The roles played by investment banks in billion-dollar buyouts have lately come under fire in the Delaware courts. Now, a complaint arising from the recent $2.2 billion buyout of the ExamWorks Group focuses on a different kind of deal adviser, according to a commentary in the New York Times DealBook blog yesterday. It contends that lawyers at Paul Hastings, a law firm based in Los Angeles, were in ties with management and the investment banks to sell the company at a below-market price, something ExamWorks vigorously denies. ExamWorks is an independent medical examination company founded by Richard E. Perlman and James K. Price. Perlman and Price are experienced financiers, focusing on industries where they can roll up a number of small companies, take the larger enterprise public and then sell out, typically to a private equity firm. This is what happened at ExamWorks, although in this case, the plaintiff, the Daytona Beach Police and Fire Pension Fund, claims that the buyout was tainted by conflicts and a failure of Paul Hastings to run the process appropriately. The fund, a shareholder of ExamWorks, is suing the company’s directors, as well as the private equity firm leading the buyout, Leonard Green & Partners.
