Gillian Tan, Columnist

How's This for a Private Equity Conflict?

The firm is set to own direct competitors through different funds, which raises questions.

July 12, 2016 at 6:11 PM UTC

Updated on

July 12, 2016 at 6:44 PM UTC

Gillian Tan is a senior reporter covering finance and alternative asset classes including real estate, infrastructure, private equity, private credit, venture capital and sports business. She previously wrote an opinion column for Bloomberg and was a reporter at the Wall Street Journal. She is a qualified chartered accountant.

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Some deals beget more drama than others. Case in point: WatchGuard Technologies, a Seattle-based provider of security-related hardware.

WatchGuard's 2006 sale to two private equity firms prompted an antitrust lawsuit, and here's why. Back then, Francisco Partners bid $4.60 a share and Vector Capital offered $4.65 a share before Vector withdrew its interest. As the only remaining buyer, Francisco lowered its bid to $4.25 a share -- an offer that was ultimately accepted. Then, Francisco reached an agreement for Vector to team up on the buyout, at those terms -- hence the lawsuit. (It ended up being dismissed, with the judge ruling that the takeover price wasn't decided by collusion, but rather a lack of market interest.)