As Microsoft and Nuance Communications appear close to a deal, its a good time to revisit the tale of Carnegie-Mellon professor James Baker, and his wife Janet, a CMU PhD and researcher, who sold the fruit of their live’s work, Dragon Systems, to Lernout & Hauspie, in 2000, in an all-stock transaction, only to find that Lernout & Hauspie was a giant fraud and also bankrupt..
Nuance, the eventual owner of Dragon Systems, isn’t the bad guy here; it was Lernout & Hauspie, plus Goldman Sachs, the Bakers’ advisor..
Its an object lesson for any entrepreneur who has an opportunity to sell a business. Be certain of what you’re getting for it, and don’t trust any middleman to do the right thing..
Nuance is reported to be worth about $16 billion to Microsoft, and Dragon seems to be the part of the business thats really growing.
This is an aftermath report by DealBook after a failed suit by the Bakers against Goldman Sachs years later.