Chancellor Andre Bouchard may have nudged the TransPerfect Group business dispute in Delaware’s Chancery Court closer to resolution in a June 2 hearing, but it will likely be midsummer before we will know.
Ultimately the outcome may be beyond Bouchard’s control, simply because at least one of the parties in the matter is unwilling to engage the other in discussions that could lead to a reasonable compromise.
“War of the Roses” has become the common reference to the case, based on the 1989 classic black comedy film in which neither Michael Douglas and Kathleen Turner would relent in relinquishing the family home when their marriage ended, with the two of them instead dying at the end. In this case, TransPerfect Group is the house, and 50-50 owners Elizabeth Elting and Philip Shawe (although he put 1 percent of his 50 percent in the name of his mother Shirley Shawe to make it a woman-owned company) never moved beyond engaged.
They started the company in 1992 from their shared NYU dorm room, after which she dumped him and married another man. Despite the tortured management, TransPerfect prospered as a legal translation company, more recently reaching about $500 million in annual revenues, with EBITDA (net profit) in the lofty 15-20 percent range, some $75 million to $90 million.
She wants out, seeking a liquidity event that would sell the entire company to a new owner, maximizing her take, because it would shift control to the buyer.
He’s happy to have her out. He’s offered $300 million a few times in an effort to jump-start negotiations, and she has ignored his proposals, even as a fair starting point for negotiations to determine a more accurate valuation. He clearly wants to stay and continue to grow the company.
She seems to have made it clear that she does not want him to stay in the company, preferring the court to order the sale of his share, which many regard as “a taking,” an otherwise illegal appropriation of someone’s property.
Bouchard, in his early decisions, created a steep hill for Shawe to climb, putting the company on a track to be sold in an M&A auction under the direction of a Bouchard-imposed custodian, although it would allow Shawe to buy back his own share as well as hers. That suits Elting’s interests, but it flies in the face of Shawe’s interest in having the court sell only her 50 percent share.
Neither Elting nor any surrogates for her will comment to the public about the case. Shawe’s surrogates, presumably including the TransPerfect employee group that is running a major media campaign, which Shawe says he neither controls nor influences.
Some have suggested that evidence was found — perhaps surreptitiously, if not improperly, and therefore not admitted to the Court record by Bouchard — that the co-CEO stalemate was orchestrated by Elting at the counsel of her advisers to maximize the value of her share of TransPerfect when she decided she wanted out.
With Bouchard turning now to a trusted former chancellor of 14 years, William B. Chandler III, an attorney at Wilson Sonsini Goordich & Rosati, to mediate the dispute, presumably both parties will face an obligation to participate in “good faith.” For Shawe, who has had a three-year run in Delaware courts worse than the Phillies’ record 6-22 May, this is the closest thing to a victory he’s enjoyed, and he may be able to leverage it into a fresh look at his own case.