عمر کوتاه خوشحالی شرکت Celliant: آیا مدیرگرایی در فن آوری های روشن و شفاف، ثروت سهامداران را به سوی سرمایه گذاران خصوصی منحرف می کند؟

Proponents of private equity investment in corporate ventures assert that private equity creates shareholder wealth by alleviating agency costs, improving venture governance, and allocating resources more efficiently. Critics claim private equity expropriates wealth from public company shareholders to private investors and managers. We use managerialism as a framework to examine these competing claims in the context of the power amplifier business at Lucent Technologies. Lucent spun off this business in 2001 into a company called Celiant Corporation, and then sold Celiant in a series of transactions in 2001 and 2002. We estimate that Lucent contributed assets to Celiant worth $330 million, but that the spin-off and sale of Celiant generated only $91 million for Lucent's shareholders. The apparent loss of over $200 million of shareholder wealth is consistent with a scenario in which Lucent managers and private equity investors used their superior information for personal gain.

Much practitioner and academic attention has focused on the financial and strategic benefits of private equity investment (e.g., Sahlman, 1990, McKnight, 2001, Folta and Janney, 2004 and Allen and Hevert, 2007). Private equity can help alleviate agency costs created by the separation of management of the enterprise from its ownership. Proponents of private equity financing assert that private equity investors provide more effective monitoring of the organization than other investors. This monitoring improves corporate governance and provides a level of control over corporate managers that is not normally available to public companies. These benefits allow the organization to focus on the rapid development and successful commercialization of new technologies. Thus, private equity can provide a more suitable governance structure than a traditional corporate structure for the commercialization of new technologies. Despite the possibility of more effective monitoring, questions remain about the role insiders play in facilitating private equity investments. Critics of private equity financing assert that private equity allows wealth expropriation from shareholders to private investors and managers. The possibility of expropriation occurs because some agents responsible for managing the ventures have personal stakes in those ventures. These agents, with their informational advantage, may have the opportunity to influence private equity investments that work to their advantage. As Michael Kinsley describes in an editorial in The Washington Post: Private investors buy a company from its public stockholders. They have a letter from an investment bank saying the price is a fair one. They usually have the support of management, or they actually are the management. The public stockholders have little choice. But time and again—surprise, surprise—the investment bank turns out to be wrong. The company is actually far more valuable! (And any bank that can’t be counted on to get this wrong will not be in this profitable line of work for long.) Soon the company is sold at a large profit, either to another company or back to the public. (Kinsley, 2006) Hence, private equity investment involves a trade-off between the purported superior strategic structure of private equity, and the risk that shareholder wealth will be unduly transferred to managers and the private equity investors. We examine this trade-off in the context of corporate venturing at Lucent Technologies, using a theoretical framework for managerialism described in Rowlinson et al. (2006). Our research question examines whether private equity ventures derive real economic value from the competitive advantages gained from improved monitoring and the efficient management of the assets purchased, or whether the ventures gain value from an exploitation of managerial control over those assets, at the expense of the shareholders who were the original owners of those assets. We use case study methodology to examine this question in the context of Lucent Technologies, which attempted to incubate new technologies within a corporate venture unit. Our analysis suggests that Lucent sold corporate venture assets to private equity investors for hundreds of millions of dollars below fair value. We analyze Lucent's power amplifier business. Until 2001, Lucent designed and manufactured the power amplifiers used in the base stations of its telecommunications cell sites. Between 1997 and 2001, Lucent incubated many of its internally developed technologies in an internal corporate venture unit called the New Ventures Group (NVG). In June 2001, Lucent spun off its power amplifier business into a company called Celiant Corporation, selling approximately 50 percent of Celiant to the private equity firm of Pequot Capital Management and to a high-profile private investor. Although NVG did not manage Celiant at the time of its initial spin-off, later in 2001 Lucent transferred its interest in Celiant into NVG and subsequently sold 80 percent of the entire NVG portfolio to Coller Capital, a London-based private equity firm. In 2001, Lucent managers associated with Celiant and with NVG received significant equity incentives in Celiant. In February 2002, Andrew Corporation acquired Celiant for $470 million. The transactions involving Celiant generated less than $100 million for Lucent's shareholders, but we estimate that the tangible and intangible assets contributed by Lucent to Celiant had a fair value of as much as $330 million as of June 2001. These events suggest an expropriation of wealth from Lucent's shareholders of nearly $250 million for the Celiant assets alone, but there is evidence that Lucent sold at least one other venture in the NVG portfolio for much less than fair value. The sales of the two ventures may suggest a pattern of selling corporate venture assets for below fair value. The corporate history of Celiant resembles the process described by Michael Kinsley, and possibly illustrates a corporate venture failure in which inadequate corporate governance and monitoring allowed corporate venture managers to utilize their superior information and their control over company assets for personal gain. As such, we believe Celiant provides an example of radical managerialism as described in Rowlinson et al. (2006) whereby managers use their power to pursue their personal interests, while legitimizing their actions by drawing upon the popular managerial concepts of entrepreneurship and venture capital. While researchers who evaluate corporate venturing activities are usually limited by the availability of venture-specific information, we obtain detailed information about Celiant from Andrew Corporation's filings with the Securities and Exchange Commission. Also, Lucent's corporate venture strategy was described at length in several contemporary academic and business press articles to which Lucent managers contributed with interviews or as coauthors. Finally, our analysis benefits from the proximate time between Lucent's spin-off of Celiant and Andrew's acquisition of Celiant, and from the materiality of the acquisition to Andrew. In the next section of the paper, we use managerialism to frame our research question. In Section 3, we discuss the history of the New Ventures Group and its role within Lucent. Section 4 describes the managerial incentives in place in the New Ventures Group. In Section 5 we estimate the amount of wealth that may have been transferred from Lucent's shareholders to private equity investors and to a small group of NVG and Celiant managers. Section 5 also includes an analysis of Celiant's value chain to assess the alternative explanation that Celiant actually generated $300 million of value during the nine months that it operated Lucent's former power amplifier business. Section 6 provides concluding remarks.

This case study describes the spin-off of Lucent's power amplifier business and examines whether Lucent's corporate venture structure and its strategy to obtain private equity funding mitigated or exasperated the potential conflicts of interest between Lucent's new venture managers and Lucent's shareholders, board of directors, and executive management. The case provides insight on widely accepted methods from the strategic management and entrepreneurial literatures for organizing and financing new corporate ventures and for compensating new venture managers. There is limited research in the academic literature that identifies specific methods to evaluate the economic and strategic value of the venture to the parent company. Success and failure are often defined, when measureable, as the difference between the capital contributions and the return on this capital plus any capital gains. But placing a fair value on the contribution of intangible assets is usually problematic. Celiant provides an unusually rich setting in which to study corporate venturing, because the circumstances of its spin-off and sale provide substantial evidence of the fair value of the assets contributed by the parent company, as well as circumstantial evidence that the corporate venture managers understood this value. Our analysis suggests that the intrapreneurial strategy for commercializing high-technology new ventures adopted by Lucent exacerbated the conflicts of interest between Lucent's shareholders and the managers responsible for those ventures. The two elements of that strategy that appear critical were (1) raising outside venture capital to validate the commercial viability of the ventures, and (2) awarding equity compensation to the Lucent managers affiliated with those ventures. In combination, these two elements may have provided these managers the incentives and opportunity to sell venture equity to outside investors for less than fair value. By pricing the ventures low, Lucent's New Ventures Group could easily attract private equity capital. However, current and former Lucent managers affiliated with the ventures continued to hold equity incentives in the ventures even after Lucent sold most of its interest in its corporate venture arm. We think these managers received significant compensation when Lucent and the private equity investors exited each venture by sale to an independent party for fair value. This scenario seems to have played out in Lucent's three-stage sale of Celiant (approximately 50 percent sold to Pequot Capital Management and John Mack in June 2001, another 40 percent sold to Coller Capital as part of the NVG spin-off into NVP in December 2001, and the final sale to Andrew Corporation in February 2002). We believe our analysis supports the theory of radical managerialism, in which managers exercise power for their personal gain. We find no evidence for the anti-managerialist thesis that corporate governance mechanisms and capital and labor markets constrained Lucent's managers to work on behalf of Lucent's shareholders to maximize returns. The rhetoric by the NVG managers asserted that the returns from the NVG portfolio to Lucent's shareholders were impressive. Furthermore, those managers drew upon the popular entrepreneurship and venture capital literatures in order to legitimize their actions. We believe our analysis belies their rhetoric and challenges the legitimacy of their framework as justification for their actions. Critics of private equity often identify many losers from private equity transactions, particularly investments involving leveraged buyouts. Private equity firms control the firms they acquire, but have no long-term commitment to their success and often drive the firms into bankruptcy (see, for example, Julie Creswell's New York Times article on the Simmons Bedding Company, 2009). Hence, not only do the original shareholders lose at the expense of management and private equity firms, but employees, customers, vendors, and the communities in which these companies are located all lose. Given this criticism, it is interesting to note that in the case of Celiant, we are unable to identify any losers other than Lucent's shareholders. Because Celiant outsourced manufacturing, it was a relatively small organization of about 200 employees (McCall, 2002) consisting mostly of administrative and research personnel. Celiant's power amplifier business was absorbed into Andrew Corporation's operations in 2002 with seemingly no negative ramifications for its employees or customers. As noted elsewhere, Celiant's senior managers became senior managers at Andrew. It is difficult to argue that NVG management engineered the spin-off of Celiant and the sale of the NVG portfolio for the greater social good. On the other hand, if these events represent managerial opportunism, the opportunism negatively affected only Lucent's shareholders. Our analysis of these events implicates financial reporting rules, corporate governance practices, and the regulation of the financial markets. Generally accepted accounting principles obfuscated the economic substance of the Celiant spin-off because the assets contributed by Lucent were transferred at book values, not market values. Since research and development expenditures are expensed, not capitalized, under Statement of Financial Accounting Standards No. 2, the fair value of the intangible assets far exceeded their book values. NVG managers used accounting-based performance metrics that took advantage of these low book values to report results that looked impressive. For example, a Lucent spokesperson stated that Lucent's sale of 80 percent of the NVG portfolio to Coller Capital was made “at a slight gain” (Grimes, 2002). This slight gain almost certainly was calculated using book values of the NVG portfolio. As another example, NVP Managing Partner Stephen Socolof stated that from 1996 through 2001, the NVG portfolio generated an internal rate of return for Lucent of 46 percent (Chesbrough and Socolof, 2003, p. 17). This internal rate of return calculation was probably based on the book value, not the fair value, of what Lucent's shareholders sold. Our analysis raises questions about corporate governance at Lucent that cannot be resolved from the public record. NVG was a relatively small component of Lucent, and the lack of information about NVG in Lucent's annual reports and regulatory filings with the SEC does not seem suspect. However, when managers have potential conflicts of interest involving hundreds of millions of dollars, their actions should be reviewed and approved by senior management and, if appropriate, by the Board of Directors or a committee of the Board. Whether such procedures were designed into Lucent's system of corporate governance, and whether they were operating effectively during this period, is unclear. The Sarbanes-Oxley Act was passed in July 2002, shortly after the events described in this paper. Section 302 of the Act imposes an annual requirement on the Chief Executive Officer and Chief Financial Officer of public companies to certify their responsibility for establishing and maintaining internal controls, and to evaluate the effectiveness of those controls. Most relevant to the events at Lucent is a requirement in Title III of the Act that these officers must disclose to the audit committee and the external auditors “any fraud, whether or not material, that involves management or other employees who have a significant role in the [company's] internal controls” (Section 302(a)(5)(B)). A misappropriation of wealth from shareholders to managers, that is nonetheless immaterial to shareholders, would seem to fall under this provision. The sanctions that can be imposed on the CEO and CFO for violating their responsibilities under Sarbanes-Oxley might be sufficient to motivate these officers to implement corporate governance mechanisms that increase the likelihood that they will learn about activities similar to those we describe in this paper, and sufficient to motivate them to prevent or at least report such activities. Also, the whistleblower protection provisions of the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 might increase the likelihood that improper conduct by managers will be reported to senior management and the audit committee. Hence, recent legislation might deter events similar to those that occurred at Lucent. On the other hand, it is an open question whether most corporate managers would characterize the events at Lucent as fraudulent or even improper. Finally, our analysis implicates the regulation of private equity firms, which do much of their “value creation” away from the public eye. These firms do not have regulatory reporting requirements comparable to public companies or large banks. Although the Dodd-Frank Act imposes reporting requirements on private equity firms that will enable the SEC to evaluate their corporate governance and systematic risk, these requirements do not provide the public, or possibly even the SEC, with information about a private equity firm's individual investments in sufficient detail to have raised a red flag on the Celiant transactions. Well-managed private equity firms, particularly firms with a reputation for successful corporate venture investing, may reassure less-informed public investors of the value of their new technology projects. However, a less-studied aspect of private equity investment is the incentive and ability of corporate venture managers to use their superior information in conjunction with private equity to expropriate value from existing shareholders, and the new legislation does not appear to address this risk. Venture capitalists should be compensated for the wealth they generate from improved monitoring, more efficient allocation of resources, improved liquidity, and risk-bearing activities. However, if private equity has a place in corporate capital management, boards of directors and corporate executives have a responsibility to ensure that the company's private equity relationships actually enhance the value to all stakeholders of the firm. This responsibility falls to corporate boards and senior managers because free markets cannot discipline what they cannot see, and all corporate venturing starts with transactions inside the firm—transactions that take resources provided by shareholders to create something of value. We believe that Celiant represents a case where a small group of corporate managers took advantage of their private information and used private equity investment to expropriate value from Lucent's public shareholders for personal gain.