Interesting: Oversee.net knew Network Solutions was leaving before it bought SnapNames
Thursday, April 19th, 2012
Company knew it would lose Network Solutions’ expired domain inventory when it bought SnapNames.
A commonly held assumption is that Oversee.net had overlooked a change-in-control term (or underestimated the risk of it) when it did its due diligence on acquiring SnapNames. In fact, I gave Oversee.net’s due diligence team a “domain dunce” award in 2009.
But perhaps I should give myself a domain dunce award on this one. Because that assumption was wrong.
In testimony related to the Monte Cahn lawsuit against Oversee.net, former Oversee CEO Jeff Kupietzky explains that Oversee.net was fully aware of Network Solutions exiting before it concluded the deal:
Lawyer: Well, you’d already been burned on the SnapNames transaction at that point in time, hadn’t you?
Kupietzky: I wouldn’t necessarily characterize it that way.
Lawyer: Well, you’d already lost the Network Solutions account?
Kupietzky: The Network Solutions was not a diligence thing. And just to be clear, because I testified about this earlier, Mr. Ng made a decision knowing that they were going to pull, to carry on the transaction even though the transaction had a term component that would have allowed him not to.
“Mr. Ng” refers to Oversee.net founder Lawrence Ng.
Network Solutions has some of the best expiring domain inventory because it is the oldest registrar. The inventory instantly made NameJet a force to be reckoned with in the expired domain business. It was a big blow to SnapNames.
If losing Network Solutions wasn’t priced in to the transaction, then I’m surprised Oversee.net went through with the deal. But I don’t want to make any more assumptions about that.
Of course the most painful due diligence failure in the transaction was Nelson Brady’s insider bidding.