Brian Haig - The Capitol Game

Wiley produced a polite smile and, before anybody could produce an answer, announced, “Not yet, thank you.” His eyes roved across the faces on the other side of the table. “First let us find out if we have anything to discuss.”

Yes, yes, another good idea, the three men across the table agreed. If the meeting was a bust, why prolong the pain with forced small talk and refreshments? Then it’s thanks for stopping by, Jack, don’t let the door bang you in the ass.

Blank edged forward on his elbows and took charge of the conversation. “So you’re a partner at Cauldron.”

“That’s right. Three years now.”

“I’m not familiar with Cauldron. Small, isn’t it?” In other words, You’re lucky to be sitting here with the big boys, Jack-and don’t you forget it.

“Yes, tiny, actually.” Jack took the putdown in stride and nodded. “We like to think of ourselves as a boutique firm. We’re very selective. We pride ourselves on being nimble, and in our view, size would only hamper us.” After a beat, he smiled lightly and added, “It would also water down the profit share for the partners.”

Big smiles from all three CG boys. This outright profession of greed warmed their hearts. “What’s your firm’s specialty?” Golightly asked, as if they hadn’t just spent thirty minutes hashing over this very issue.

“Good question,” Wiley answered. “Our investors tend to be old money, mostly inherited. Mostly from New York, upper New Jersey, and New England. They have their fortunes, they appreciate it, and they want to appreciate it next year as well. We buy one or two properties each year, no more. Our focus is on lean, well-managed, steadily profitable companies in need of a little capital to expand. Nothing exciting. It’s a good formula, though, and it works.”

The men across the table smirked and made little effort to hide their disdain. They lived and died on the mantra of no big risks, no big payoffs. Cauldron sounded like a bunch of wimps. Little Leaguers hustling for chump change.

“You don’t find it stifling?” Blank couldn’t resist asking. Obviously, it would kill him.

Wiley smiled and ignored the insult. “I spent ten years on the treadmill at the bigger firms. A full decade running the halls, fifteen-hour days, no weekends, plenty of canceled vacations. Ten years of midnight deals hanging by a thread, then trying to turn around turkeys we never should’ve gone near. You boys know the life.”

The three men nodded. Damn right they knew.

“I wasn’t burned out,” Jack continued. “But I can’t say I was enjoying myself, either. When Cauldron offered a fast-track partnership, I jumped at it. Understand, Cauldron is very laid-back, a low-pressure outfit. Lots of long lunches where drinking isn’t off-limits. Weekends are sacrosanct. The partners can often be found napping in their offices. And why not? Our investors are content with ten percent growth a year. They throw a wild bash for us if we hit fifteen.” He produced a weak smile for the hungry sharks across the table.

As he and they knew, at CG, ten would be a disaster. The directors would turn up the heat, pink slips would fly-life would become intolerable for the survivors. This had happened, once, only once, twelve years back. A painful recession had set in. Growth sank to a mere eight percent that year. Blank was the only one in the room with enough tenure to have lived through it. A bloodbath, 365 days of unmitigated terror, twelve torturous months without a day off, a full year of unbearable stress. His blood pressure shot up forty points. He still had nightmares about it.

“Sounds ideal,” Golightly commented, obviously not meaning it.

“Yes, doesn’t it?” Jack replied, matching his insincerity ounce for ounce.

“So why don’t you explain this irresistible offer you were bragging about?” Blank asked. Having cut Wiley down to size, it was time to cut to the chase.

“In a minute, Mr. Blank. Let me start by telling you, you’re not the only people I’m talking to. I developed a model. Four firms fell out. You’re one of those four and any or all of you could fit the bill. It doesn’t mean only four firms will do, but four of you are ideal.”

Casual nods from across the table. Standard fare, and also empty bluster. Nobody with a noodle of sense ever confessed up-front that CG was the only firm they were talking with. Offers always came juiced up with a little competition. The boys from CG heard it all the time. Nice try, Jack.

They nudged one another under the table and played along. “But we do fit the bill?” Blank suggested, straight-faced, as if there was any chance in hell they might not.

“You might even be the best fit,” Jack agreeably allowed.

“What a relief.”

“Should I go on?”

“Yes, do.”

Jack uncrossed his legs and leaned forward. “It’s a company that came to my attention a few months ago. At first glance it looked like a perfect fit for Cauldron-midsize, profitable, well led, courting an infusion of capital. Their CEO and head financial guy were making the rounds through a few firms like ours. Call it a road show.”

“And you met with them?” Golightly asked.

A fast nod. “It wasn’t my meeting, but I was present, yes. Forty-five years ago, the CEO founded this company. Built it from scratch, the usual story, sweat, smarts, and his bare hands. His life’s work. He’s now in his late seventies, has two sons and a daughter. He’s in fairly good health, but a realist. He had two heart attacks in his late fifties. He quit smoking and watches the cholesterol, but long lives don’t run in his genes. Either of his children could succeed him. He wants to leave them set up for success.”

“So this company’s his property?”

“No,” Jack said. “Not exactly.”

“Meaning what?”

“It’s listed. A penny stock, though. Through his stock and a few friendly stockholders he controls slightly over half of the voting shares.”

Caldwell suddenly developed a deep frown. “If you’d done your homework, Wiley, you’d know we prefer private companies.”

“Who doesn’t? Less complications, less mess.”

“Plus,” Golightly-also frowning-stiffly noted, “it doesn’t sound like management wants to relinquish ownership. You mentioned that this geezer intends to hand it over to his kids. CG never shares. We buy it, and it’s ours to do with as we please.”

Jack leaned back in his seat. The legs crossed again. He smiled at the three men and let a little more cockiness show. “Do you want to hear the setup or should I find my own way out?”

“We’re asking fair questions,” Golightly replied. His tone made it clear he wasn’t the least bit apologetic.

“No, you’re nit-picking before you’ve heard the pitch.”

“No, we’re-”

“If I’m wasting my time, Brian, let’s call it quits now.”

Blank had cleared his calendar for this meeting. He had an hour to kill with nothing better to do. He cleared his throat and decided to hear him out. “All right, continue.”

“Good decision. As I said, this is a midsize company. About four hundred million in revenue, and fifty mil in profit two years ago. It’s lean and efficient, but competes in a low-margin business. They were asking for a hundred mil. See where I’m going with this?”

The three boys from CG exchanged looks that quickly turned into shrugs. No idea.

Jack smiled again, and exposed a little more of the chip on his shoulder. “I asked the CEO what he intended to do with the money. About half for plant expansion, a quarter to hire more salespeople, the rest for updating a few systems.”

“And what bothered you about that?” Golightly asked.

“According to him, his company was already clearing fifty million in profit annually. Do the math, Brian. That means a hundred and fifty million for investment, minimum.”