Lazard, the investment bank that advised SolarCity on its $2.6 billion sale to Tesla Motors, made an error in its analysis that discounted the value of the U.S. solar energy company by $400 million, a regulatory filing by Tesla showed on Wednesday.
While the purchase price was within the valuation range that Lazard came up with for SolarCity even after accounting for the miscalculation, the error illustrates how even leading investment banks can make mistakes on some of the most high-profile deals.
The mistake came after Tesla and SolarCity co-founder Elon Musk, who is the largest shareholder in both companies, went out of his way to create processes and structures, including a special board committee at SolarCity, aimed at alleviating concerns that he used his influence to force the two companies into a deal.
An analysis by Lazard for SolarCity that indicated an equity value of between $14.75 and $34.00 per share was wrong because it double-counted some of the company's projected indebtedness, according to Tesla's filing with the U.S. Securities and Exchange Commission.
After identifying the computational error on Aug. 18, more than two weeks after the signing of the deal, Lazard realized the valuation range based on its discounted cash flow model was $18.75 to $37.75 per share.