Canadian family battling UBS over tech firm buyout

UBS Group AG and a rich family from Montreal are in the final stretch of a legal fight over the buyout of a Canadian technology company, a dispute that escalated when the Swiss bank sued for its fee.

Members of the Ahdoot family are seeking $295 million in damages from UBS, which they hired several years ago to help resolve an ownership battle at Hypertec Group Inc.

Closely held Hypertec, which sells IT products and services such as servers, was founded in the 1980s by two brothers, David and Robert Ahdoot, and some of their children eventually joined the company. In 2008, David Ahdoot died, and his wife and children were allegedly sidelined in the business by Robert's clan. A bitter family fight ensued.

Each brother had owned 50 per cent, so the Ahdoots launched a process to determine which of the two branches of the family would take over.

David's widow, Louiselle Lamarche Ahdoot, and their children asked UBS'S Canadian arm to find a financial partner to help them buy out Robert. But the bank made a series of mistakes that prevented a deal from coming together, they claim in court documents.

The family's case alleges UBS failed to identify a partner to help finance the deal, revealed confidential information to potential investors and put its own interests first. UBS bankers turned their focus to a transaction that left Robert Ahdoot's group in control, they say — thus securing a US$3 million fee.

In the end, Louiselle Lamarche Ahdoot and her kids sold their half of Hypertec for about $65 million in a deal that closed in 2019 — a far cry from an earlier estimate that had placed a valuation of more than $400 million on the whole company, according to the family.

UBS sued Louiselle's group, saying it was still owed US$1 million for its work. Then came the countersuit.