SLM Corporation (Sallie Mae) v. J.C. Flowers II L.P.
In a matter widely reported in the media, SLM Corporation, better known as Sallie Mae, dropped its lawsuit seeking a $900 million termination fee from an investor group represented by Wachtell, Lipton, Rosen & Katz, a client of Analysis Group. At issue was the collapse of an April 2007 merger agreement between the student lender and a buyout group consisting of J.C. Flowers, JPMorgan Chase, and Bank of America. The buyers contended that recent legislation slashing federal subsidies to the student lending industry and the subprime lending crisis had caused a "material adverse effect" (MAE) on Sallie Mae's business as defined in the merger agreement. Sallie Mae argued that no MAE had occurred, and that it was entitled to collect the termination fee because of the buyers' refusal to consummate the transaction.
Buyers' group counsel Wachtell, Lipton retained Analysis Group to determine whether the obligation to purchase Sallie Mae should have been fulfilled. Co-Founder Bruce Stangle, Managing Principal Gaurav Jetley, and affiliate Michael J. Quinn led a team including Managing Principal Michael Holland in support of academic affiliates R. Glenn Hubbard and Peter Tufano. Professors Hubbard and Tufano were in the midst of analyzing conditions in securities markets to determine whether the current credit crunch had a disproportionate impact on Sallie Mae's business. They were planning to prepare expert reports on the results of their research when the case was settled.