This week, the sudden collapse of Silicon Valley Bank (SVB) dominated headlines and will likely continue as a central focus in the coming weeks. Instead of recapping the events that led to the bank’s demise, we wanted to highlight the governance weaknesses within the company and what role that may have played in the fallout.
SVB’s Risk Committee met 18 times in 2022, twice as many as the year before. That uptick should have signaled turmoil behind the scenes, yet missing from these meetings was the company’s Chief Risk Officer, who left the company in April of last year. Noah Barsky, Professor at Villanova’s Business School, points out that more meetings does little to replace the role of a full-time CRO, while Shivaram Rajgopal, Professor of Accounting and Auditing at Columbia Business School, identified six red flags that escaped the attention of the bank’s governance stakeholders, specifically calling attention to only one board member having the formal banking experience necessary to oversee a bank.
Despite the volatility brought on by SVB’s collapse, this week began with the largest merger Monday of the year. Though Pfizer took much of the spotlight with its $43b acquisition of cancer drug manufacturer Seagen, a number of deals rounded out the day, including Apollo’s agreement to purchase chemical company Univar for $8.1b, Blackstone’s acquisition of event software company Cvent for $4.6b, and private equity firm Symphony Technology’s $1.5b take-private of Momentive Global.
On the activism front, corporate raider Carl Icahn went public with a letter to shareholders of life science company Illumina on Monday. The octogenarian is demanding three board seats with 1.4% of the stock in response to complications surrounding the company’s acquisition of biotechnology company Grail. Illumina was swift in its response, rejecting Icahn’s board nominees because they “lack relevant skills and experience.” Bloomberg’s Crystal Tse and Angelica Peebles noted in the company’s response that “Illumina is moving as quickly as possible to arrive at a resolution, with divestiture work already underway in advance of the European Commission’s divestiture order.”
Next week, the newsletter will be coming to you live from New Orleans! The team will be on the ground at Tulane Law School’s Corporate Law Institute 2023—the preeminent deal conference of the year—where our own Steven Lipin will be moderating a panel on M&A and the Media Friday morning featuring Berkeley Law Professor Steven Davidoff Solomon, The Wall Street Journal’s Laura Cooper, DealBook’s Lauren Hirsch and Semafor’s Liz Hoffman. We’re also excited to hear from Delaware Chancellor Kathaleen McCormick on the (increasingly public) role the Delaware courts play in corporate disputes, as well as JP Morgan’s Anu Aiyengar on the hot topics currently roiling the M&A world.
Have a great weekend,
GPP Team
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