How did having a weak IT department affect Valeant?

Discussion in 'Valeant Pharmaceuticals' started by anonymous, Aug 24, 2016 at 9:41 AM.

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  1. anonymous

    anonymous Guest

    Just curious since I saw some interesting comments on the "Jacob Alao" thread: Pearson seemed to short-shrift IT as another unnecessary expense, like R&D, etc. Did having a weak IT department make it easier to fudge numbers in accounting or to track what was going on at Philidor?

    Is IT being strengthened under Papa's management?
     

  2. anonymous

    anonymous Guest

    not so far. Jerry J is still over IT. He hired Jacob and gave him all of his access when he was here.
     
  3. anonymous

    anonymous Guest

    Compliance is federally regulated for corporations. If they are not being adhered to, that can cost the company fines, lawsuits, stock price and valuation. Also current and future business which can cripple revenue.
     
  4. anonymous

    anonymous Guest

    Michael Pearson cut IT fte resources to the bone. Basically putting Jacob over all hiring of consultants.Then had Jacob hire consultants and contractors to run IT. This allowed Michael Pearson to have Jacob set up fake projects and financially allocate the consultants to run operations as a capital expense. This fudged the numbers and improved the ebidta rating to make it look to financial analysts that IT operations were significantly cheaper than they really were.
     
  5. anonymous

    anonymous Guest

    that sounds like pure fraud.
     
  6. anonymous

    anonymous Guest

    This is an absolute truth. Although it isn't just to fudge EBITDA, the brilliant plan is to allocate ongoing IT costs as integration expense; fire somebody and re-hire them as a consultant or through a third party consulting firm, then categorize that cost as integration. They would have gotten away with it too if it wasn't for those pesky kids/ the implosion of the constant acquisition model. In every acquisition they did you saw regular IT employees re-hired as consulting resources, some are still there, it wouldn't take much effort to list all of the names of those poor souls who we're fired and re-hired.
     
  7. anonymous

    anonymous Guest

    I wonder why this has never been brought up in the national conversation. I haven't heard anything about IT and valeant.
     
  8. anonymous

    anonymous Guest

    We had quite a few consultants from Nigeria. Why they were allowed here is beyond me.
     
  9. anonymous

    anonymous Guest

    Sweeping it, admin, and restructuring costs into the one-time charge line is common practice for serial acquirers. They usually have a full year to sweep these costs under the rug, and as long as they have an outstanding acquisition that is less than a year old, they will continue sweeping any and all costs, whether it's related or unrelated to the initial acquisition. Of course, they will label them related, but we all know better. That's why it had worked so well for so long, after mp became ceo for a small pharma called icn. Then he started his acquisition binge, knowing full well that he was going to report cash ebitda to mask the true financial dysfunction of the company. They were able to keep the good times rolling with the merger of biovail, and acquisitions of medicis, b&l, salix and a whole slew of other companies. The bigger the acquisitions/merger were, the more costs they were able to sweep without raising any red flags, essentially doubling down and riding the gaap accounting envelop, since it was common practice. All this while, killing off g&a of the acquired company and astronomically raising prices. When the allergan deal took longer than they wanted, and all the previous acquisitions were over a year old, so they can't sweep any more, which was a cause of concern for mp. While there was a lull in the m&a activities, they ventured outside their core competencies by engaging with philidor and thinking that they can get the cake and eat it too. After the allergan deal failed, they needed to close a deal really fast, so they overpaid for salix by overleveraging the company without issuing more equity. The new line banks who drank the kool-aid didn't know what hit them, and they should have been more cautious and have insisted on vrx issuing equity to maintain a more manageable debt-to-equity ratio. Interestingly enough, had they issued equity at $250/share, have $20bn in debt instead, and may not be so bad off right now. But being the megalomaniac that mp is, who didn't want to dilute his shares, insisted on "cheap" debt, even though most of the new debt were rated in the junk levels, implies higher interest rates. Bottom line, senior management ultimately signs off on all transactions that goes through the ERP, resulting in the quarterly financials that is published for the world to see, and IT is just a cost center that supports their efforts. So, a weak it dept don't have any impact, just easy targets and puppets.
     
  10. anonymous

    anonymous Guest

    Yes, it would take a lot of effort to name all the people who were fired and rehired. They make up 60-70% of IT today. For some it's like seasonal work. Off in the summer and contract in the winter.
     
  11. anonymous

    anonymous Guest

    PARAGRAPHS...have you heard of them? Jesus!
     
  12. anonymous

    anonymous Guest


    IT functionality seem better lately