One Bank, One Board: Allen & Company's Fairness Opinion on Microsoft's $69B Activision Blizzard Deal

Every detail below comes from Activision Blizzard, Inc.'s Form DEFM14A, filed March 21, 2022 with the SEC (CIK 0000718877), Annex C, "Opinion of Allen & Company LLC." Full source on SEC EDGAR.

What happened

Allen & Company LLC dated its fairness opinion to Activision Blizzard's board January 17, 2022, one day before Microsoft and Activision Blizzard signed the merger agreement, announced January 18, 2022, for $95.00 per share in cash, a transaction valued at roughly $69 billion. The opinion, along with a summary of the underlying financial analyses, was filed as Annex C to Activision Blizzard's definitive merger proxy statement (DEFM14A) with the SEC on March 21, 2022. Goldman Sachs advised Microsoft on the buy side, Skadden and Simpson Thacher served as legal counsel to Activision Blizzard and Microsoft, respectively.

This deal is a good contrast case to bulge-bracket, multi-advisor mandates: Activision Blizzard retained a single advisor, the boutique merchant bank Allen & Company, long known for concentrated relationships in media and technology rather than a broad industry coverage platform. That structure changes how the deal team is built and how the analysis gets built and defended.

What goes into a single-advisor fairness opinion

Even with one bank in the room, the mechanics of the valuation work don't change much from a multi-advisor deal, the board still needs to see a selected companies analysis, benchmarking Activision Blizzard against comparable publicly traded gaming and interactive entertainment companies on forward revenue and EBITDA multiples; a selected transactions analysis, looking at prior M&A in gaming/media where control premiums were paid; a discounted cash flow analysis built off management's financial projections, with the discount rate and terminal value assumptions disclosed in the proxy summary; and a view of the premium the $95.00 offer represented relative to Activision Blizzard's unaffected trading price.

What's different in a single-advisor structure is that there's no second bank's numbers to triangulate against inside the room, the burden of internal challenge and sanity-checking falls more heavily on the deal team hierarchy itself, and on the board's own outside advisors (legal counsel, and sometimes an independent valuation consultant) to press on assumptions.

The deal team, from the ground up

Analysts on this kind of mandate spend most of their time in the comp set and the model, pulling consensus estimates for peer gaming companies, updating the DCF as management's projections are revised through diligence, and producing the iterative drafts of the football field that the board eventually sees in polished form.

Associates are the quality-control layer: reconciling the DCF's terminal value assumptions against the comps-implied multiples, making sure the precedent transaction set is defensible (deal size, timing, and strategic rationale all matter for whether a comp belongs in the set), and translating raw model output into a board-ready narrative.

Vice Presidents typically run point on the actual valuation debate with the client's CFO and general counsel, negotiating what assumptions go into the base case, how sensitivity cases are framed, and ensuring the deck's story lines up with what legal counsel needs to support the board's fiduciary duty analysis under Delaware law.

Managing Directors, at a relationship-driven shop like Allen & Company in particular, are often the reason the mandate exists at all. The firm's history advising media and gaming founders and boards is itself part of what a company is paying for, the MD's role is to bring judgment forged across many prior cycles to the specific question the board is asking: is $95.00 fair, and can that view be defended if challenged.

Reading the proxy statement itself

Activision Blizzard's DEFM14A "Background of the Merger" section lays out, meeting by meeting, how the price moved during negotiations and when the board formally received Allen & Company's analysis before voting to approve the deal. For anyone trying to understand how a single-bank sell-side mandate actually functions, as opposed to the more commonly discussed dual-advisor bake-offs, this filing is a clean, publicly available worked example.