I'm not the only one who thinks the lawyers are scummy...
By Martha Entwistle
Updated Wed April 28, 2010
It's nice to have somebody get your back every once in a while. Looking through the PeHUB wire yesterday, I came across this from the excellent Dean Primack:
As an aside: When doing a bit of Google research on Protection One, I saw a handful of press releases by law firms “investigating potential claims on behalf of shareholders of Protection One.” In other words, law firms hoping to get shareholders to sue the company for selling at too low a price (a.k.a. breach of fiduciary duty). These law firms should really be ashamed of themselves. I’m all for getting the best price, and for going after public boards that hold quasi-proprietary processes. But the Protection One case is fairly cut and dried. The company publicly announced in January that it had hired J.P. Morgan to seek out strategic alternatives. It then ran a competitive auction, netting a premium of more than 100% from the pre-January announcement price (and 13% higher than last Friday’s closing price). Moreover, this is a tender offer. Someone should “investigate” these law firms for wasting everyone’s time.Bold emphasis mine, obviously, but thank you, Dan. These "investigations" are embarrassing. Further, I've heard some rumbling even in the security industry that the multiple of 33x RMR is a little low. I've got to disagree. First of all, the price is more than 9x EBITDA. That's pretty damn good. Sure, Broadview got 47x RMR, but that was a 70 percent stock deal, for one, and Broadview was carrying exactly zero debt. Pro One? Yeah, they had 450 million in debt to restructure as part of the deal. Remember the Devcon deal? The 30.5x RMR deal they got is much more in line with what Pro One got. Yes, Pro One should have gotten a premium for its size, but did I mention that debt load? Add that to the large piece of multi-family and wholesale RMR they're carrying and you can probably adjust the 33x they got up a few ticks to 36x or so, if you were comparing apples to apples with Broadview. And Broadview was basically lauded as having the best book of accounts in the industry. So, moral of the story? Lawyers are scummy. Except for the industry lawyers that give us all those great quotes. They're totally not scummy, but are in fact virtually scum-free.
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