Founders of the dating app Tinder presented their opening statements in a Manhattan state court on Monday, as their attorney detailed how they were tricked by executives from Barry Diller’s IAC/InterActiveCorp and Match Group Inc. who purposely underestimated a valuation to con the group out of billions of dollars.
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Former CEO of Tinder, Sean Rad, and other founders argued that IAC and Match execs deprived them of their rightful share of the multibillion-dollar company by purposefully undervaluing the dating app. When they decided to merge Tinder out of existence as a stand-alone company, the founders claim it effectively denied them the right to cash in ownership stakes slated in the billions of dollars range.
Attorney and trial consultant Joshua Dubin outlined to the jury how the founders were owed a 20% stake in what was a $13.2 billion company in July 2017. He then walked them through how the Match and IAC executives schemed to deceive both Deutsche Bank and Barclays, who were tasked with valuing the company, into believing it was only worth $3 billion.
“When it came time to pay the men and women who built this company what they were contractually obligated to pay, the evidence will show defendants in this case engaged in a scheme to create a phony story about the future growth of Tinder so they wouldn’t have to pay my clients what they were owed,” Dubin said.
Dubin added that these actions were taken despite Match executives internally valuing Tinder in excess of $12 billion the prior year.
“Ladies and gentlemen, the scheme worked,” Dubin proclaimed. “They were able to secure a false valuation of just $3 billion. This company was worth at least $13.2 billion at that point.”
In a statement, Match accosted the Tinder founders’ position, saying their opening was filled with lies and misrepresentations.
“They continue to obfuscate the facts. We look forward to making our case and are confident the jury will see that Sean Rad’s lies, omissions and manipulations have no basis in reality,” a spokesperson for Match said.
The founders are seeking $2.5 billion in total damages, which includes prejudgment interest. Openings from the defense begin Tuesday and will continue the contentious debate.
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Source: https://www.law360.com/securities/articles/1438381/tinder-founders-slam-match-as-2-5b-trial-begins
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