I spent part of yesterday’s flight reading BusinessWeek’s cover story on the Freescale buyout, which a headline writer suggests is “private equity’s ugliest deal.”
Let’s leave aside that hyperbole for a moment, since Refco is private equity’s ugliest deal in recent memory, and Freescale isn’t (yet) nearly as ugly as the dozens of PE-backed companies making their way into bankruptcy court (ATA Airlines, Lillian Vernon, etc.). Instead, I want to emphasize the following passage:
The board, meanwhile, had trouble assessing the tech sector in general and Freescale in particular, say Freescale executives. Directors fired off demands to managers regarding everything from cost cutting to general strategy. Mayer and Campbell, the CFO, grew so exasperated that they asked the board to standardize their requests in monthly conference calls. “We asked them to speak in one voice to us,” says Campbell. “We want to be productive.”
This is not only damning, but also very surprising. Why? Because two of the Freescale owners are Blackstone and TPG, which also are involved in the SunGard club.
SunGard CEO Cris Conde said at a January 2007 conference that he also had faced this issue of competing directives and requests, and that he and the board had worked hard to successfully resolve it.
But it looks like Blackstone and TPG didn’t apply the SunGard lessons to Freescale, which is astounding. In this case, the smartest guys in the room became the dumbest.