Attorney’s warning on SAS: If Goodnight sells he can’t protect his legacy

Editor’s note: Rick Smith, cofounder and editor of WRAL TechWire, has been covering the technology company since 1995. TechWire launched in January 2002.

CARY – As buzz continues to build about a possible acquisition of privately held SAS, a veteran Raleigh attorney of numerous mergers-and-acquisitions says that majority owner and CEO Jim Goodnight can’t protect the firm’s legacy.

“Treat employees like they make a difference and they will,” he says. A new owner might not concur.

The billionaire, philanthropist and investor can try to ensure jobs, employee benefits and culture that have made the company one of the best places to work in the opinions of workers year after year remain guarded. Goodnight has always said his most valuable resource are the people that drive in and out of the company’s beautiful corporate campus (or work from home in these days of pandemic).

Rick Smith, WRAL TechWire’s editor and a cofounder, writes The Skinny.

But once Goodnight and partner John Sall sell shares, all bets are off.

“You can put all types of things in buyout agreements to try to preserve an existing culture,” says Jim Verdonik, cofounder of the Raleigh firm Innovate Capital Law and a frequent contributor to WRAL TechWire. “These may include board seats, long term contracts and flowery language about future intentions.”

And employees as well as people who know Goodnight would expect him to do so.

However, there is reality, not hope.

“In my experience, none of them work,” Verdonik says of protective measures.

Why?

With billions at stake any buyer – Broadcom or some other entity – the bottom line is control, not feel good measures and philanthropy.

Jim Verdonik

“The buyer either values the existing culture or not,” Verdonik says.

“If not, the buyer will change it.

“That’s what the byer is buying when they buy control – the right to make decisions.”

Corporate culture is important. The free-wheeling innovation atmosphere added much to Red Hat’s appeal when IBM came calling three years ago for a $34 billion deal.

But while Red Hat CEO Jim Whitehurst promised to protect the Hatters’ mystique, he’s gone now, stepping down as IBM NO. 2 (president) to seek his own CEO position.

So who protects the Hatters now? CEO Paul Cormier says he will – but if he barks too loudly and preaches too much independence IBM Chair and CEO Arvind Krishna can say: Goodbye. (Krishna told The Financial Times that the IBM board chose him as CEO, not Whitehurst … the message being?)

So let us say Goodnight stays on as interim CEO of SAS as someone’s subsidiary … when push comes to shove he’ll get shoved.

As Verdonik puts it:

“It’s kind of like selling your house. As much as the buyer may have told you how great it is. The buyer is free to renovate after the closing.”