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{\i0 \fs18 \ul0 } {\i0 \fs18 \cf1 {\i0 \fs18 \sa0 WILLIAM GOLDMAN } } {\i0 \fs18 \sa0

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} {\i0 \fs18 \cf1 \f0 \b1 {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f0 \b1 \sb0 9/20/2011 } } {\i0 \fs18 \ul0 \cf1 \strike0 \f0 \b0 \par } } {\ri0 \i0 \fs18 \cf1 \f0 \li0 \qc \b0 {\i0 \fs18 \ul0 \cf1 \strike0 \f0 \b0 } {\i0 \fs18 \cf1 \f0 \b1 {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f0 \b1 \sb0 For Educational Use Only } } {\i0 \fs18 \ul0 \cf1 \strike0 \f0 \b0 } }\i0 \ri0 \fs18 \sa0 \ul0 \cf1 \strike0 \f0 \li0 \qc \b0 \sb0 \intbl \cell \row } {\trowd \itap0 \trleft0 \clpadb60 \clpadfb3 \clpadl400 \clpadfl3 \clbrdrb \brdrs \brdrw20 \brdrcf17 \clb rdrl \trql \clvertalb \cellx9380 \clpadb60 \clpadfb3 \clpadl400 \clpadfl3 \clbrdrb \brdrs \brdrw20 \brdrcf17 \clb rdrr \trql \cellx10080 \intbl {\ri0 \i0 \ql \fs18 \cf1 \f0 \li0 \b0 {\i0 \fs18 \ul0 \cf1 \strike0 \f0 \b0 } {\i0 \fs18 \cf23 \f0 \b1 {\i0 \fs18 \sa0 \ul0 \cf23 \strike0 \f0 \b1 \sb0 CASE STUDY: SELLING NEIMAN MARCUS, 12 Harv. Negot. L. Rev. 235 } } {\i0 \fs18 \ul0 \cf1 \strike0 \f0 \b0 } }\i0 \ri0 \fs18 \ql \sa0 \ul0 \cf1 \strike0 \f0 \li0 \b0 \sb0 \intbl \cell \intb l {\ri0 \i0 \fs18 \cf1 \f0 \li0 \qr \b0 }\i0 \ri0 \fs18 \cf1 \f0 \li0 \qr \b0 \intbl \cell \row } {\trowd \itap0 \trleft0 \clbrdrb \clbrdrl \trql \cellx10080 \intbl {\ri0 \i0 \ql \fs18 \cf1 \f0 \li0 \b0 }\i0 \ri0 \fs18 \ql \cf1 \f0 \li0 \b0 \intbl \cell \row }}}{\footer { {\trowd \itap0 \trleft0 \clpadl60 \clpadfl3 \clbrdrt \brdrs \brdrw20 \brdrcf17 \clbrdrb \clbrdrl \trql \ clvertalb \cellx9300 \clpadl60 \clpadfl3 \clbrdrt \brdrs \brdrw20 \brdrcf17 \clbrdrb \clbrdrr \trql \

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11dbacd6b4db45fd6021_Target} \par } {\ri0 \i0 \fs20 \cf1 \f5 \li0 \qc \b0 {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f5 \b0 \sb0 12 Harv. Negot. L. Rev. 235 \par } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \qc \b0 {\ri0 \i0 \fs20 \cf1 \f2 \li0 \qc \b0 {\ri0 \i0 \fs20 \cf1 \f2 \li0 \qc \b1 {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b1 \sb400 Harvard Negotiation Law Review \par } } } {\i0 \fs20 \cf1 \f5 \b0 {\i0 \fs20 \cf27 \f5 \chcbpat26 \b1 {\i0 \fs20 \sa0 \ul0 \cf27 \strike0 \f5 \b1 \sb0 Winter } } {\i0 \fs20 \cf1 \f5 \chcbpat2 \b0 } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f5 \b0 \sb0 } {\i0 \fs20 \cf27 \f5 \chcbpat26 \b1 {\i0 \fs20 \sa0 \ul0 \cf27 \strike0 \f5 \b1 \sb0 2007 } } {\i0 \fs20 \cf1 \f5 \chcbpat2 \b0 \par } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \qc \b0 {\ri0 \i0 \fs20 \cf1 \f2 \li0 \qc \b0 {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 Note \par } } } {\ri100 \i0 \fs20 \cf27 \f5 \li100 \qc \b0 {\i0 \fs20 \sa200 \ul0 \cf27 \strike0 \f5 \b0 \sb200 CASE STUDY: SELLING NEIMAN MARCUS \par } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \qc \b0 {\i0 \fs20 \cf1 \f2 \b0 {\i0 \fs20 \sa200 \ul0 \cf1 \strike0 \f2 \b0 \sb200 Bryce Klempner, Dharini Mathur, Lerato Molefe, Jen Reynolds, Tony Uccellini } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_Fd1331276596_ID0ERI}{\*\bkmkend co_footnoteRe ference_Fd1331276596_ID0ERI}

{\field {\*\fldinst HYPERLINK "#co_footnote_Fd1331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 d1 }}} \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \qc \b0 {\i0 \fs20 \sa200 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Copyright (c) 2007 Harvard Negotiation Law Review; Bryce Klempner; Dharini Mathu r; Lerato Molefe; Jen Reynolds; Tony Uccellini \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EHJAC_1}{\*\bkmkend co_g_ID0EHJAC_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 On May 2, 2005, the Neiman Marcus Group (\u8220\'3fNeiman\u8221\'3f) announced t hat it had accepted an acquisition proposal by a corporate vehicle controlled jo intly by two large private equity firms, Texas Pacific Group and Warburg Pincus (\u8220\'3fTPG/Warburg\u8221\'3f). At the time of the sale, Neiman was the \u822 0\'3fcrown jewel\u8221\'3f of the luxury industry: } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F1331276596_ID0EQJA}{\*\bkmkend co_footnoteRe ference_F1331276596_ID0EQJA} {\field {\*\fldinst HYPERLINK "#co_footnote_F1331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 1 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 the company\rquote s stock was trading at an all-time peak; its management team was widely admired; and its financial health was excellent, with investment-gra de credit and little debt. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F2331276596_ID0EVJA}{\*\bkmkend co_footnoteRe ference_F2331276596_ID0EVJA} {\field {\*\fldinst HYPERLINK "#co_footnote_F2331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 2 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 It was an expensive time to purchase such a high-quality asset; indeed, with a final price tag of $5.1 billion, the leveraged buyout ended up commanding far mo re money than analysts in both the private equity and retail industries had expe cted. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F3331276596_ID0EZJA}{\*\bkmkend co_footnoteRe ference_F3331276596_ID0EZJA} {\field {\*\fldinst HYPERLINK "#co_footnote_F3331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0

3 }}} \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EAKAC_1}{\*\bkmkend co_g_ID0EAKAC_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 What is remarkable about this deal is not simply that the company obtained such a high final price - a price that many industry insiders believed to be at, if n ot above, the top of its value range - but } {\i1 \fs20 \cf28 \f2 \b1 {\*\bkmkstart co_pp_sp_111958_236_1}{\*\bkmkend co_pp_sp_111958_236_1} {\i1 \fs20 \sa0 \ul0 \cf28 \strike0 \f2 \b1 \sb0 *236 } } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 that it did so with a common value auction that employed tight controls and sel ler-friendly deal protections within a relatively compressed timeframe. In theor y, all these factors should have pushed the price down, not up. \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EUKAC_1}{\*\bkmkend co_g_ID0EUKAC_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Neiman chose to sell after the Smith family, the company\rquote s controlling sh areholders, decided to liquidate. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F4331276596_ID0E3KA}{\*\bkmkend co_footnoteRe ference_F4331276596_ID0E3KA} {\field {\*\fldinst HYPERLINK "#co_footnote_F4331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 4 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 The Smiths were by no means desperate to sell, but they wanted to take advantag e of the favorable market conditions for the retail and luxury sectors. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F5331276596_ID0EBLA}{\*\bkmkend co_footnoteRe ference_F5331276596_ID0EBLA} {\field {\*\fldinst HYPERLINK "#co_footnote_F5331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 5 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 To that end, Neiman developed a rigorously controlled sale and auction that too k place over several months. During that time, Neiman closely managed the biddin g process from start to finish - all the way from handpicking the initial invita tions to pressuring prospective bidders into \u8220\'3fclubs\u8221\'3f of Neiman

\rquote s choosing. Even the agreement\rquote s deal protections - provisions wh ich have traditionally served as safeguards for the buyer - tilted in Neiman\rqu ote s favor: the deal\rquote s sliding reverse breakup fee, for example, effecti vely prevented any last-minute buyer\rquote s remorse. \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EQLAC_1}{\*\bkmkend co_g_ID0EQLAC_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 The Neiman Marcus case thus presents one very successful solution to a common ne gotiation puzzle: how can a motivated seller extract maximum value, on its own t erms, in a short timeframe? An answer can be found through close examination of the auction mechanics, deal protections, and risk management utilized in the Nei man acquisition. The story of how Neiman Marcus was able to pull off this auctio neering feat is an instructive and compelling example of successful, sophisticat ed deal design and implementation. \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0ECMAC_1}{\*\bkmkend co_g_ID0ECMAC_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 This case study first sketches the factual background and details of the deal. I t then outlines the case\rquote s central puzzle and considers other possible so lutions and additional considerations within the context of negotiation dynamics and the modern private equity industry. The Neiman deal may be exceptional in m any ways, but it nonetheless provides an interesting case study in managing comp lex auction dynamics in a seller\rquote s market. \par } } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \qc \b1 {\*\bkmkstart co_g_ID0EUMAC_1}{\*\bkmkend co_g_ID0EUMAC_1} {\i0 \fs20 \ul0 \cf1 \strike0 \f2 \b1 } {\i1 \fs20 \cf28 \f2 \b1 {\*\bkmkstart co_pp_sp_111958_237_1}{\*\bkmkend co_pp_sp_111958_237_1} {\i1 \fs20 \sa0 \ul0 \cf28 \strike0 \f2 \b1 \sb0 *237 } } {\i0 \fs20 \sa200 \ul0 \cf1 \strike0 \f2 \b1 \sb200 The Making of a Deal \par } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0ECNAC_1}{\*\bkmkend co_g_ID0ECNAC_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 For the Smith family, Neiman Marcus represented a large portion of their dynasti c wealth. The Smiths had initially invested in Neiman as friendly acquirors, or

\u8220\'3fwhite knights,\u8221\'3f in 1984, and the company became part of the l arger Smith family conglomerate. } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Due to a series of mergers and tax-free spin-offs subsequent to the investment, along with periods of bad market conditions, the family had had little opportun ity to exit the investment completely on favorable terms. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F6331276596_ID0EQNA}{\*\bkmkend co_footnoteRe ference_F6331276596_ID0EQNA} {\field {\*\fldinst HYPERLINK "#co_footnote_F6331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 6 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 However, because a tax obstacle raised by a previous restructuring had just exp ired, } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F7331276596_ID0ETNA}{\*\bkmkend co_footnoteRe ference_F7331276596_ID0ETNA} {\field {\*\fldinst HYPERLINK "#co_footnote_F7331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 7 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 and because retail businesses were selling well, mid-2005 appeared a propitious time for the Smith family to sell the company - and they were therefore very ea ger to do so. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F8331276596_ID0EXNA}{\*\bkmkend co_footnoteRe ference_F8331276596_ID0EXNA} {\field {\*\fldinst HYPERLINK "#co_footnote_F8331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 8 }}} \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0E5NAC_1}{\*\bkmkend co_g_ID0E5NAC_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Neiman\rquote s board of directors started evaluating the company\rquote s alter natives. Business was good, and accordingly the company was not desperate to sel l. The other alternatives, however - namely, recapitalization or a strategic mer ger - were not attractive to the board because of the unique qualities of the Ne iman brand and the controlling shareholder family. Recapitalization would have i nvolved taking on significant debt, but the shareholders would not have been com fortable assuming such a debt load, and the company was unwilling to compromise its capital investment program or its corporate image. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F9331276596_ID0EPOA}{\*\bkmkend co_footnoteRe ference_F9331276596_ID0EPOA}

{\field {\*\fldinst HYPERLINK "#co_footnote_F9331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 9 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 A strategic merger might have been more appealing, but at the time the only pos sible partner was Saks Fifth Avenue, which was busy with other transactions and whose merger with Neiman would } {\i1 \fs20 \cf28 \f2 \b1 {\*\bkmkstart co_pp_sp_111958_238_1}{\*\bkmkend co_pp_sp_111958_238_1} {\i1 \fs20 \sa0 \ul0 \cf28 \strike0 \f2 \b1 \sb0 *238 } } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 have been likely to trigger Hart-Scott-Rodino review. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F10331276596_ID0EZO}{\*\bkmkend co_footnoteRe ference_F10331276596_ID0EZO} {\field {\*\fldinst HYPERLINK "#co_footnote_F10331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 10 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 Because retailers were in vogue among financial buyers and the luxury market wa s especially robust, selling the company to a financial buyer seemed like the be st way to achieve the interests of the Smiths and other Neiman stakeholders. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F11331276596_ID0E4O}{\*\bkmkend co_footnoteRe ference_F11331276596_ID0E4O} {\field {\*\fldinst HYPERLINK "#co_footnote_F11331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 11 }}} \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EEPAC_1}{\*\bkmkend co_g_ID0EEPAC_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 In January 2005, Neiman hired Goldman Sachs to draw up a list of possible financ ial bidders for the company. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F12331276596_ID0EMP}{\*\bkmkend co_footnoteRe ference_F12331276596_ID0EMP} {\field {\*\fldinst HYPERLINK "#co_footnote_F12331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 12 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Although management was interested in exploring all strategic possibilities, th

ey wanted to bring financial bidders into the process early, so that they could bring potential buyers up to speed on the property. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F13331276596_ID0ERP}{\*\bkmkend co_footnoteRe ference_F13331276596_ID0ERP} {\field {\*\fldinst HYPERLINK "#co_footnote_F13331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 13 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Several private equity firms expressed preliminary interest in moving forward, and Neiman set up a series of informational meetings throughout the next few mon ths. Neiman\rquote s banker, Goldman Sachs, offered financing to the bidders (\u 8220\'3fstapled financing,\u8221\'3f so called because the \u8220\'3fpre-baked f inancing package is \u8216\'3fstapled\u8217\'3f to the target company and sancti oned by the seller\u8221\'3f } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F14331276596_ID0EBA}{\*\bkmkend co_footnoteRe ference_F14331276596_ID0EBA} {\field {\*\fldinst HYPERLINK "#co_footnote_F14331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 14 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 ), which gave the bidders a common floor for negotiating their own third-party f inancing arrangements. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F15331276596_ID0EFA}{\*\bkmkend co_footnoteRe ference_F15331276596_ID0EFA} {\field {\*\fldinst HYPERLINK "#co_footnote_F15331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 15 }}} \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EMAAE_1}{\*\bkmkend co_g_ID0EMAAE_1} {\i0 \fs20 \ul0 \cf1 \strike0 \f2 \b0 } {\i1 \fs20 \cf28 \f2 \b1 {\*\bkmkstart co_pp_sp_111958_239_1}{\*\bkmkend co_pp_sp_111958_239_1} {\i1 \fs20 \sa0 \ul0 \cf28 \strike0 \f2 \b1 \sb0 *239 } } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 The preliminary discussions and due diligence period lasted from February until April. During this time, Goldman was also lining up the sale of Neiman\rquote s private-label credit card unit, a significant but non-core asset. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F16331276596_ID0E2A}{\*\bkmkend co_footnoteRe

ference_F16331276596_ID0E2A} {\field {\*\fldinst HYPERLINK "#co_footnote_F16331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 16 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 The auction of the credit card division proceeded alongside the auction for the rest of the company, so that part of Goldman\rquote s updates to the Neiman bid ders included the progress on the credit card sale. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F17331276596_ID0EAB}{\*\bkmkend co_footnoteRe ference_F17331276596_ID0EAB} {\field {\*\fldinst HYPERLINK "#co_footnote_F17331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 17 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 The proceeds of the sale would flow directly to the winning bidder. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F18331276596_ID0EEB}{\*\bkmkend co_footnoteRe ference_F18331276596_ID0EEB} {\field {\*\fldinst HYPERLINK "#co_footnote_F18331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 18 }}} \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0ELBAE_1}{\*\bkmkend co_g_ID0ELBAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 In March, Goldman arranged the bidders into bidding consortiums, commonly known as \u8220\'3fclubs.\u8221\'3f } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F19331276596_ID0ETB}{\*\bkmkend co_footnoteRe ference_F19331276596_ID0ETB} {\field {\*\fldinst HYPERLINK "#co_footnote_F19331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 19 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 At the beginning of the process, Neiman asked the bidders to sign confidentiali ty agreements that precluded any club formation without Neiman\rquote s consent. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F20331276596_ID0EYB}{\*\bkmkend co_footnoteRe ference_F20331276596_ID0EYB} {\field {\*\fldinst HYPERLINK "#co_footnote_F20331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 20 }}} }

{\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Without signing the confidentiality agreements, potential bidders would not be given access to Neiman\rquote s confidential internal documents, essential to th e due diligence of any financial buyer. The company was not averse to club forma tion, however; in fact, Neiman and Goldman knew from the beginning that no singl e private equity firm would be willing to risk as much of its own capital as wou ld be necessary for the non-debt portion of the purchase price. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F21331276596_ID0EAC}{\*\bkmkend co_footnoteRe ference_F21331276596_ID0EAC} {\field {\*\fldinst HYPERLINK "#co_footnote_F21331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 21 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 To maximize the competitiveness of the auction, Neiman wanted to promote the fo rmation of as many bidding clubs as possible, while also ensuring that each club had the resources to fund the equity portion of the deal. Neiman } {\i1 \fs20 \cf28 \f2 \b1 {\*\bkmkstart co_pp_sp_111958_240_1}{\*\bkmkend co_pp_sp_111958_240_1} {\i1 \fs20 \sa0 \ul0 \cf28 \strike0 \f2 \b1 \sb0 *240 } } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 and Goldman therefore decided to limit the club size to a maximum of two firms. After consultation with potential bidders as to their preferences and research on which firms had worked well together in the past, } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F22331276596_ID0EOC}{\*\bkmkend co_footnoteRe ference_F22331276596_ID0EOC} {\field {\*\fldinst HYPERLINK "#co_footnote_F22331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 22 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 Goldman assembled the following pairs: TPG/Warburg, the Blackstone Group and Th omas H. Lee Partners (\u8220\'3fBlackstone/Lee\u8221\'3f), Kohlberg Kravis Rober ts and Bain Capital (\u8220\'3fKKR/Bain\u8221\'3f), and Apollo Management and Le onard Green (\u8220\'3fApollo/Green\u8221\'3f). Only two of these clubs made it to the finish line: Apollo/Green dropped out before bidding commenced, and altho ugh KKR/Bain did bid, they were out of serious contention before the final round . } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F23331276596_ID0EVC}{\*\bkmkend co_footnoteRe ference_F23331276596_ID0EVC} {\field {\*\fldinst HYPERLINK "#co_footnote_F23331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 23 }}} \par } } }

{\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0E3CAE_1}{\*\bkmkend co_g_ID0E3CAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 As the auction neared, Neiman sent a draft merger agreement to each club and req uested comments. Upon receiving the markups, Neiman decided which changes were a cceptable and merged them into a master \u8220\'3fhomogenized contract,\u8221\'3 f containing certain non-negotiable terms, for all the bidders to use in the auc tion process. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F24331276596_ID0EHD}{\*\bkmkend co_footnoteRe ference_F24331276596_ID0EHD} {\field {\*\fldinst HYPERLINK "#co_footnote_F24331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 24 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 This homogenized contract featured stringent deal protections and, notably, did not contain a \u8220\'3ffinancing out,\u8221\'3f a standard provision that enab les buyers to walk away from the deal should the financing fall through. \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EQDAE_1}{\*\bkmkend co_g_ID0EQDAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 In late April, Neiman asked for bids from the clubs. TPG/Warburg\rquote s bid of $100 per share was the highest, with Blackstone/Lee in second place and KKR/Bai n a distant third. After a weekend of negotiation on some of the deal terms, Nei man announced that TPG/Warburg had won the auction with an offer of $5.1 billion . That summer, HSBC purchased the credit card concern for $640 million, } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F25331276596_ID0E6D}{\*\bkmkend co_footnoteRe ference_F25331276596_ID0E6D} {\field {\*\fldinst HYPERLINK "#co_footnote_F25331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 25 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 and in November, Neiman\rquote s shareholders approved the sale to the TPG/Warb urg club. \par } } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \qc \b1 {\*\bkmkstart co_g_ID0EIEAE_1}{\*\bkmkend co_g_ID0EIEAE_1} {\i0 \fs20 \sa200 \ul0 \cf1 \strike0 \f2 \b1 \sb200 The Puzzle \par } }

{\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0ESEAE_1}{\*\bkmkend co_g_ID0ESEAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Several aspects of this deal make it especially striking that Neiman fetched suc h a high price. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F26331276596_ID0E1E}{\*\bkmkend co_footnoteRe ference_F26331276596_ID0E1E} {\field {\*\fldinst HYPERLINK "#co_footnote_F26331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 26 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 First, Neiman was a well-managed, } {\i1 \fs20 \cf28 \f2 \b1 {\*\bkmkstart co_pp_sp_111958_241_1}{\*\bkmkend co_pp_sp_111958_241_1} {\i1 \fs20 \sa0 \ul0 \cf28 \strike0 \f2 \b1 \sb0 *241 } } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 high-performing company, so a financial buyer would be unable to extract much m arginal value via governance improvements. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F27331276596_ID0EEF}{\*\bkmkend co_footnoteRe ference_F27331276596_ID0EEF} {\field {\*\fldinst HYPERLINK "#co_footnote_F27331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 27 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 To the extent that private equity firms add value to their portfolio companies through operational upgrades, the lack of any evident problems to fix could have made Neiman a less appealing investment. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F28331276596_ID0EJF}{\*\bkmkend co_footnoteRe ference_F28331276596_ID0EJF} {\field {\*\fldinst HYPERLINK "#co_footnote_F28331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 28 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Moreover, the luxury market was so inflated at the time that buying Neiman woul d be expensive relative to its expected value, causing a decrease in the rate of return on the investment. \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0ESFAE_1}{\*\bkmkend co_g_ID0ESFAE_1}

{\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Second, the absence of strategic buyers - retailers or others who might be able to recognize synergies with Neiman\rquote s existing operations - meant that the re was little private value potential in this sale. In basic auction theory, the re are two types of value that can be recognized by bidders: common and private. Common value properties will command similar prices across buyers because their value is well defined and widely understood; commodities such as pork bellies, for example, are common value items. Private value properties will vary in value , because those buyers who perceive unique synergies or affinities - a fan of Im pressionist art bidding on a Monet, for example - will make higher offers than t hose buyers who are less idiosyncratically interested. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F29331276596_ID0EDG}{\*\bkmkend co_footnoteRe ference_F29331276596_ID0EDG} {\field {\*\fldinst HYPERLINK "#co_footnote_F29331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 29 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Strategic bidders typically recognize more private value than financial bidders will, because they can imagine how the new property will fit into their preexis ting business infrastructure; financial bidders, with no \u8220\'3fbusiness\u822 1\'3f other than investment, usually cannot realize these kinds of synergies and are only interested in common value. } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 In Neiman\rquote s case, there were only non-strategic financial buyers, } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F30331276596_ID0EJG}{\*\bkmkend co_footnoteRe ference_F30331276596_ID0EJG} {\field {\*\fldinst HYPERLINK "#co_footnote_F30331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 30 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 so any private value \u8220\'3fpremium\u8221\'3f would not apply. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F31331276596_ID0ENG}{\*\bkmkend co_footnoteRe ference_F31331276596_ID0ENG} {\field {\*\fldinst HYPERLINK "#co_footnote_F31331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 31 }}} \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EUGAE_1}{\*\bkmkend co_g_ID0EUGAE_1} {\i0 \fs20 \ul0 \cf1 \strike0 \f2 \b0 } {\i1 \fs20 \cf28 \f2 \b1 {\*\bkmkstart co_pp_sp_111958_242_1}{\*\bkmkend co_pp_sp_111958_242_1} {\i1 \fs20 \sa0 \ul0 \cf28 \strike0 \f2 \b1 \sb0

*242 } } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Third, as discussed above, due to the size of the deal it was inevitable that p rivate equity funds would team up into clubs to raise the needed capital, } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F32331276596_ID0E5G}{\*\bkmkend co_footnoteRe ference_F32331276596_ID0E5G} {\field {\*\fldinst HYPERLINK "#co_footnote_F32331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 32 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 thereby reducing the number of bidders and possibly depressing the size of fina l bids in the auction. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F33331276596_ID0EDH}{\*\bkmkend co_footnoteRe ference_F33331276596_ID0EDH} {\field {\*\fldinst HYPERLINK "#co_footnote_F33331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 33 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Club deals have become increasingly common in large public transactions, and th ere is considerable interest in how well they can absorb the risks inherent in t eaming up to tackle complex, long-term projects. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F34331276596_ID0EIH}{\*\bkmkend co_footnoteRe ference_F34331276596_ID0EIH} {\field {\*\fldinst HYPERLINK "#co_footnote_F34331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 34 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 The challenge of managing different time horizons, divergent institutional prio rities, and disparate internal structures could, conceivably, make it difficult to recognize the full value of their joint investment. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F35331276596_ID0ENH}{\*\bkmkend co_footnoteRe ference_F35331276596_ID0ENH} {\field {\*\fldinst HYPERLINK "#co_footnote_F35331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 35 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 Goldman\rquote s decision to exercise control over the pairings would seem to i nvite such mismatches and organizational clashes. \par } } }

{\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EWHAE_1}{\*\bkmkend co_g_ID0EWHAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Fourth, key provisions of the merger agreement - the reverse breakup fee and the lack of a financing out - shifted deal risk to the buyers, even in areas tradit ionally the responsibility of the sellers. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F36331276596_ID0E5H}{\*\bkmkend co_footnoteRe ference_F36331276596_ID0E5H} {\field {\*\fldinst HYPERLINK "#co_footnote_F36331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 36 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Although some buyers view reverse breakup fees as essentially \u8220\'3foptions \u8221\'3f on the deal, } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F37331276596_ID0EBI}{\*\bkmkend co_footnoteRe ference_F37331276596_ID0EBI} {\field {\*\fldinst HYPERLINK "#co_footnote_F37331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 37 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 in this case, the reverse breakup fee was too onerous to permit such an interpr etation. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F38331276596_ID0EGI}{\*\bkmkend co_footnoteRe ference_F38331276596_ID0EGI} {\field {\*\fldinst HYPERLINK "#co_footnote_F38331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 38 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Moreover, because } {\i1 \fs20 \cf28 \f2 \b1 {\*\bkmkstart co_pp_sp_111958_243_1}{\*\bkmkend co_pp_sp_111958_243_1} {\i1 \fs20 \sa0 \ul0 \cf28 \strike0 \f2 \b1 \sb0 *243 } } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 Goldman offered stapled financing to all the bidders from the beginning, the cl ubs knew that they would not be able to claim that they were unable to find suff icient backing. \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EUIAE_1}{\*\bkmkend co_g_ID0EUIAE_1}

{\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 In spite of all this, Neiman sold itself at an above-average premium (34% above its share price at announcement of the sale process, and nine times its cash flo w), defying speculation by competitors, analysts, and other bidders alike. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F39331276596_ID0E3I}{\*\bkmkend co_footnoteRe ference_F39331276596_ID0E3I} {\field {\*\fldinst HYPERLINK "#co_footnote_F39331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 39 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 How did Neiman manage to achieve such a high price on its own terms and timelin e, without any apparent concessions to the buyers? \par } } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \qc \b1 {\*\bkmkstart co_g_ID0EFJAE_1}{\*\bkmkend co_g_ID0EFJAE_1} {\i0 \fs20 \sa200 \ul0 \cf1 \strike0 \f2 \b1 \sb200 The Answer \par } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EPJAE_1}{\*\bkmkend co_g_ID0EPJAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Neiman\rquote s tight auction controls, seller-friendly deal protections, and sh ort timeframe ultimately did not, as intuition or conventional wisdom might sugg est, paint the company into a corner. On the contrary, these three elements actu ally enabled the company to harness pro-seller market trends and capture substan tial value. First, Neiman\rquote s firm control of the process allowed the compa ny to regulate crucial deal dynamics - including who bid, with whom, and on what terms - while eliminating uncertainties that may have depressed the final price . Second, Neiman\rquote s cutting-edge deal protections ensured that the deal wo uld not fall through or be subject to retrading at the last moment. Third, Neima n was in the right place at the right time: good timing, intelligent market anal ysis, and just plain luck contributed to its success. \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EHKAE_1}{\*\bkmkend co_g_ID0EHKAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 Closer examination of the negotiation puzzle in the Neiman context, then, reveal s unexpected synchronicities between puzzle and answer. For Neiman, the same fac tors that might theoretically have destroyed value - control, protection, and ti ming - turned out to be the very reasons the company commanded such an impressiv e price. \par } }

} {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EWKAE_1}{\*\bkmkend co_g_ID0EWKAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 1. Controlling the Process. \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0ECLAE_1}{\*\bkmkend co_g_ID0ECLAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 From the beginning, Neiman\rquote s advisors orchestrated every aspect of the au ction. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F40331276596_ID0EKL}{\*\bkmkend co_footnoteRe ference_F40331276596_ID0EKL} {\field {\*\fldinst HYPERLINK "#co_footnote_F40331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 40 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 In January, Neiman invited specific financial } {\i1 \fs20 \cf28 \f2 \b1 {\*\bkmkstart co_pp_sp_111958_244_1}{\*\bkmkend co_pp_sp_111958_244_1} {\i1 \fs20 \sa0 \ul0 \cf28 \strike0 \f2 \b1 \sb0 *244 } } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 bidders to the table to begin negotiations before announcing the sale process t o the general market. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F41331276596_ID0EUL}{\*\bkmkend co_footnoteRe ference_F41331276596_ID0EUL} {\field {\*\fldinst HYPERLINK "#co_footnote_F41331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 41 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 This minimized the risk of information leaks and allowed the management team an d its advisers to concentrate their efforts on the parties most likely to offer a premium bid. The subsequent public announcement } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F42331276596_ID0E1L}{\*\bkmkend co_footnoteRe ference_F42331276596_ID0E1L} {\field {\*\fldinst HYPERLINK "#co_footnote_F42331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 42 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200

that Neiman was investigating \u8220\'3fstrategic alternatives\u8221\'3f ensure d that the process did not miss any interested buyers and that Neiman was fully in compliance with its Revlon duties, which require companies to seek the maximu m value for stockholders in a sale of the company. \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EDMAE_1}{\*\bkmkend co_g_ID0EDMAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Inviting the participants was the first step; the second was to make sure that t hey worked together well, but not too well - bidder collusion is always a concer n in the auction context. Neiman\rquote s bankers at Goldman directed the format ion of bidding consortiums - \u8220\'3fa series of forced marriages,\u8221\'3f i n the words of one participant } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F43331276596_ID0EMM}{\*\bkmkend co_footnoteRe ference_F43331276596_ID0EMM} {\field {\*\fldinst HYPERLINK "#co_footnote_F43331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 43 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 - to ensure a competitive bidding process that resulted in higher bids. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F44331276596_ID0ERM}{\*\bkmkend co_footnoteRe ference_F44331276596_ID0ERM} {\field {\*\fldinst HYPERLINK "#co_footnote_F44331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 44 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Pre-partnering certain bidders can forestall anti-competitive pairings in which bidders band together to eliminate competition (as in the March 2005 buyout of SunGard Data Systems } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F45331276596_ID0EUM}{\*\bkmkend co_footnoteRe ference_F45331276596_ID0EUM} {\field {\*\fldinst HYPERLINK "#co_footnote_F45331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 45 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 ), leading to a lower final price. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F46331276596_ID0EZM}{\*\bkmkend co_footnoteRe ference_F46331276596_ID0EZM} {\field {\*\fldinst HYPERLINK "#co_footnote_F46331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 46 }}}

} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Since the formation of bidding consortiums was a foregone conclusion given the size of this deal, the confidentiality agreements served to prevent bidders from voluntarily forming teams without consent. This allowed Neiman to ensure that t he resulting teams were the right size (that is, precisely two private equity fi rms each) and would complement each other well. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F47331276596_ID0EAN}{\*\bkmkend co_footnoteRe ference_F47331276596_ID0EAN} {\field {\*\fldinst HYPERLINK "#co_footnote_F47331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 47 }}} \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EHNAE_1}{\*\bkmkend co_g_ID0EHNAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Another important element of Neiman\rquote s control of process was its insisten ce that bidders work from a homogenized contract that left } {\i1 \fs20 \cf28 \f2 \b1 {\*\bkmkstart co_pp_sp_111958_245_1}{\*\bkmkend co_pp_sp_111958_245_1} {\i1 \fs20 \sa0 \ul0 \cf28 \strike0 \f2 \b1 \sb0 *245 } } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 little room for last-minute retrades, creative departures, or tradeoffs. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F48331276596_ID0EUN}{\*\bkmkend co_footnoteRe ference_F48331276596_ID0EUN} {\field {\*\fldinst HYPERLINK "#co_footnote_F48331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 48 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 The pre-negotiated homogenized contract, coupled with a short, two-day timefram e for final negotiations, helped prevent an eleventh-hour attempt by the winning bidders to renegotiate terms once they learned that they had prevailed in the a uction. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F49331276596_ID0EYN}{\*\bkmkend co_footnoteRe ference_F49331276596_ID0EYN} {\field {\*\fldinst HYPERLINK "#co_footnote_F49331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 49 }}} \par } } }

{\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0E6NAE_1}{\*\bkmkend co_g_ID0E6NAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Moreover, Neiman\rquote s arrangement of a separate and concurrent sale of its c redit card business was a key tactical move. The credit card business was a valu able asset that could command a high price if sold to strategic buyers in the fi nancial services industry, because synergies with their existing retail credit b usinesses promised to create significant private value. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F50331276596_ID0EKO}{\*\bkmkend co_footnoteRe ference_F50331276596_ID0EKO} {\field {\*\fldinst HYPERLINK "#co_footnote_F50331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 50 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 A financial buyer of Neiman\rquote s entire business would likely divest the cr edit card division soon after a buyout to reduce transaction debt, and therefore , would discount its value due to the uncertainty of the price it would fetch in a sale. By orchestrating the concurrent sale of the credit card business, Neima n was able to ensure that the unit\rquote s full fair market value would devolve to its shareholders, decreasing uncertainty for financial bidders and pushing u p final offers for the company. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F51331276596_ID0ERO}{\*\bkmkend co_footnoteRe ference_F51331276596_ID0ERO} {\field {\*\fldinst HYPERLINK "#co_footnote_F51331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 51 }}} \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EYOAE_1}{\*\bkmkend co_g_ID0EYOAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 2. Protecting the Deal. \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EEPAE_1}{\*\bkmkend co_g_ID0EEPAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 To ensure that the deal would be consummated, Neiman included a variety of contr actual protections to incentivize the parties. Before starting the auction proce ss, the board installed \u8220\'3fgolden parachutes,\u8221\'3f or lucrative seve rance agreements, for key management personnel, in an attempt to ensure that man agement was fully committed to completing the auction process. Having the golden parachutes in place reassured management that their jobs would be secure regard less of the outcome of the auction. Although golden parachutes are often viewed as an anti-takeover measure, in this case }

{\i1 \fs20 \cf28 \f2 \b1 {\*\bkmkstart co_pp_sp_111958_246_1}{\*\bkmkend co_pp_sp_111958_246_1} {\i1 \fs20 \sa0 \ul0 \cf28 \strike0 \f2 \b1 \sb0 *246 } } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 they provided reassurance to both the company and its potential buyers that the management team - which was, after all, one of the company\rquote s greatest st rengths - would remain in place. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F52331276596_ID0EZP}{\*\bkmkend co_footnoteRe ference_F52331276596_ID0EZP} {\field {\*\fldinst HYPERLINK "#co_footnote_F52331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 52 }}} \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EAQAE_1}{\*\bkmkend co_g_ID0EAQAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 In addition, Neiman\rquote s lawyers negotiated unusual contractual clauses to s afeguard the deal for the seller. Traditional leveraged buyout (\u8220\'3fLBO\u8 221\'3f) deal protections tend to place the onus largely on the sellers, giving buyers a higher level of confidence that the sellers will not continue to look e lsewhere for a higher price. } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 In this case, however, the traditional deal protections were supplemented by un common terms that focused on the buyers\rquote commitments. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F53331276596_ID0EOQ}{\*\bkmkend co_footnoteRe ference_F53331276596_ID0EOQ} {\field {\*\fldinst HYPERLINK "#co_footnote_F53331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 53 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 Most notably, the deal featured a \u8220\'3ftwo-tier\u8221\'3f reverse breakup fee of unprecedented scale, which broke new ground by completely omitting a fina ncing out provision that might enable the buyers to abandon the deal. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F54331276596_ID0ESQ}{\*\bkmkend co_footnoteRe ference_F54331276596_ID0ESQ} {\field {\*\fldinst HYPERLINK "#co_footnote_F54331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 54 }}} \par } } }

{\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EZQAE_1}{\*\bkmkend co_g_ID0EZQAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Generally, reverse breakup fees impose predetermined costs on the buyers should they decide not to follow through on their agreement to purchase the company. In Neiman\rquote s case, the reverse breakup fee imposed on the winning bidders a penalty of $140.3 million (about 3% of the enterprise value of the sale) if the deal fell through because the financing did not materialize. This was only the s econd time such a fee had ever been imposed in the LBO of a public American comp any. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F55331276596_ID0EHR}{\*\bkmkend co_footnoteRe ference_F55331276596_ID0EHR} {\field {\*\fldinst HYPERLINK "#co_footnote_F55331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 55 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Neiman improved on the first use, however, by adding a second tier: the fee jum ped to $500 million (almost 10% of enterprise value) if the deal did not close f or reasons other than financing. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F56331276596_ID0EMR}{\*\bkmkend co_footnoteRe ference_F56331276596_ID0EMR} {\field {\*\fldinst HYPERLINK "#co_footnote_F56331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 56 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 This second tier was so punitive that it essentially forced } {\i1 \fs20 \cf28 \f2 \b1 {\*\bkmkstart co_pp_sp_111958_247_1}{\*\bkmkend co_pp_sp_111958_247_1} {\i1 \fs20 \sa0 \ul0 \cf28 \strike0 \f2 \b1 \sb0 *247 } } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 the winning bidders to abandon any notion that they might use the reverse break up fee as a real option on the company. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F57331276596_ID0EWR}{\*\bkmkend co_footnoteRe ference_F57331276596_ID0EWR} {\field {\*\fldinst HYPERLINK "#co_footnote_F57331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 57 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Apart from giving comfort to the Neiman board that there would be no dramatic l ast-minute bust-up, } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F58331276596_ID0EZR}{\*\bkmkend co_footnoteRe

ference_F58331276596_ID0EZR} {\field {\*\fldinst HYPERLINK "#co_footnote_F58331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 58 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 the lack of a financing out also eliminated the natural temptation on the part of the winning bidder to ratchet down the final price by claiming difficulty in obtaining debt financing necessary to consummate the merger and threatening to i nvoke the financing out clause. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F59331276596_ID0E5R}{\*\bkmkend co_footnoteRe ference_F59331276596_ID0E5R} {\field {\*\fldinst HYPERLINK "#co_footnote_F59331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 59 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 Instead, the buyers\rquote only notable out would be a tightly drafted materia l adverse change (\u8220\'3fMAC\u8221\'3f) clause - and the buyers were well awa re that the threshold for adverse events to qualify as a MAC is extremely high i n Delaware courts. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F60331276596_ID0ECS}{\*\bkmkend co_footnoteRe ference_F60331276596_ID0ECS} {\field {\*\fldinst HYPERLINK "#co_footnote_F60331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 60 }}} \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EJSAE_1}{\*\bkmkend co_g_ID0EJSAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Why would bidders as sophisticated as TPG and Warburg agree to terms that seem s o skewed towards the sellers? In their own words, they were \u8220\'3fvery comfo rtable with the process.\u8221\'3f } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F61331276596_ID0EUS}{\*\bkmkend co_footnoteRe ference_F61331276596_ID0EUS} {\field {\*\fldinst HYPERLINK "#co_footnote_F61331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 61 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 They negotiated MAC clauses with the banks providing debt financing that mirror ed almost perfectly the MAC clause in the sales agreement, so they were \u8220\' 3fvery confident that their banks would show up.\u8221\'3f } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F62331276596_ID0ECT}{\*\bkmkend co_footnoteRe

ference_F62331276596_ID0ECT} {\field {\*\fldinst HYPERLINK "#co_footnote_F62331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 62 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Second, Neiman was negotiating from a position of strength: it was a highly-res pected company and there was significant interest in the auction. In short, TPG/ Warburg really wanted the company and believed that they would be able to close the transaction, so they were willing to accept fairly restrictive deal protecti ons. Finally, to mitigate the buyers\rquote financing risk, Neiman\rquote s ban kers at Goldman Sachs offered potential buyers \u8220\'3fstapled financing\u8221 \'3f for the deal. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F63331276596_ID0ENT}{\*\bkmkend co_footnoteRe ference_F63331276596_ID0ENT} {\field {\*\fldinst HYPERLINK "#co_footnote_F63331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 63 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 This creates for buyers a convenient negotiation floor vis-\u224\'3f-vis other potential } {\i1 \fs20 \cf28 \f2 \b1 {\*\bkmkstart co_pp_sp_111958_248_1}{\*\bkmkend co_pp_sp_111958_248_1} {\i1 \fs20 \sa0 \ul0 \cf28 \strike0 \f2 \b1 \sb0 *248 } } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 sources of leverage, because their financing is guaranteed. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F64331276596_ID0EXT}{\*\bkmkend co_footnoteRe ference_F64331276596_ID0EXT} {\field {\*\fldinst HYPERLINK "#co_footnote_F64331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 64 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 Moreover, stapled financing may enable buyers to bid more boldly by guaranteein g the availability of financing on certain terms. \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EAUAE_1}{\*\bkmkend co_g_ID0EAUAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 3. Being in the Right Place at the Right Time. \par } } }

{\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EMUAE_1}{\*\bkmkend co_g_ID0EMUAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 There are a number of intangible factors that facilitated this particular deal a nd may, in fact, have been unique to it. An equally motivated seller in a less a uspicious context might not be as successful as Neiman, even if it followed the same formula. \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0E2UAE_1}{\*\bkmkend co_g_ID0E2UAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 This deal arrived at a particularly opportune time in both the private equity } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F65331276596_ID0EBV}{\*\bkmkend co_footnoteRe ference_F65331276596_ID0EBV} {\field {\*\fldinst HYPERLINK "#co_footnote_F65331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 65 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 and luxury retail industries. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F66331276596_ID0EGV}{\*\bkmkend co_footnoteRe ference_F66331276596_ID0EGV} {\field {\*\fldinst HYPERLINK "#co_footnote_F66331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 66 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 The depressed state of the US economy since the early 2000s and the passage of the Sarbanes-Oxley Act made going private an attractive option for many public c ompanies. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F67331276596_ID0ELV}{\*\bkmkend co_footnoteRe ference_F67331276596_ID0ELV} {\field {\*\fldinst HYPERLINK "#co_footnote_F67331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 67 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 As a company with an excellent management team and targeted marketing strategy, Neiman was reluctant to risk the breakup of the team and disruption of its long -term strategy. At the same time, private equity was booming, and funds were ove rflowing. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F68331276596_ID0ETV}{\*\bkmkend co_footnoteRe ference_F68331276596_ID0ETV} {\field {\*\fldinst HYPERLINK "#co_footnote_F68331276596_1" }{\fldrslt

{\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 68 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 With a strong brand, well-defined retail concept, experienced management team, affluent customer base, and readily saleable consumer credit card business, Neim an was an ideal - if expensive - acquisition target. The luxury retail sector ha d proven itself one of the most resilient to economic shocks and industry fluctu ations. It fell } {\i1 \fs20 \cf28 \f2 \b1 {\*\bkmkstart co_pp_sp_111958_249_1}{\*\bkmkend co_pp_sp_111958_249_1} {\i1 \fs20 \sa0 \ul0 \cf28 \strike0 \f2 \b1 \sb0 *249 } } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 together perfectly: investors were looking for opportunities, and Neiman was re ady to sell. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F69331276596_ID0EDW}{\*\bkmkend co_footnoteRe ference_F69331276596_ID0EDW} {\field {\*\fldinst HYPERLINK "#co_footnote_F69331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 69 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 Fortunately for the company, market conditions remained favorable throughout th e sale process. \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EMWAE_1}{\*\bkmkend co_g_ID0EMWAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 It also seems likely that the careful matchmaking among potential bidders added significant marginal advantage to those clubs that worked well together, while d isadvantaging those that did not. A dysfunctional pairing could easily impair th e process of raising large amounts of debt and preparing a strategy to realize r eturns over a number of years: disagreements could arise over a number of critic al areas, including the balance of power, distribution of fees, investment time horizon, institutional competencies, and governance issues. } {\i0 \fs16 \cf1 \f2 \b0 {\*\bkmkstart co_footnoteReference_F70331276596_ID0EXW}{\*\bkmkend co_footnoteRe ference_F70331276596_ID0EXW} {\field {\*\fldinst HYPERLINK "#co_footnote_F70331276596_1" }{\fldrslt {\i0 \fs16 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 70 }}} } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 That TPG and Warburg Pincus proved able to work together well was no doubt the result of careful pairing by Goldman Sachs - but, to a certain extent, it was al so a stroke of luck.

\par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EAXAE_1}{\*\bkmkend co_g_ID0EAXAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 Another factor contributing to Neiman\rquote s successful sale process was simpl y the quality of the company\rquote s brand, management, and infrastructure. Nei man sold itself from a position of strength; had the company failed to get its r eservation price, it simply would have walked away from the auction process. Sim ilarly, had the company been less appealing, the buyers may not have acquiesced to as many of Neiman\rquote s demands. Clearly, having something worthwhile to s ell makes the sale much easier. \par } } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \qc \b1 {\*\bkmkstart co_g_ID0EVXAE_1}{\*\bkmkend co_g_ID0EVXAE_1} {\i0 \fs20 \sa200 \ul0 \cf1 \strike0 \f2 \b1 \sb200 Conclusion \par } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0E6XAE_1}{\*\bkmkend co_g_ID0E6XAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Controlling the process and protecting the deal were two strategies that played out particularly well in the Neiman deal. It is still too early to tell if some of the deal terms utilized in this transaction signal a trend in the industry. T he reverse breakup fee and the diluted financing out have only been used in two other private equity deals in the United States - SunGard and Hertz - both of wh ich } {\i1 \fs20 \cf28 \f2 \b1 {\*\bkmkstart co_pp_sp_111958_250_1}{\*\bkmkend co_pp_sp_111958_250_1} {\i1 \fs20 \sa0 \ul0 \cf28 \strike0 \f2 \b1 \sb0 *250 } } {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 were, like Neiman, very attractive properties. For less attractive properties, it may be difficult for sellers to install these provisions without giving conce ssions in price or other provisions. \par } } } {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\ri0 \i0 \fs20 \cf1 \f2 \li0 \b0 \qj {\*\bkmkstart co_g_ID0EZYAE_1}{\*\bkmkend co_g_ID0EZYAE_1} {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb200 Nonetheless, the Neiman Marcus acquisition is a compelling study in leveraging b argaining power, negotiating dynamics, and controlling auction outcomes. So how does a motivated seller extract maximum value, quickly? The answer is a combinat

ion of factors, including, most prominently, the ability to control the process and guarantee the deal\rquote s completion. In the end, this negotiation was bot h atypical and successful - a sophisticated approach that met the needs of all t he parties involved. \par } } } } }{ {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadl200 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrt \clbrdrl \ trql \cellx10080 \intbl {\ri20 \i0 \ql \fs20 \cf1 \f2 \li20 \b0 {\i0 \fs20 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Footnotes } }\i0 \ri20 \fs20 \ql \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_Fd1331276596_1}{\*\bkmkend co_footnote_Fd1331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_Fd1331276596_ID0ERI" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 d1 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Harvard Law School, J.D. expected 2007; Harvard Law School, LL.M. 2006; Harvard Law School and Fletcher Divinity School, J.D./MALD 2006; Harvard Law School, J.D . expected 2007; Harvard Law School, J.D. expected 2007; respectively. We thank our professor, Guhan Subramanian, for his advice and guidance throughout this pr oject. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F1331276596_1}{\*\bkmkend co_footnote_F1331276596_1}

{\field {\*\fldinst HYPERLINK "#co_footnoteReference_F1331276596_ID0EQJA" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 1 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Bill Dreher & Caroline Costin, Crown Jewel for Potential Sale or Secondary (Deut sche Bank Company Bulletin), Mar. 16, 2006 at 3. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F2331276596_1}{\*\bkmkend co_footnote_F2331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F2331276596_ID0EVJA" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 2 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See id.; see also Neiman Marcus Group, Proxy Statement (Form 14-A), at 18 (July 18, 2005) [hereinafter Proxy Statement]; Interview with Walter Salmon, Professor , Harvard Bus. Sch., in Cambridge, Mass. (Mar. 20, 2006) [hereinafter Salmon Int erview]. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F3331276596_1}{\*\bkmkend co_footnote_F3331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F3331276596_ID0EZJA" }{\fld rslt

{\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 3 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See, e.g., Dennis K. Berman et al., Neiman Marcus Nears $5 Billion Deal - Texas Pacific, Warburg Bid Trumps Rival Equity Firms; A Long Term Luxury Play, Wall St . J., May 2, 2005, at A3; Dennis K. Berman et al., Today\rquote s Bids for Neima n Marcus May Be Dampened by Soft Market, Wall St. J., Apr. 29, 2006, at C4; Jona than Birchall & James Politi, Neiman Marcus Sold for $5.1bn, Fin. Times, May 3, 2005, at 27 (noting criticism that \u8220\'3fthe deal was struck at the top of t he market [and] the buyers might struggle to make money from their investment\u8 221\'3f); Nat Worden, Neiman Marcus Is Sold, TheStreet.com, May 2, 2005, http:// www.thestreet.com/markets/natworden/10221095.html (quoting the chairman of a ret ail consulting and investment banking firm as saying that \u8220\'3fit looks to me like [Neiman is] at the very top of the cycle, and that\rquote s a bad time . .. to buy the company\u8221\'3f). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F4331276596_1}{\*\bkmkend co_footnote_F4331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F4331276596_ID0E3KA" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 4 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Although the family never publicly stated that they were interested in selling o ff their Neiman stake, industry insiders and analysts nonetheless speculated tha t the family wanted to move on. See, e.g., Dreher, supra note 1 (\u8220\'3fWe ha d been anticipating a secondary of the Smith family shares\u8221\'3f); Deborah W einswig, Charmaine Tang & Tina Hwang, NMGA: Evaluating Strategic Alternatives What Next?, (Citigroup/Smith Barney), Mar. 2, 2005, at 9 (\u8220\'3fRichard Smit h, 81, has been the center of industry discussion that he has been interested in monetizing this stake in Neiman Marcus.\u8221\'3f). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro

w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F5331276596_1}{\*\bkmkend co_footnote_F5331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F5331276596_ID0EBLA" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 5 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Salmon Interview, supra note 2 (noting that the family\rquote s decision to sell did not happen in a time-constrained \u8220\'3fcorridor or window\u8221\'3f but rather at the \u8220\'3ffirst opportunity\u8221\'3f). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F6331276596_1}{\*\bkmkend co_footnote_F6331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F6331276596_ID0EQNA" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 6 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See Neiman Marcus Group, Inc., Preliminary Proxy Statement (Form 14A), at 11 (Ju l. 8, 1999) [hereinafter 1999 Proxy], for the background to the 1999 Neiman spin -off from Harcourt General. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0

\clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F7331276596_1}{\*\bkmkend co_footnote_F7331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F7331276596_ID0ETNA" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 7 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See id. at 10, describing the limitations that the tax-free distribution may imp ose on Neiman and the indemnity Neiman provided to Harcourt General for taxes th at became payable by Harcourt General due to actions by Neiman Marcus. See also Bernard Wolfman & Diane M. Ring, Federal Income Taxation of Corporate Enterprise 584-85 (4th ed. 2005) (discussing the two- to five-year restrictive window crea ted by \u167\'3f\u167\'3f 355(d)-(e) for changes of control following a tax-free spin-off under \u167\'3f 355). After 2004, Neiman was beyond the long end of th e restrictive window and therefore had very little risk of violating \u167\'3f 3 55 for the Harcourt General spin-off in a change of control. Robert Willens, Two -Class Stock Spinoffs Leave Vulnerable Castoffs, The Daily Deal, Nov. 23, 1999. } {\field {\*\fldinst HYPERLINK "http://www.westlaw.com/Link/Document/FullText?fin dType=Y&serNum=1969014009&pubNum=0001048&originationContext=document&vr=3.0&rs=c blt1.0&transitionType=DocumentItem&contextData=(sc.Search)" }{\fldrslt {\i0 \fs18 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 Revenue Ruling 69-407 }\i0 \fs18 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 mentions the \u8220\'3fpermanent realignment of voting control\u8221\'3f requir ement of \u167\'3f 355, which means that the two classes of stock cannot be reco mbined for five years, making sale options more complicated. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F8331276596_1}{\*\bkmkend co_footnote_F8331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F8331276596_ID0EXNA" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 8 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }}

} }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Note that the clearing of the tax issues was, at most, a necessary condition to a sale, not a sufficient one. During 2000-03, the Smiths would likely not have b een eager to sell even without the tax limitations, because the company\rquote s stock price was depressed. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F9331276596_1}{\*\bkmkend co_footnote_F9331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F9331276596_ID0EPOA" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 9 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Salmon Interview, supra note 2. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F10331276596_1}{\*\bkmkend co_footnote_F10331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F10331276596_ID0EZO" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 10 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj

{\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Id. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F11331276596_1}{\*\bkmkend co_footnote_F11331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F11331276596_ID0E4O" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 11 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Id. (observing that the \u8220\'3fwind was at the back\u8221\'3f of the luxury r etail market in early 2005); see also, e.g., Tracie Rozhon, In a Shopping Frenzy : Investors, Flush with Cash, Go After Retail Chains, N.Y. Times, Apr. 14, 2005, at C2 (noting that \u8220\'3f[t]he retailing industry [was] gripped by frenzy\u 8221\'3f to sell); Tracie Rozhon, To Cash in on Luxury, Think of Selling the Sto re, N.Y. Times, Feb. 9, 2005, at C1 (stating that Neiman Marcus would be, accord ing to one expert, \u8220\'3fa coveted but expensive prize ... for a financial t rophy hunter\u8221\'3f) (internal quotations omitted). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F12331276596_1}{\*\bkmkend co_footnote_F12331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F12331276596_ID0EMP" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 12 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl

{\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Proxy Statement, supra note 2, at 20. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F13331276596_1}{\*\bkmkend co_footnote_F13331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F13331276596_ID0ERP" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 13 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Id. Apart from Saks, LVMH and Nordstrom were also rumored to have an interest in a potential purchase, but none found the resources necessary to mount a serious bid. Neiman also wanted to be careful not to compromise its luxury retailer pro file - not all of these potential strategic buyers had the right image. Salmon I nterview, supra note 2. Moreover, Neiman was keen to minimize the possibility of information leaks and competitive risks of sharing information with competitors . See generally Ellen Byron, Neiman Marcus May Be up for Sale, Wall St. J., Mar. 17, 2005, at A3; Is Nordstrom Interested in Buying Neiman Marcus?: Seattle Comp any Is Mum on Speculation, Seattle Post-Intelligencer, Mar. 17, 2005, available at http:// seattlepi.nwsource.com/business/216303_nieman17.html. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F14331276596_1}{\*\bkmkend co_footnote_F14331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F14331276596_ID0EBA" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 14

}\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Successfully Managing Private Equity Conflicts of Interest, CapitalEyes (Bank of America), http:// www.bofabusinesscapital.com/resources/capeyes/a08-04-238.html (last visited Oct. 15, 2006). Stapled financing simply means that the bank advi sing the target company also arranges for the potential buyer\rquote s financing . Therefore, the buyer, in theory, does not have to seek any additional financin g to purchase the company - the target\rquote s bankers have already \u8220\'3fs tapled\u8221\'3f the necessary financing contracts to the purchase agreement. Bu yers often use these contracts as a baseline or BATNA for negotiating with other third-party lending sources. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F15331276596_1}{\*\bkmkend co_footnote_F15331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F15331276596_ID0EFA" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 15 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Telephone Interview with James Westra, Partner, Weil, Gotshal & Manges LLP, in B oston, Mass. (Mar. 14, 2006) [hereinafter Westra Interview]. None of the bidders , including the winning bidders, used Goldman\rquote s stapled financing. Howeve r, Goldman was part of the final financing arrangement. Neiman Marcus, Inc. Annu al Report (Form 10-K), at 36 (Sept. 16, 2005). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0

{\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F16331276596_1}{\*\bkmkend co_footnote_F16331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F16331276596_ID0E2A" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 16 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 The private-label credit card concern had $550 million in receivables. Andrew Ro ss Sorkin & Tracie Rozhon, Credit Card Business Draws Bidders to Neiman Marcus, N.Y. Times, Apr. 26, 2005, at C5; see also Tracie Rozhon, Neiman Marcus Deal Dis appoints Investors Looking for a Second One, N.Y. Times, May 3, 2005, at C1. (st ating that the credit card concern had been the subject of intense speculation, because Neiman shareholders were hoping to benefit from both the sale of the com pany and of the credit card business). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F17331276596_1}{\*\bkmkend co_footnote_F17331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F17331276596_ID0EAB" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 17 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Proxy Statement, supra note 2, at 21. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0

{\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F18331276596_1}{\*\bkmkend co_footnote_F18331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F18331276596_ID0EEB" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 18 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Rozhon, supra note 16 (quoting one executive as saying that the credit card sale would \u8220\'3fserve as the down payment\u8221\'3f on the Neiman purchase). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F19331276596_1}{\*\bkmkend co_footnote_F19331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F19331276596_ID0ETB" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 19 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Proxy Statement, supra note 2, at 22. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F20331276596_1}{\*\bkmkend co_footnote_F20331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F20331276596_ID0EYB" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0

20 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Telephone Interview with John Finley, Partner, Simpson, Thatcher & Bartlett, in New York, N.Y. (Apr. 3, 2006) [hereinafter Finley Interview]. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F21331276596_1}{\*\bkmkend co_footnote_F21331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F21331276596_ID0EAC" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 21 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See } {\field {\*\fldinst HYPERLINK "http://www.westlaw.com/Link/Document/FullText?fin dType=Y&serNum=0306077310&pubNum=100078&originatingDoc=I90b73c31e99811dbacd6b4db 45fd6021&refType=DA&originationContext=document&vr=3.0&rs=cblt1.0&transitionType =DocumentItem&contextData=(sc.Search)" }{\fldrslt {\i0 \fs18 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 James Westra, Club Deals, in PLI Corporate Law and Practice Course, Handbook Ser ies No. 6063 (2005), available at WL 1517 PLI/Corp 261 }\i0 \fs18 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 (\u8220\'3fWhen forming a club with a strategic partner, a private equity firm can obtain the benefit of the partner\rquote s strategic knowledge of the indust ry or market and often access intellectual property of the strategic partner and the strategic partner\rquote s good will in the marketplace.\u8221\'3f) [herein after Club Deals]. In this particular case, it was clear to all parties that the bidding could approach or top $5 billion. If the equity sponsors had to pay 30% in a $5 billion deal, for example, this would require putting up about $1.5 bil lion, significantly more than even the largest private equity firms have shown t hemselves willing to risk on a single transaction. \par } } }

}\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F22331276596_1}{\*\bkmkend co_footnote_F22331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F22331276596_ID0EOC" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 22 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Telephone Interview with Michael Carr, Managing Director, Goldman Sachs, in New Orleans, La. (Mar. 23, 2006). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F23331276596_1}{\*\bkmkend co_footnote_F23331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F23331276596_ID0EVC" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 23 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 James Politi, Neiman Board Weighs up Rival Buy-Out Offers, Fin. Times, May 2, 20 05, at 17; see also Proxy Statement, supra note 2, at 23. Neiman\rquote s strate gy of \u8220\'3fpre-partnering\u8221\'3f the clubs may have meant that there wer e \u8220\'3ffewer people at the finish line\u8221\'3f at the auction than there would have been if firms had chosen their own clubs. Westra Interview, supra not e 15. \par } } }

}\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F24331276596_1}{\*\bkmkend co_footnote_F24331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F24331276596_ID0EHD" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 24 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Westra Interview, supra note 15. Even with the homogenized contract, the bidders still made some small changes to the final version. Id. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F25331276596_1}{\*\bkmkend co_footnote_F25331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F25331276596_ID0E6D" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 25 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Tracie Rozhon, HSBC to Acquire Neiman Credit Card Unit, N.Y. Times, June 9, 2005 , at C4. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr

3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F26331276596_1}{\*\bkmkend co_footnote_F26331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F26331276596_ID0E1E" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 26 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 For price comparisons, see note 3, supra. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F27331276596_1}{\*\bkmkend co_footnote_F27331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F27331276596_ID0EEF" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 27 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See Dennis K. Berman & Henny Sender, Private-Equity Players Turn to Bigger Prey - Lucrative Fees From Transactions Steer Buyout Firms to Big Deals; Tough Hunt f or Valued Targets, Wall St. J., May 12, 2005, at C1; see also 1999 Proxy, supra note 6. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080

\intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F28331276596_1}{\*\bkmkend co_footnote_F28331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F28331276596_ID0EJF" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 28 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See, e.g., The Lex Column, Neiman Marcus, Fin. Times, May 3, 2005, at 20 (\u8220 \'3fQuite how the buyers ... plan to generate the typical private equity returns from this deal is unclear. It is certainly not a classic turnround [sic] story. Neiman is already in peak form.\u8221\'3f) Note, however, that private equity f irms are not looking solely for turnaround challenges, but seek growth opportuni ties as well. Westra Interview, supra note 15. A company like Neiman Marcus may offer many such opportunities in the short and long term. See generally Salmon I nterview, supra note 2. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F29331276596_1}{\*\bkmkend co_footnote_F29331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F29331276596_ID0EDG" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 29 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 For a discussion of private and common value in auction theory, see R. Preston M cAfee & John McMillan, Auctions and Bidding, 25 J. Econ. Lit. 699, 704-05 (1987) . \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr

3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F30331276596_1}{\*\bkmkend co_footnote_F30331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F30331276596_ID0EJG" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 30 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See supra text accompanying notes 10-11. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F31331276596_1}{\*\bkmkend co_footnote_F31331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F31331276596_ID0ENG" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 31 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Of course, the private equity firms could have their own version of a private va lue premium, depending on the varying competencies within the clubs. (Neiman has potential growth in, for example, home furnishings and junior lines; if a bidde r had special access to retailing expertise in these markets, then it might have found some private value in this auction.) Moreover, if market analysts can be convinced to classify Neiman as a specialty store (rather than as a retailer), N eiman\rquote s value will increase. Salmon Interview, supra note 2. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr

3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F32331276596_1}{\*\bkmkend co_footnote_F32331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F32331276596_ID0E5G" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 32 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Telephone Interview with Douglas Braunstein, Managing Director & Head of Investm ent Banking Coverage, J.P. Morgan, in New York, N.Y. (Mar. 17, 2006) [hereinafte r Braunstein Interview]; Finley Interview, supra note 20; Telephone Interview wi th David Leinwand, Partner, Cleary Gottlieb Steen & Hamilton, in New York City, N.Y. (Apr. 7, 2006) [hereinafter Leinwand Interview]. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F33331276596_1}{\*\bkmkend co_footnote_F33331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F33331276596_ID0EDH" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 33 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Barbarians Knocking at Retail\rquote s Gate, Financo Rev., Nov. 2005, at 3, avai lable at http://www.financo.com/news/review/Financo_Review_-_November_ 2005.pdf. But see Club Deals, supra note 21, at 264 (noting that \u8220\'3fsome argue tha t clubs actually push up prices by making additional funds available\u8221\'3f). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0

\clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F34331276596_1}{\*\bkmkend co_footnote_F34331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F34331276596_ID0EIH" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 34 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See, e.g., So Happy Together?, Corp. Control Alert, Nov. 2005, at 10 (observing that \u8220\'3f[o]ther issues can emerge after closing as private equity players , accustomed to calling the shots ... must share power with other members of a b uyout consortium\u8221\'3f); David Stires, LBO Kings Go Clubbin\rquote , Fortune , Apr. 3, 2006, at 29 (\u8220\'3fAnd while clubbin\rquote is a relatively new p henomenon, the consensus [is] that this party is just getting started.\u8221\'3f ) \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F35331276596_1}{\*\bkmkend co_footnote_F35331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F35331276596_ID0ENH" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 35 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See Club Deals, supra note 21, at 268; see also Eileen Nugent, Global Overview: Join the Club, Expert Guides, 2005, available at http:// www.expertguides.com/de fault.asp?Page=9&GuideID=135&Ed=43. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro

w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F36331276596_1}{\*\bkmkend co_footnote_F36331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F36331276596_ID0E5H" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 36 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 John L. Graham & Bradley C. Vaiana, Rolling the Dice, N.Y.L.J., Nov. 7, 2005, av ailable at http://www.kslaw.com/library/pdf/rollingdice.pdf (discussing the rece nt seller-friendly trends of reverse breakup fees and no financing outs). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F37331276596_1}{\*\bkmkend co_footnote_F37331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F37331276596_ID0EBI" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 37 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Some buyers think of reverse breakup fees as options on buying the company, beca use they provide a specified measure of damages, frequently capped at just a few percent of enterprise value, should the buyer decide against the deal. Westra I nterview, supra note 15. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w }

{\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F38331276596_1}{\*\bkmkend co_footnote_F38331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F38331276596_ID0EGI" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 38 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Finley Interview, supra note 20. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F39331276596_1}{\*\bkmkend co_footnote_F39331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F39331276596_ID0E3I" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 39 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 TPG/Warburg\rquote s high yield bond financing for the Neiman acquisition did no t materialize as planned, but the club was able to substitute bank debt. See Sim ona Covel & Tom Sullivan, Neiman Marcus Meets Skepticism: Long-Awaited Deal Sees Some Resistance as Market for Risky Debt Gets Jittery, Wall St. J., Sept. 29, 2 005, at C4; Deal Notes, Corp. Control Alert, Nov. 2005, at 4 (commenting that th e Neiman buyout, \u8220\'3f[i]f anything, showed how liberal the bank debt marke t remains\u8221\'3f). The substitution also included an asset-based revolving fa cility, bridge facilities, and senior secured notes in addition to the bank debt . \par } } }

}\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F40331276596_1}{\*\bkmkend co_footnote_F40331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F40331276596_ID0EKL" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 40 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Finley Interview, supra note 20; Braunstein Interview, supra note 32. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F41331276596_1}{\*\bkmkend co_footnote_F41331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F41331276596_ID0EUL" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 41 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See Proxy Statement, supra note 2, at 20. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3

\clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F42331276596_1}{\*\bkmkend co_footnote_F42331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F42331276596_ID0E1L" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 42 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Press Release, Neiman Marcus Group, The Neiman Marcus Group Exploring Strategic Alternatives (Mar. 16, 2005), available at www.neimanmarcusgroup.com (follow \u8 220\'3fNews and Events\u8221\'3f hyperlink); Neiman Marcus Group, Current Report (Form 8-K), at 18 (Mar. 16, 2005). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F43331276596_1}{\*\bkmkend co_footnote_F43331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F43331276596_ID0EMM" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 43 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Braunstein Interview, supra note 32. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0

{\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F44331276596_1}{\*\bkmkend co_footnote_F44331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F44331276596_ID0ERM" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 44 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Finley Interview, supra note 20. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F45331276596_1}{\*\bkmkend co_footnote_F45331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F45331276596_ID0EUM" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 45 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See, e.g., Rob Assal, Consortium Bids: An Overview, Mondaq, Mar. 21, 2006, avail able at 2006 WLNR 4640314. Whether SunGard\rquote s single-bidder situation redu ced the final price is impossible to know, but the fear that a single consortium will undermine the auction process worries sellers in a variety of contexts. Co mpare the practice of tuangou (team purchase), which is gaining popularity with consumers and confounding retailers in China. James T. Areddy, Chinese Consumers Overwhelm Retailers with Team Tactics, Wall St. J., Feb. 28, 2006, at A1. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0

{\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F46331276596_1}{\*\bkmkend co_footnote_F46331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F46331276596_ID0EZM" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 46 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Braunstein Interview, supra note 32; Finley Interview, supra note 20. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F47331276596_1}{\*\bkmkend co_footnote_F47331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F47331276596_ID0EAN" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 47 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Finley Interview, supra note 20. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F48331276596_1}{\*\bkmkend co_footnote_F48331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F48331276596_ID0EUN" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 48

}\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Commenting on the homogenized contract, Robert Smith (of the Smith family) said that \u8220\'3fJohn [Finley] did a great job handling the contract management pr ocess with each bidding party.\u8221\'3f Carlyn Kolker, Dealmakers of the Year, Am. Lawyer, Mar. 2006, at 99, available at http:// www.stblaw.com/content/news/n ews554.pdf. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F49331276596_1}{\*\bkmkend co_footnote_F49331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F49331276596_ID0EYN" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 49 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 As an example, consider a case in which there are three bidders, one of whom has bid $12 for an asset and two of whom have bid $10. If the leading bidder gets w ind of the lower numbers - a likely occurrence, especially as losing bidders oft en justify their loss by suggesting that the winner has overpaid - then the lead ing bidder has an incentive to drop his bid to $11. These \u8220\'3fretrades\u82 21\'3f often occur when too much time passes between the bids and the company\rq uote s subsequent pre-closing negotiations with the high bidder. Finley Intervie w, supra note 20. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0

{\*\bkmkstart co_footnote_F50331276596_1}{\*\bkmkend co_footnote_F50331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F50331276596_ID0EKO" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 50 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See Sorkin & Rozhon, supra note 16. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F51331276596_1}{\*\bkmkend co_footnote_F51331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F51331276596_ID0ERO" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 51 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Braunstein Interview, supra note 32. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F52331276596_1}{\*\bkmkend co_footnote_F52331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F52331276596_ID0EZP" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 52 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }}

} }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Salmon Interview, supra note 2. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F53331276596_1}{\*\bkmkend co_footnote_F53331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F53331276596_ID0EOQ" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 53 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See generally Glenn D. West & R. Jay Tabor, Sungard and Neiman Marcus LBO Transa ctions - Increased Liability Risk to Private Equity Sponsors?, Private Equity Al ert (Weil, Gotshal & Manges, LLP), June 2005, available at http://65.214.34.40/w gm/cwgmhomep.nsf/Files/PEAJun05/$file/PEAJun05.pdf. It is believed that these un usual terms were possible in this deal because Neiman knew it could set the term s. See Itai Maytal & Abigail Roberts, SunGard and Neiman Deals Debut New Reverse Breakup Fee, Others Could Follow - Analysis, Mergermarket, May 10, 2005, http:/ /www.mergermarket.com/public/default.asp? pagename=editorial_detail&docid=668. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F54331276596_1}{\*\bkmkend co_footnote_F54331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F54331276596_ID0ESQ" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 54

}\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Typically, in deals involving financial buyers an investment vehicle is set up t o consummate the acquisition. In this case TPG and Warburg formed Newton Acquisi tion Merger Sub, Inc., for the purpose of the acquisition. For sellers, the pros pect of taking this asset-less \u8220\'3fshell\u8221\'3f to court should the dea l go awry is not attractive. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F55331276596_1}{\*\bkmkend co_footnote_F55331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F55331276596_ID0EHR" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 55 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 The first use of such a fee was in the March 2005 leveraged buyout of SunGard Da ta Systems by a consortium of seven large PE firms. Assal, supra note 45. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F56331276596_1}{\*\bkmkend co_footnote_F56331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F56331276596_ID0EMR" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 56 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }}

} }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See Proxy Statement, supra note 2, \u167\'3f 8.2; Finley Interview, supra note 2 0; Leinwand Interview, supra note 32. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F57331276596_1}{\*\bkmkend co_footnote_F57331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F57331276596_ID0EWR" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 57 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Finley Interview, supra note 20. Whether the fee was too punitive (and therefore unenforceable) is not clear, since the deal went through. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F58331276596_1}{\*\bkmkend co_footnote_F58331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F58331276596_ID0EZR" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 58 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj

{\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See Graham & Vaiana, supra note 36. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F59331276596_1}{\*\bkmkend co_footnote_F59331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F59331276596_ID0E5R" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 59 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Finley Interview, supra note 20. See, e.g., David J. Sorkin & Eric M. Swedenburg , Recent US Deals Depart from Traditional Financing, Int\rquote l Fin. L. Rev., available at http://www.iflr.com/?Page=17&ISS=21163&SID=605652 (tracking the evo lution of financing provisions in LBOs); Graham & Vaiana, supra note 36. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F60331276596_1}{\*\bkmkend co_footnote_F60331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F60331276596_ID0ECS" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 60 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See, e.g.,

} {\field {\*\fldinst HYPERLINK "http://www.westlaw.com/Link/Document/FullText?fin dType=Y&serNum=2001519424&pubNum=162&originationContext=document&vr=3.0&rs=cblt1 .0&transitionType=DocumentItem&contextData=(sc.Search)" }{\fldrslt {\i0 \fs18 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 IBP, Inc. v. Tyson Foods, Inc., 789 A.2d 14 (Del. Ch. 2001) }\i0 \fs18 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 (detailing difficulty of invoking stringent MAC provisions). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F61331276596_1}{\*\bkmkend co_footnote_F61331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F61331276596_ID0EUS" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 61 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Leinwand Interview, supra note 32. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F62331276596_1}{\*\bkmkend co_footnote_F62331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F62331276596_ID0ECT" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 62 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj

{\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Id. Because presumably the same adverse event would trigger both the merger MAC and the financing MAC, the buyers could be comfortable that they would never be in a situation in which one MAC was triggered but the other was not. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F63331276596_1}{\*\bkmkend co_footnote_F63331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F63331276596_ID0ENT" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 63 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Proxy Statement, supra note 2, at 21. Note that such arrangements are not borne solely of the generosity of bankers - the fees generated by financing are signif icant. Braunstein Interview, supra note 32. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F64331276596_1}{\*\bkmkend co_footnote_F64331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F64331276596_ID0EXT" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 64 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0

Westra Interview, supra note 15. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F65331276596_1}{\*\bkmkend co_footnote_F65331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F65331276596_ID0EBV" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 65 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See Berman et al., supra note 3; see also Stanley B. Block, The Latest Movement to Going Private: An Empirical Study, 14 J. Applied Fin. 36 (2004); Emily Thornt on, Going Private, Bus. Wk., Feb. 27, 2006, at 53 (discussing the influx of exec utives from public companies into private equity firms). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F66331276596_1}{\*\bkmkend co_footnote_F66331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F66331276596_ID0EGV" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 66 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See Andrew Dolbeck, Shopping Spree: M&A in the Retail Sector, Wkly. Corp. Growth Rep., Apr. 25, 2005, at 1; KPMG, What\rquote s Hot in M&A?: Consumer Markets, D ealogic M&A Rev. (Aug. 2005), available at http:// www.altassets.net/casefor/sec

tors/2006/nz8758.php; see also supra note 11; Glory Days: Private Equity, Econom ist, Aug. 6, 2005, at 58; Capitalism\rquote s New Kings, Economist, Nov. 27, 200 4, at 9. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F67331276596_1}{\*\bkmkend co_footnote_F67331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F67331276596_ID0ELV" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 67 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See, e.g., Dimitry Herman, Why Are So Many Top Retailers and Consumer Product Co mpanies Going Private?, Back Channel Media Newsl., May 24, 2005, available at ht tp:// www.backchannelmedia.com/newsletter/story/2481102355/WHY_ARE_SO_MANY_TOP_ RETAILERS_.html; Michael Rudnick, Seeking Privacy: Some Public Home Furnishings Retailers Are Rushing to Take Advantage of Higher Valuations Offered by Private Equity Firms, HFN: The Wkly. Newspaper for Home Furnishings Network, Sept. 12, 2 005, at 64; Angela Sormani, Retail is Back in Fashion, Eur. Venture Cap. J., Sep t. 1, 2004, at 1 (reviewing European market). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F68331276596_1}{\*\bkmkend co_footnote_F68331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F68331276596_ID0ETV" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 68 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj

{\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 See, e.g., supra note 11; see also Lauren Foster, FT Report: Business of Luxury, Fin. Times, May 18, 2005, at 3 (\u8220\'3fEager to cash in on the buoyant marke t for luxury merchandise, [private equity funds] are prowling round the industry looking for deals.\u8221\'3f). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F69331276596_1}{\*\bkmkend co_footnote_F69331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F69331276596_ID0EDW" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 69 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Choosing the right time to initiate a sale may be more than luck, but enjoying c ontinued favorable market conditions throughout the auction process is undeniabl y lucky. See, e.g., Braunstein Interview, supra note 32 (observing that in the u npredictable environment of M&A practice, it can be \u8220\'3fbetter [to be] luc ky than good\u8221\'3f); Salmon Interview, supra note 2. \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w } {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadb100 \clpadfb3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr 3 \clbrdrb \clbrdrl \trql \clvertalt \cellx600 \clpadt20 \clpadft3 \clpadb90 \clpadfb3 \clpadl90 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrb \clbrdrr \trql \cellx10080 \intbl {\ri120 \i0 \ql \fs20 \cf1 \f2 \li120 \b0 {\i0 \fs20 \cf1 \f2 \b0 {\*\bkmkstart co_footnote_F70331276596_1}{\*\bkmkend co_footnote_F70331276596_1} {\field {\*\fldinst HYPERLINK "#co_footnoteReference_F70331276596_ID0EXW" }{\fld rslt {\i0 \fs20 \sa0 \ul0 \cf5 \strike0 \f2 \b0 \sb0 70 }\i0 \fs20 \sa0 \cf5 \ul0 \f2 \strike0 \b0 \sb0 }} } }\i0 \ri120 \fs20 \ql \cf1 \f2 \li120 \b0 \intbl \cell \intbl

{\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\ri20 \i0 \fs18 \cf1 \f2 \li20 \b0 \qj {\i0 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \b0 \sb0 Braunstein Interview, supra note 32; see also Andrew Ross Sorkin, The Great Glob al Buyout Bubble, N.Y. Times, Nov. 13, 2005, \u167\'3f 3 (warning that \u8220\'3 fif the debt market turns against [private equity players] - and it is bound to do so at some point - potential buyers or public investors may not be willing to pay the same prices\u8221\'3f); Club Deals, supra note 21 (laying out governanc e considerations and risks for private equity consortiums); So Happy Together?, supra note 34, at 14 (\u8220\'3fSome suspect that many club-backed companies sad dled with an unwieldy decision-making apparatus won\rquote t be nimble enough to dodge, or navigate through, a crisis when the inevitable downturn in the econom y occurs.\u8221\'3f). \par } } } }\i0 \ri20 \fs18 \sa0 \ul0 \cf1 \strike0 \f2 \li20 \b0 \sb0 \qj \intbl \cell \ro w }}{ {\trowd \itap0 \trleft0 \clpadt20 \clpadft3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrt \clbrdrb \ clbrdrl \trql \cellx4320 \clpadt20 \clpadft3 \clpadl100 \clpadfl3 \clpadr20 \clpadfr3 \clbrdrt \clbrdrb \ clbrdrr \trql \cellx10080 \intbl {\ri44 \i0 \ql \fs16 \cf29 \f2 \li44 \b1 {\i0 \fs16 \sa0 \ul0 \cf29 \strike0 \f2 \b1 \sb0 End of Document } }\i0 \ri44 \fs16 \ql \sa0 \ul0 \cf29 \strike0 \f2 \li44 \b1 \sb0 \intbl \cell \i ntbl {\ri44 \i0 \fs16 \cf29 \f2 \li44 \qr \b0 {\i0 \fs16 \sa0 \ul0 \cf29 \strike0 \f2 \b0 \sb0 \u169\'3f 2011 Thomson Reuters. No claim to original U.S. Government Works. } }\i0 \ri44 \fs16 \sa0 \ul0 \cf29 \strike0 \f2 \li44 \qr \b0 \sb0 \intbl \cell \r ow }} } }\sect }