This Little Piggy (11) “Do that,” agreed Marty. “But don’t bother me again unless ‘your advisors’ accept the deal precisely as you and Sam already agreed.” * “THE ITI BOARD OF DIRECTORS have reviewed and approved the Nachman terms as outlined in the contract,” Bob called Marty, lying like a rug. “ITI hopes to take full advantage of the company’s considerable operating expertise.” “I wasn’t trying to be difficult the other day,” replied Marty smugly. ”But as you can appreciate, I was given a specific set of expectations by the family.” “I do have one question. Why is Sam so adamant about naming rights in perpetuity after a five-year waiting period?” “You know lawyers. We all think worst case. In the unlikely event that ITI goes down, they simply want to be able to return to business with a brand name the world will recognize.” “What an academic issue. There is no way ITI is going anywhere but up.” “When can I expect a signed contract?” said Marty. “I’ll sign it today and have it messengered over.” “Let me save you a few quid,” suggested Marty, the consummate closer. “Christine can stop over and pick up the document. We’re only a few blocks from you.” “Fine. Fine,” said Bob, visions of blonde curls dancing in his head. “I’ll be in around lunchtime. One more thing. I want to compliment you on how you handled our transaction. I’m impressed. My board has instructed me to ask if you and your firm would have any interest in representing ITI in acquisitions and future financings? Delano Mondrain Hudson seems to have the depth of service we’ll require.” “I’m flattered, although I’ll need to discuss the matter with my partners. Perhaps you and Michael can meet with them.” “Just say when.” “Better we wait till after the Nachman transaction closes. I don’t want even a hint of a conflict of interest.” “The board and I respect your loyalty,” said Bob, working to create a distinct bifurcation.” But once the contract is signed, what possible conflicts could there be? We’ll give you a healthy monthly retainer and appoint BF exclusive legal representation. If for any reason you’re unhappy, you can resign with thirty days notice.” “This is really borderline. Some people in the Firm might feel strongly against it.” “We just want to go first class. If you can’t, you can’t.” “Bob, in all honesty,” said Marty beginning his reverse sell, “Delano Mondrain Hudson may be too expensive for your budget at this stage of the Company’s development.” “How much is too expensive?” “I couldn’t bring a deal like this to the Firm without a monthly retainer of at least a hundred thousand dollars. Plus BF has to have the right to void the relationship on seven days notice, not thirty.” “Done.” So much for conflict of interest, business ethics and the like. * THE MAIN CONFERENCE ROOM at Delano Mondrain Hudson was sold out; everyone had a ringside seat. Bob and Michael versus Marty and the Firm’s managing partners, Sefton Delano and Theodore Mondrain, and Marty’s associate partner, Tom Kugle. Sefton and Theodore were as straight laced as Marty was pragmatic and entrepreneurial. A bookend set of square jaws, deep chiseled brown eyes, blue pinstriped Paul Stuart suits, $150 haircuts and manicures, and white shirts with boring club ties stapled onto English spread collars. “Gentlemen and fellow partners...Robert Goldstrom and Michael Martini,” Marty introduced them like an emcee. “The two founders and primary ITI principals. We’re here to talk about the possibility of taking on ITI on as a Delano Mondrain Hudson client. I’ve explained to both of them that the Firm is not normally in the business of dealing with startups. In fairness however, Bob and Michael have a pretty unusual concept and have already signed a contract to acquire our client, the Sam Nachman Company. I think it’s best for them to explain their vision directly to you.” Like coming out swinging at the opening bell, Bob and Michael wowed the room for thirty minutes, seamlessly sharing the spotlight. Bobbing and weaving, with rapid-fire combinations of corporate vision, preliminary projections, and acquisition candidates, they pulled no punches. Their team performance was a knockout. Their clashing styles were apparent, but effective. Bob lit up big cigar halfway through and scattered ashes on the table and on the floor. Michael came on totally relaxed and as smooth as silk as if he’d been wooing powerful, sophisticated clients ever since he’d been old enough to drink out of a cup. When the meeting was over, they each had their own perspective on their way to the elevator. “It’s in the bag,” said Bob. “I’m not sure,” said Michael. “Okay whiz kid, I’ll bite. Why?” Michael’s razor sharp insights surprised and alarmed Bob. “To begin with, they didn’t trust us. They reeked blue-blood, custom made. We reeked off-the-rack. It wasn’t about the money. It was about the heritage. The only reason they even listened was because Marty’s got clout.” “Who gives a shit!,” responded Bob assertively. “In the end clout always wins.” “My guess is Marty makes one mistake with the group of sharks and he’s out. They don’t like him any more than they do us.” Michael’s complete sense of confidence in his situational analysis worried Bob. He knew it was going to be harder to bullshit Michael. That wasn’t part of his original plan. * THE DELANO MONDRAIN HUDSON PARTNERS had their own meeting after the meeting. “The whole thing stinks,” said Delano. “ITI sounds like a sugar-coated pyramid scheme. I’ll only go along if we’re unanimous.” “I’m with Sefton,” said Mondrain. “But a hundred thousand a month is substantial remuneration. Who the hell knows? We’re lawyers, not businessmen. ITI might actually be able to do what they say. I’m in.” “But Marty,” said Mondrain. “Make damn sure you get the monthly fees up front. If they stop paying, dump them.” Kugle was the most concerned. “Our firm would be representing both the buyer and seller.” “The two of us working in collaboration can manage the conflict issue,” said Marty. “I’m skeptical, but I’ll give it my best shot,” said Kugle. “You’ve got to do more,” said Mondrain. “Keep our noses squeaky clean all the way.” “One last thing,” said Delano. “Those two float like butterflies and sting like bees, but they both could be cockroaches. Bob in an obvious promoter, but Michael, with that humble routine, may be a lot more dangerous. Watch him like a hawk.” * “HONEY, I DON’T KNOW how you do it,” said Michael, calling home. “At the hospital by seven a.m,, prepping patients for the operating rooms, rushing home to feed our ungrateful, starving teenagers and then waiting around for me. How about I grab the next train and we take the kids out for dinner?” “Sounds like fun,” agreed Sandra. “I know the kids want to talk. They’ve been making ‘wish lists.’ I think they plan to take a million or two off our hands before we can spend it.” They agreed to meet at an informal nouvelle cuisine cafe within walking distance of the train station. Bob almost queered it, collaring Michael on the way out the door to rant for an hour about “acquisition projections.” “That son of a bitch was planning to keep going all night,” said an out of breath Michael on his cell phone as he dashed for the last train. “He’s got no family and doesn’t care if anybody else does.” “Don’t sweat it, baby,” said Sandra. “I figured something was up when my call went directly to your voice mail. The kids’ve already ordered dinner and I’m on my second Merlot, getting ready to check out the guys at the bar.” Michael arrived as Matt and Mark were devouring dessert—hot fudge sundaes. “Hey, Pops,” said the precocious Mark. “Like you always tell us, let’s get down to business.” Michael chuckled. “Do you mind if Dad orders a drink first?” “Be my guest. Mom is already sloshed!” “Marc…” scolded Sandra with a smile. Michael ordered a double Dewar’s on the rocks and a few appetizers as the boys did their pitch. “Matt is almost seventeen and is the only kid in his group without a car,” began Mark, his eyes full of confidence. “Take care of him and you take care of me. I’ll always have a way of getting to school and he can teach me to drive.” “What kind of car are we thinking about?” asked Michael. “I did some research on the Internet,” thoughtfully replied Matt. “Since nobody in the family is mechanically inclined, I figure the car should be new, have a long warranty and a good repair pick-up service.” “Really?” “That eliminated American cars.” “And the winner is…” “Audi—the new convertible sports coupe has a great maintenance program.” “How much did the Internet say the car might cost?” pressed Michael. Matt went silent. His younger brother took over. “Audi’s don’t come cheap, but we’re talking lower depreciation than American junk,” said Marc matter-of-factly. “Plus when you figure in the free five-year maintenance program and the free telephone, thirty-seven thousand dollars is a pretty good deal. So what do you say?” Michael looked hard at both his sons. Marc had come on like Bob, while Matt’s approach was more like his father’s. Not quite the team show at Delano Mondrain Hudson, but close enough. “Sold American!” said Michael. “Make that Germany.” The boys jumped up and hugged him. “I guess it’s my turn,” said Sandra. “Is your pitch as persuasive?” asked Michael. “It needs a little more polishing,” she said seductively. “Lamborghinis always do.” ########## Chapter 8. Freddie and His Magic Credits SAM CALLED BOB the next day. “Now that our deal’s done, I have someone you should meet,” pitched Sam in his low key, raspy voice. “Fred Tothson.” “Who?” Nachman explained that after he trademarked the “going out of business” liquidation sale, competitors began to mimic his techniques to grab a piece of the action. Minor no-names began bidding up the purchase price of inventories. To maintain his leadership position, he searched for a new angle when cash alone wasn’t the answer. Fred Tothson was a clever, but struggling entrepreneur who founded Mansfield Communications in New York City. Tothson had spent the better part of five years trying to buy excess inventory from major manufacturers exclusively for what he called ‘receivable barter credits,’ with little success. “Bob, imagine a smalltime putz with no financial clout trying to persuade major manufacturers to give him title to millions of dollars of excess merchandise for what was effectively a personal IOU. Gotta love the balls!” “So he doesn’t have a profitable operating history?” asked spinmaker Bob. “Let me put it this way. He was making a living. Just nothing special. Probably saved a few executive asses with his ‘smoke and mirrors write-off’ avoidance story.” “Sam, with all due respect, we may be in the wrong pew. The Street buys earnings. And, we’re selling what the Street buys. That’s the payoff for you and me!” Sam’s reply was part Joan of Arc, part egomaniacal. “Bob, you missed my point. Freddie’s a good guy, and he was strictly small time. But that was until Sam Nachman. Thanks to my reputation and my operations he’s made a ton. In the last three years, we’ve executed a shit-pile of mega cash-barter deals with Canon, Mattel and Panasonic, among others. Why? Because I gave the corporate suits a legit write-off transaction, thanks to my cash and my distribution system. No black box bullshit. Sam Nachman made companies feel like they were dealing with a real company. Plus, I told them exactly how and where we were remarketing their inventory.” Bob got it, sort of. ‘So Tothson’s a free-standing business with a recurring earnings stream?” The portly Nachman, leaned back in his seat. “Relax, Bob. Relax. Both businesses are here to stay. Freddie even fulfills the goddamn credits, at least once in a while, to keep the auditors happy,” winked Sam. “He’s even figured out how to make a profit on the barter-credits. And, what’s fair is fair. We split those profits fifty-fifty. So everybody’s happy.” Sam’s last comment made no real business sense, but Bob was on a mission to identify and capture earnings. “Do you think Tothson would be willing to meet?” asked Bob. “He’ll do what I want. I’ve made him a rich man. Just tell me where and when. He’ll be there. * SAM CONTACTED TOTHSON. “Is this a news update?” asked Tothson. “Or did you do a deal?” “We got a nice cash price for the business,” said Sam. “Plus some inventory credits and some stock. We’re satisfied.” “Wanna give me a hint?” “Don’t worry about what I got. This is your chance to cash out big. As an ITI company, I will be required to do ventures with other ITI companies. That’s the whole synergy thing. If you remain independent, you’ll have to put up your own cash,” said Sam, who knew Tothson loathed that kind of risk. “Those barter credits you give away like popcorn are a major personal liability.” Tothson had over $200 million in barter credits on the Mansfield books. He fulfilled less than ten percent in his best year, barely enough to avoid legal complications and remain credible. “If and when management changes, new people will come in and scrutinize those deals. There’s going to be big problems,” warned Nachman. “Don’t be a schmuck. ITI’s offering you an easy chance to vamoose.” “Why should I go anywhere?” retorted Fred. “I’m running a legitimate business here.” “Freddie, this is Sam. Light on the B.S.” * THE MANSFIELD COMPANY OCCUPIED a four-story brownstone on East 39th Street off Third Avenue. “Mr. Tothson is expecting you,” said the round-faced receptionist with the butch haircut who greeted Bob and Michael when they walked in. “I’m impressed,” Bob told her. “Mr. Tothson communicates well with his employees.” “Yes, and no,” she said dryly. “My name’s Barbara. I also double as Mr. Tothson’s wife. Half the staff is family. Who else can you really trust?” As if on cue, a distinguished gray haired gentleman in his early seventies, with a nice tan and a relaxed smile came out of the rear area. “Say hello to Al,” said Barbara. “Al is Mansfield’s delivery manager…and Fred’s father.” Michael found Barbara Tothson’s act hilarious. He wanted it to continue. “And, what do the kids do?” “How did you know we had kids? Are you the guy who installed the video cameras in our bedroom. I didn’t care, but Fred got really upset when he found them!” Barbara’s knee accidentally opened the lower file cabinet draw of her desk. Bob noticed a collection of partially empty vodka bottles. Barbara noticed Bob noticed. They exchanged glances. Michael was oblivious. The phone rang at Barbara’s desk. “Fred’s ready,” said a businesslike Barbara breaking the silence. (Unbenounced to everybody at that moment, Sandra would become close friends with Barbara and her frequent mood swings. Sandra discovered Barbara, after giving birth to three healthy children during a 21-year marriage to a loving and faithful husband, would quietly drink to excess while obsessing about the non-existent ‘other woman.’ And, when money no longer was an issue thanks to ITI, Barbara became even more depressed, rationalizing why she had so much while others struggled. As the kids grew into teenagers, they became all to familiar with their Mom’s personal issues, while Fred, who was flying here and there in pursuit of the next barter deal, remained oblivious. It wasn’t until the evening of their oldest daughter’s, sweet sixteen party that Fred finally confronted the reality. He was searching for a lost sock in their dressing room. As he checked one of Barbara’s draws, he found two empty vodka bottles under her lingerie. As his search intensified, he found more partially empty bottles tucked under the clothes in each and every draw, as well as a cardboard box under the bed with yet more bottles. As he stood and cried, Barbara entered. “Fred, I’m so, so sorry,’ wept Barbara. Feeling like the unfulfilled husband, Fred asked, “Do the kids know?” “Yes.” “So, I’m the only one?” “Yes.” “Do you still want to have Joanne’s party.” “Yes.” Less than a week after the party, Barbara told Sandra that she and Fred had agreed to check her into the posh and discreet, Silver Hill Clinic, in the little village of Northfolk, Connecticut. The treatments took almost six months, during which time Sandra became extremely close to all three children.) * Bob and Michael were led up a set of steep steps and down a long hall to a dimly lit conference room with gray walls graced with framed pictures and matching letters from various American presidents. Collecting White House memorabilia was a Tothson family passion. They found the stuff historically interesting, an excellent long-term investment and very impressive to the underground dealmakers who would stop by from to time with the latest pay-for-play insider inventory tips. At five feet seven inches tall and weighing over 300 pounds, Fred Tothson was hardly presidential. He had a warm smile, big bushy eyebrows and his suit jacket hid his significant stomach rolls. A big briar pipe was clenched in his teeth.
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