Scott Adelson, co-president of major investment bank Houlihan Loki, reportedly leaked information to a potential acquirer of QAD Inc.
A top Wall Street banker is being accused of bizarre double-dealing at a California tech firm where he serves as a board member.
Scott Adelson, co-president of major investment bank Houlihan Locke, reportedly leaked information to a potential acquirer of QAD Inc. — a publicly traded software firm based in Santa Barbara, Calif. — even as he Secretly entered into a deal to buy. A private jet with the company’s CEO, according to an explosive lawsuit.
Despite the fact that Adelson served as an independent director of QAD Inc., the financier was reportedly passing information to Thoma Bravo, a giant private equity fund, which in late June agreed to take the software company private for $2 billion. had bid. Noticed lawsuit, which was filed this month in Delaware by a hedge fund that wants to halt the deal.
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Adelson served on a special committee to evaluate offers to buy the company, which makes software for manufacturers. Instead of seeking all shareholders, Adelson was protecting the interests of QAD co-founder Pamela Lopker, the suit claims.
In June, a day after Thoma Bravo submitted an offer for QAD—an offer that was raised from its original price—Adelson sent a letter of intent to purchase an aircraft with Lopcar for $4 million, according to the suit. Put signature on. According to the lawsuit filed by Nanthala Capital, the hedge fund with a 5 percent stake in QD, Adelson reportedly agreed to keep the purchase “our secret” with Lopkar.
At the time of the deal to buy the aircraft, Adelson, who had been on QAD’s board since 2006, reportedly said in a message to Lopkar, “How happy I am that we are partners in this,” according to documents submitted for the suit. Adelson did not respond to a request for comment. Houlihan declined to comment.
Sources said that according to legal filings, Nanthala’s claims were followed by permission from a Delaware Chancery Court judge to submit and conduct a quick search — something rare in merger lawsuits.
According to court filings, Nanthala disclosed the alleged aircraft purchase while submitting to company founder Lopkar. Lopkar and her husband, who died in 2018, have had control of QAD since 2010, when the company’s stock was split. QAD did not respond to a request for comment.
A source familiar with the matter told The Post: “There is no way that Palm should buy a plane with the head of an independent special committee.”
The alleged purchase of the aircraft was not disclosed in a proxy statement from QAD shareholders, which asked them to approve a $2 billion purchase offer from Thoma Bravo.
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Shareholders were also not told that Adelson, an independent QAD director, was allegedly passing “leaked” information to Thoma Bravo, who helped hedge fund structure a deal, according to the suit. was suited to. Thoma Bravo did not respond to a request for comment.
Meanwhile, according to the suit, in February Adelson had flagged off Thoma Bravo partner Paul Zuber saying that QAD would be in the market even before the special committee was formed. Zubair Houlihan is also on Loki’s board.
According to the suit, “Adelson was not authorized to speak to the bidders and never disclosed to the Special Committee that it was providing information to Thoma Bravo,” which claims that Adelson was doing so throughout the sales process. .
The sale was arranged so that QAD founder Lopkar would receive $1 billion for his stake in the company – and it was structured so as to defer the payment of taxes to some of his stock holdings in the newly formed private company, according to the suit. be brought back.
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Because of that structure, other shareholders such as Nantahla Capital would not get the best deal for QAD’s shares, the suit alleges. If the company were to grow substantially or be resold, they would not get to participate in any boom – unlike Lopkar, who could have benefited because he would be given a stake in the new company, the suit alleges. .
Douglas Chia, president of Soundboard Governance, said the allegations in the lawsuit are barking. “I think the plane will certainly be of concern to the judge,” said Chia, who has no involvement in the case. As far as leaking information to a potential buyer: “If true, that’s very problematic.”
Judge Paul Fioravanti Jr. will hold a hearing on October 1 to decide whether to grant an injunction to block the deal.
Adelson has spent 25 years at Houlihan representing clients including Wolfgang Puck and equipment manufacturer Callaway Golf. According to an alumnus profile on the University of Southern California website, he handles most of the corporate responsibilities, and in particular is the caretaker of Hoolihan’s brand image.