financed, and would involve the “rollover” of an equity stake by the selling shareholders. There are five key documents to be negotiated: The Stock Purchase Agreement (Cases B-1, B-2), the Stockholders’ and Registration Rights Agreements (Cases C-1, C-2), the Credit Agreement (Cases D-1, D-2), and the Employment Agreement (Cases E-1, E-2). These agreements have been drafted, but each contain a handful of open business points which the parties need to resolve. The cases look at these open points from the perspective of each of the key parties involved, including Pierre’s majority shareholder, Oaktree Capital Management, the selling shareholders, the target’s management team, and the lenders to the acquisition facility. Overall, these cases can be used to understand the unique elements of a complex corporate transaction, how the key documents allocate risk and value, and how parties may make trade-offs to achieve outcomes that best match their priorities.
Keywords: Mergers and Acquisitions;
Contracts;
Agreements and Arrangements;
Negotiation;
Complexity;
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Case
| HBS Case Collection
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January 2019
LKQ-Stahlgruber
Guhan Subramanian and Caeden Brynie
Through a combination of organic growth and acquisitions, LKQ Corp. became the leading aftermarket auto parts distributor in the U.S. by the early 2000s. Beginning in 2012, the company began similarly consolidating the European marketplace. However, by 2017, the company still lacked a meaningful presence in Germany, which was the largest automotive market in Europe. Stahlgruber AG, the largest German distributor, became available as an acquisition opportunity. Senior LKQ management had to decide whether to participate in the sale process, and if so, how high to bid. Bain Capital, which was also making aggressive moves into the European marketplace, was likely to be the other significant bidder. On one hand, “Project Jigsaw” (named as such because Stahlgruber would be the jigsaw piece in the center of the European puzzle) represented a once-in-a-lifetime opportunity for LKQ. On the other hand, the competitive bidding process would force LKQ to stretch financially. The case presents the challenges and opportunities presented by the Stahlgruber acquisition.
Keywords: Consolidation;
Acquisition;
Decision Making;
Strategy;
Opportunities;
Europe;
Germany;
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Case
| HBS Case Collection
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August 2018
(Revised July 2020)
The Fuji-Xerox Merger
Guhan Subramanian and Annie Zhao
In January 2018, Xerox, a well-known American digital document firm, convened its board of directors to decide whether to approve a merger with Japanese imaging company Fujifilm. Activist Xerox shareholders were suing to halt the transaction, and documents unearthed during the subsequent discovery process revealed that the deal was negotiated by a conflicted CEO. This case study draws from contemporaneous deal documents and unsealed court records to provide a behind-the-scenes look at the deal dynamics. The case raises important issues of deal process design, negotiations, corporate law, and corporate governance.
Keywords: Mergers and Acquisitions;
Negotiation Deal;
Negotiation Process;
Corporate Governance;
Law;
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Teaching Plan
| HBS Case Collection
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August 2013
Remicade-Simponi
Guhan Subramanian and Charlotte Krontiris
This exercise models a negotiation between two pharmaceutical companies—Johnson & Johnson and Merck—concerning the international distribution rights for Remicade, a blockbuster anti-arthritis drug. At odds over the original distribution contract, the two companies enter a final negotiation session before they must take their case to arbitration. This exercise gives students the opportunity to experiment with creative deal structures as a response to a narrow legal dispute.
Keywords: Johnson ＆ Johnson;
Merck;
negotiation;
Negotiation Participants;
Negotiation Deal;
Pharmaceutical Industry;
Citation:
Subramanian, Guhan, and Charlotte Krontiris. " Remicade-Simponi." Harvard Business School Teaching Plan 914-006, August 2013.
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Teaching Plan
| HBS Case Collection
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June 2013
Fairstar Heavy Transport
Guhan Subramanian and Charlotte Krontiris
This case traces the efforts of Fairstar Heavy Transport, a heavy marine transportation company, to secure a contract associated with the development of the Greater Gorgon gas fields off the coast of Australia. It examines Fairstar's approach to a highly regimented bidding process, focusing on the interplay between the company's bid and its long-term position in a changing competitive landscape. In (B) and (C) sequels, the case reviews Fairstar CEO Philip Adkins's strategy in final price negotiations.
Keywords: Fairstar;
Gorgon;
bidding;
Bids and Bidding;
Energy Sources;
Shipping Industry;
Australia;
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Case
| HBS Case Collection
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September 2011
(Revised September 2013)
The K-Dow Petrochemicals Joint Venture
Guhan Subramanian, James K. Sebenius, Phillip Andrews, Rhea Ghosh and Charlotte Krontiris
In 2007, the Dow Chemical Company and the Kuwait Petroleum Corporation announced plans to launch a multibillion-dollar joint venture. Later known as K-Dow Petrochemicals, it would be one of the largest manufacturers of chemicals and plastics in the world. Analysts widely hailed the planned joint venture as a game-changing deal for both companies. Shortly after the announcement, cable network CNBC requested an interview with Andrew Liveris, Dow's CEO, about this massive transaction. Liveris needed to decide how to respond. This case provides a brief background on the industry, both companies, and plans for the joint venture as of January 2008.
Keywords: Announcements;
Joint Ventures;
Chemical Industry;
Kuwait;
United States;
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Case
| HBS Case Collection
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March 2010
(Revised January 2012)
Bank of America-Merrill Lynch
Guhan Subramanian and Nithyasri Sharma
In September 2008, as Lehman Brothers struggled to survive, John Thain, CEO of Merrill Lynch, realized that his bank was also on the brink of failure. Throughout the weekend of September 13–14, 2008, Thain successfully negotiated a deal with Ken Lewis, CEO of Bank of America, for BofA to acquire Merrill. However, throughout the fourth quarter of 2008, Merrill's financial condition deteriorated at an alarming rate, with expected 4Q08 losses ballooning from $5.3 billion in November to over $12 billion by mid-December. Shareholders of both companies approved the deal on December 5, 2008, but soon after, Lewis telephoned Fed officials and declared he would invoke the MAC clause to exit the deal unless Fed officials provided government financial assistance. Fed officials instructed Lewis to "stand down" and not to invoke the MAC clause. As he convened his Board on December 22, 2008, Lewis had to make a decision. Should he close the deal "for the good of the country?" Or should he declare a MAC and exit the deal, potentially invoking the wrath of the U.S. government. Was there another way?
Keywords: Mergers and Acquisitions;
Financial Crisis;
Financing and Loans;
Negotiation Deal;
Business and Government Relations;
Banking Industry;
United States;
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Supplement
| HBS Case Collection
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August 2011
(Revised August 2011)
Remicade/Simponi: Legal Memorandum
Guhan Subramanian, Guhan Subramanian and Rhea Ghosh
Supplements Remicade/Simponi: Confidential Instructions for Johnson & Johnson and Remicade/Simponi: Confidential Instructions for Merck.
Keywords: Law;
Legal Services Industry;
Citation:
Subramanian, Guhan, and Rhea Ghosh. "Remicade/Simponi: Legal Memorandum." Harvard Business School Supplement 911-046, August 2011. (Revised from original April 2011 version.)
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Case
| HBS Case Collection
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July 2007
(Revised May 2008)
Cable & Wireless America
Guhan Subramanian and Eliot Sherman
Describes the auction of Cable & Wireless America (CWA), a bankrupt subsidiary of the British telecommunications company Cable & Wireless. While an initial "stalking-horse" bid valued the assets at $125 million, after a long day and night of bidding between eight groups, the best bid was in the high $60-million range. The sell-side team, comprised of bankers from the Blackstone Group and Greenhill, and lawyers from Wachtell Lipton and Kirkland & Ellis, is forced to regroup and reconsider their options for galvanizing the bidding process. Describes these events in detail, while providing information for students on CWA's history, the nature of Section 363 auctions, and the bidders who were involved in the process.
Keywords: Mergers and Acquisitions;
Insolvency and Bankruptcy;
Auctions;
Bids and Bidding;
Negotiation Process;
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Case
| HBS Case Collection
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June 2007
(Revised March 2008)
Lazard LLC
Guhan Subramanian and Eliot Sherman
Describes Lazard's situation in 2001, and supplies context for the subsequent negotiation between its Chairman and his hand-picked successor. In 2001 Lazard, the last of the great investment houses to remain both private and in the control of its founding family, is in a state of decline. Infighting throughout the 1990s led to a defection of talent that left many wondering if Lazard could compete with the diversified financial behemoths of the 21st Century. It also left Chairman Michel David-Weill looking for a successor. David-Weill believes he has found one in M&A star Bruce Wasserstein: going into their negotiation, what should Wasserstein's strategy be?
Keywords: Mergers and Acquisitions;
Family Business;
Talent and Talent Management;
Selection and Staffing;
Management Succession;
Negotiation Tactics;
Financial Services Industry;
Citation:
Subramanian, Guhan, and Eliot Sherman. "Lazard LLC." Harvard Business School Case 907-046, June 2007. (Revised March 2008.)
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Case
| HBS Case Collection
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November 2005
(Revised February 2006)
Oracle vs. PeopleSoft (A)
Lynn S. Paine, Guhan Subramanian and David Millstone
Focuses on the hotly contested takeover battle between software rivals Oracle and PeopleSoft in 2003 and 2004. Raises novel issues of takeover law under Delaware corporate law as well as issues of fair competition under California law. A central issue is whether the PeopleSoft board's adoption of a "Customer Assurance Program" is a permissible move to protect customers or an impermissible takeover defense.
Keywords: Mergers and Acquisitions;
Software;
Ethics;
Law;
Governing and Advisory Boards;
Information Technology Industry;
United States;
Citation:
Paine, Lynn S., Guhan Subramanian, and David Millstone. "Oracle vs. PeopleSoft (A)." Harvard Business School Case 306-058, November 2005. (Revised February 2006.)
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Case
| HBS Case Collection
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March 2001
(Revised December 2003)
Circon (A)
Brian J. Hall, Guhan Subramanian and Christopher A Rose
In 1996, U.S. Surgical launched a hostile takeover bid against Circon Corp. After building the company for 20 years, CEO Richard Auhll takes a defensive stand that includes inviting an old HBS friend (George Cloutier) to join the fight as a director of Circon. A "poison pill" and a staggered board serve as primary defense measures, leading to the longest-running takeover battle in U.S. corporate history. Issues of loyalty to a friend, executive incentives, executive entrenchment, and duty to shareholders collide as Cloutier realizes crucial corporate governance decisions have to be made.
Keywords: Motivation and Incentives;
Corporate Governance;
Medical Devices and Supplies Industry;
United States;
Citation:
Hall, Brian J., Guhan Subramanian, and Christopher A Rose. "Circon (A)." Harvard Business School Case 801-403, March 2001. (Revised December 2003.)
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Case
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May 2001
(Revised June 2002)
Frasier (A)
Guhan Subramanian and Michelle Kalka
In 2001, NBC entered into contract negotiations with Paramount Television Group to keep the hit show "Frasier" on the network. Paramount, the studio that produced the show, threatened to move "Frasier" to CBS, Paramount's sister network, if NBC did not agree to a substantially higher license fee than the one it was currently paying. This case follows Marc Graboff's (EVP of NBC West Coast) analysis of the situation.
Keywords: Negotiation;
Television Entertainment;
Media and Broadcasting Industry;
Citation:
Subramanian, Guhan, and Michelle Kalka. "Frasier (A)." Harvard Business School Case 801-447, May 2001. (Revised June 2002.)
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Case
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October 2001
(Revised December 2001)
EU Takeover Directive
Guhan Subramanian and Michelle Kalka
The draft 13th Company Law Directive, originally written in the 1980s and first formally proposed in 1990, was intended to harmonize the takeover laws of the member states of the European Union (EU). From its inception, though, this bill was controversial. Nations without a history of corporate takeovers, such as Germany, feared that the legislation would disrupt the social contract between labor and management. Nations more familiar with takeovers, such as the United Kingdom, worried that the directive would upset their established system of regulation. EU officials, therefore, had to craft a delicate balance between these competing interests to achieve an EU-wide takeover policy. This challenge has proven extremely difficult--so difficult, in fact, that nearly two decades after first being proposed, the EU Takeover Directive still has not been enacted into law. This case follows the attempts to get the law passed, from its approval by the EU ministers in June 1999 to its ultimate failure, largely at the hands of Germany, in July 2001. A copy of the directive is also included.
Keywords: Conflict of Interests;
Mergers and Acquisitions;
Laws and Statutes;
Policy;
Problems and Challenges;
Cross-Cultural and Cross-Border Issues;
Germany;
United Kingdom;
European Union;
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Background Note
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November 2001
Global Approaches to Anti-Corruption
Joseph Hinsey, Guhan Subramanian and Michelle Kalka
In the 1970s, a series of unpleasant revelations about corporate conduct, culminating in the public disclosure about unsavory business practices abroad by more than 400 U.S. corporations, jarred popular perceptions concerning business ethics. Congress responded by enacting the Foreign Corrupt Practices Act (FCPA) in late 1977. However, as time passed, U.S. businesses complained that they were at a competitive disadvantage to foreign companies because many countries lacked an equivalent to the U.S.'s FCPA. In December 1997, OECD member countries and five nonmember countries signed a Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. All signatories agreed to introduce legislation making foreign bribery a crime. This case discusses anticorruption measures and provides a fictional case study to illustrate the issues involved in a more concrete way.
Keywords: Crime and Corruption;
Globalization;
Developing Countries and Economies;
Laws and Statutes;
Ethics;
Corporate Social Responsibility and Impact;
Information Industry;
United States;
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January 1997
(Revised October 2000)
Lynton V. Harris & Madison "Scare" Garden (A)
Michael A. Wheeler and Guhan Subramanian
A young entrepreneur, Lynton V. Harris, who successfully staged family-oriented shows in his native Australia and who had several entertainment ventures in the United States, is on the verge of signing an agreement with Madison Square Garden to jointly produce a new Halloween event. Both sides seem committed to the deal; but with the holiday looming, some key issues involving the sharing of profit (and risk) are still to be negotiated, not only between the principals but with key vendors. The continuing negotiations are the focal point of the deal, but the case includes rich descriptions of Harris's prior ventures, specifically how they enhanced his credibility at the bargaining table.
Keywords: Negotiation;
Entertainment and Recreation Industry;
New York (city, NY);
Teaching
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Teaching Interest
Making Corporate Boards More Effective
by
Guhan Subramanian
While your corporate board may have broadly defined legal duties, its role in evaluating management, providing strategic oversight, and dealing with the complexity of today's regulatory environment has never been more tested—or more critically dependent on effective leadership. Whether the issue is financial resilience, corporate strategy, executive compensation, or regulatory compliance, this program is designed to help you promote sound governance. You will learn what it takes to design an optimal board structure, lead the organization through periods of adversity and opportunity, and harness the considerable talents of your board members to create a cohesive and forward-thinking unit.
Related Link: Course web site
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Teaching Interest
Strategic Negotiations: Dealmaking for the Long Term
by
Guhan Subramanian
To craft a complex deal with major implications for your organization's future, you need more than just persuasive tactics at the negotiating table. You need to bring together the right players, tackle the right issues, and develop the right process. By examining different types of deals in a broad framework, Strategic Negotiations: Dealmaking for the Long Term will help you master negotiation techniques that yield maximum value.
Related Link: Course web site
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Teaching Interest
Advanced Management Program: Transforming Proven Leaders into Global Executives
by
Guhan Subramanian
As the world economy continues to evolve, so do the requirements for global leadership. The Advanced Management Program (AMP) is a powerful, transformational, and personalized learning experience that explores the best management practices and latest strategies for sustaining a strategic advantage over the long term. You will emerge from AMP a visionary leader—equipped with the business expertise and global perspective to take your career and your organization to the next level of success.
Related Link: Course web site
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Teaching Interest
Changing the Game: Negotiation and Competitive Decision Making
by
Guhan Subramanian
High-stakes business negotiations challenge your wits, your confidence, and your capacity for clear reasoning under intense pressure. Changing the Game leverages the latest research to your advantage, helping you prepare for complex negotiations, anticipate and overcome obstacles, and think on your feet when decisions must be made in a flash.
Related Link: Course web site
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