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Before EASTERBROOK, Chief Judge, and BAUER and KANNE, Circuit Judges. Paul Wickes (argued), Linklaters, New York, NY, for Defendant-Appellee. Toward the end of 1999 John Kelley, HA-LO's CEO, decided that the way to enter the world of electronic commerce was to acquire Starbelly.com, Inc., a startup that Kelley believed had a promising e-commerce system-but that was burning through venture capital at million a month, had never made a sale, and thus was a risky proposition.

The cash was more than HA-LO had in hand, and paying that much would have placed it in violation of several loan covenants.

In need of advice, HA-LO hired Credit Suisse First Boston (CSFB) (now Credit Suisse Securities) as an investment banker and Ernst & Young as a business consultant.

CSFB tried to renegotiate the price, structure payments to prevent a violation of loan covenants, arrange new credit facilities to cover the cash outlay, and obtain standstill agreements from Starbelly.com's investors (who otherwise might be able to use the stock received in the acquisition to take effective control of HA-LO).

It also gave HA-LO a “fairness opinion” representing that, “as of the date hereof [January 17, 2000], the Merger Consideration is fair to HA-LO from a financial point of view.” Both CSFB's engagement letter and the fairness opinion specified that CSFB relied on HA-LO's financial projections, which it had not tried to verify.

That was the task of Ernst & Young, which told Kelley and HA-LO's Board of Directors that the projections were unrealistic.

Ernst & Young concluded that was unlikely to generate anywhere near the projected revenue stream. The parties have stipulated that “Kelley presented HA-LO's Board with revenue projections for Starbelly even though he knew these projections were based on assumptions about Starbelly's technology Kelley knew to be false.”A proxy solicitation sent to shareholders in April 2000 included a copy of CSFB's fairness opinion.

Investors approved the merger, which closed in May 2000.

Starbelly.com's technology never paid off for HA-LO.

Within months HA-LO was in financial distress, not only because of the hefty cash payout (which led to debt-service obligations) but also because encountered continuing losses. A successor to HA-LO emerged from the firm's reorganization (see as did a trust for the benefit of its creditors.

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