'Investment Bank A' - Sign of the Times?

Dec. 7.09 | About: KANA Software, (KANA)

By Brenon Daly

In proxy statements, we’re used to seeing unidentified parties that figure into transactions referred to as ‘Company A,’ ‘Company B’ and so on. Sometimes, the identity of these would-be buyers is widely known, like the not-so-mysterious ‘Company A’ that was bidding for Sun Microsystems (JAVA) earlier this year before Oracle (NASDAQ:ORCL) landed the faded tech star. But in most cases, the other parties are typically more lookers than buyers, perhaps trying to gather a bit of competitive intelligence on the company or the auction process itself.

So there’s nothing unusual about putting the cloak of anonymity over buyers that fall by the wayside. But, for the first time that we can recall, we recently saw the cloak extended to an adviser that had fallen by the wayside, too. In the SEC paperwork that Kana (KANA) filed for its ‘fittingly imperfect’ wind-down sale, the vendor noted that from mid-2008 to mid-2009 it was advised by ‘Investment Bank A.’ When the banker left this unnamed firm, Kana vetted other banks before selecting Pagemill Partners.

We have our suspicions about the identity of ‘Investment Bank A,’ but we’re actually more intrigued to think about whether this situation is a sign of the times. Before all of the upheaval in the investment banking business, we would have found it hard to imagine a bank effectively writing off a year of work that one of its erstwhile bankers had sunk into a potential transaction. We all know that the unprecedented mayhem on Wall Street forced some changes on the investment banks that would have been unimaginable at any time since The Glass-Steagall Act was repealed a decade ago. But we were under the impression that investment banking was still a fee-based business, even if those fees are scarce across the board.