M&A conflict case is advert for independent advice

Sometimes the most efficient process is not the safest. United Natural Foods is suing Goldman Sachs, along with Bank of America , saying the firm put its own interests first when it advised on and financed an acquisition.
Whatever the reality, while having one adviser in multiple roles is efficient, it carries some risk of bad blood later.
Parts of the suit, filed in New York state court, hinge on whether Goldman was justified in increasing the interest rate on a roughly $2 billion loan it was providing, with BofA and US Bank, for natural-food distributor UNFI’s $2.9 billion acquisition of grocery wholesaler Supervalu, announced last July.
It may be partly a matter of assessing market conditions, including the possibly negative impact of disappointing earnings reports at the time.
Other elements are less easily open to interpretation. UNFI claims Goldman offered a discount on $11.4 million of advisory fees but then took the full amount — and did so from the loan proceeds, which it should not have done.
The company also argues $40.5 million was wrongly withheld from the proceeds, because that deduction depended on the lead lenders lacking sufficient time to market the loan — and UNFI says that was not the case. The allegations extend to Goldman helping out hedge-fund clients with credit-default swap exposure to Supervalu, too.
Overall the complaint alleges breach of contract and fraud, claims Goldman says have no merit. Yet UNFI is hardly unsophisticated, and litigation like this is unusual.
Steve Spinner, its chief executive, says the company feels an obligation to hold Goldman and others accountable. Perhaps other clients of investment banks are steamrollered just as UNFI suggests it was, but let it go.
There’s no doubt some are very happy to deal with a single main banker for everything — even though Goldman and others have from time to time been found to have conflicts. Hiring a one-stop shop for advice and billions of dollars in funding removes some bureaucracy and ought to reduce the chance that news of a deal leaks.
In theory it also ought to reduce disagreements. In the UNFI case, at least in hindsight, there’s an argument that adding an independent adviser — an entity like Evercore, Lazard or Moelis, for example, separate from any lender — might have helped avoid trouble. — Reuters