Rob nestled down. His let his hand wander down under the covers.
Emmy shook her head. “Go on, Rob. You gotta go.”
Rob didn’t go.
“Go on. I’m too tired. I want to sleep.” She pushed him away and rolled over again.
“You just want me to get out.”
“That’s right,” she said, talking into the pillow. “I just want you to get out so I can sleep.”
Rob sat up on the side of the bed. “It’s gonna be late tonight.”
“How late?”
“I don’t know. There’s a big meeting with the client tomorrow and we’ve got to get a document done. I don’t think I can make dinner. You go without me.”
“I don’t want to go without you. He’s your friend, Rob.”
“Yeah, but you like Louise.”
“Yeah, right. Miss Snookums.”
“What’s not to like?”
Emmy didn’t respond.
Rob waited a moment, wondering if she had fallen asleep again. “Will you call them?”
Emmy sighed.
“Make it another night.”
“What night?”
“I don’t know. Maybe it won’t be so busy after tomorrow. Later in the week, huh? Tuesday, Wednesday.”
Emmy nodded, eyes closed.
Rob watched her. “What are you going to do today?”
“Don’t know. There’s always a manuscript to read.”
“I’m sorry, Em.”
She shrugged. “Go on, you’d better get going.”
Rob nodded. They had hardly had a chance to say a word to each other in the past couple of days. Their longest conversations had been when he called each night to say he was going to be back after she had gone to bed.
He leaned over and kissed her. Then he got up.
“What are you wearing?” Emmy said as he walked into the bathroom.
“Same as yesterday.”
“You’d better get back to your apartment and pick up some clothes.”
“Right,” said Rob. He turned the shower faucet. “I’ll add it to the list.”
* * *
The valuation grid was like the outline of a football field. On the grid were positioned four black circles, each of which represented the possible value of BritEnergy according to a different valuation methodology. Simple. And behind that one simple page were the annual reports, regulatory filings, brokers’ reports, and literally thousands of pages Rob had looked through on comparable companies to figure out where those four dots should sit.
The first cut of the grid was supposed to have been ready by noon Sunday. By four o’clock, when Phil Menendez arrived, Rob had just about gotten it done.
Menendez took it out of his hand, held it like it was a reeking dog turd, and started jabbing. He pointed at one of the circles. How did Rob estimate that? What were the comparables? Where were the numbers? What about that one? And that one? Pretty soon Rob was searching through the piles and piles of paper on his desk.
“He’s a piece of crap,” said Phil to Sammy, as if Rob weren’t in the room. “Look at this stuff.” He tore up the copy of the valuation grid. “And you, Sammy, you’ve been jerking off in here.”
Then he turned away to deal with Cynthia.
Rob looked at Sammy. Sammy gave him a slight nod. They huddled.
“Go back and check over these … and these … and these…”
“But Sammy…” whispered Rob.
“He’s happy,” murmured Sammy. “Trust me. It’s a first cut. Eighty-twenty. It’s going to have errors. He knows that.”
“What the fuck is this?” exploded Menendez behind them, hunched over Cynthia’s computer.
Menendez came back at about nine o’clock that night. After that, he didn’t leave. He worked over and over the document that was going to Baton Rouge the next morning, giving drafts back to Sammy and peering over the shoulders of Rob and Cynthia and cursing while he waited for Sammy to give a new draft back to him. Rob had no idea what was in the document. All he knew about was the four-blob grid on his screen and the endless pages of figures in the documents on his desk and in his computer. Every so often he would come up with a new valuation for a comparable and he’d move one of the blobs a quarter inch up or down, and he’d e-mail the new version to Sammy to do whatever Sammy was doing with it. Then he’d be back in the figures. A fog of tiredness descended on him and he just kept moving muzzily through the numbers.
At some point he realized that Phil Menendez had settled in for the night, and no one was going home. He wondered if he should call Emmy. He looked at his watch. A quarter to one. Too late. If he called now he’d only wake her.
He kept crunching the numbers.
At about four o’clock he became aware that Phil and Sammy were talking about his latest version of the valuation grid. He turned around.
Menendez stared at him. “What the fuck are you looking at? You got nothing else to do?”
“Listen in,” said Sammy.
Menendez snorted in contempt, then ignored him. He and Sammy were talking about the value of BritEnergy, which was what the valuation grid was all about. The four blobs gave somewhat varying figures. They decided to give the value a range of 11.25 to 11.75 billion. Where the client chose to pitch the offer within that range would be a question of the negotiating strategy.
The last draft was done just before seven in the morning. Phil, who had gone upstairs, reappeared in a suit, face and head freshly shaven, and leafed through it disgustedly. He lingered over the valuation grid, the sneer on his face getting deeper and deeper.
“It’ll do,” he said eventually. He put three copies of the document in his bag. “It’s full of mistakes. Sammy, I want them fixing this stuff. I don’t want you guys bugging off.” Then he left to catch a cab for LaGuardia, where he was going to meet Pete Stanzy for the flight to Baton Rouge.
Sammy got up and closed the door after him.
“Good job,” he said.
“You’re going to tell us he’s happy, right?” said Rob.
“Very.”
Cynthia stood up. “I’m getting out of here.”
Sammy nodded. “Let’s go get some sleep. Be back here at four. Phil’s gonna call.”
Cynthia grabbed her bag and walked out. Sammy turned around and started leafing through a pile of papers on his desk.
“You not going?” asked Rob.
“Soon,” murmured Sammy. “Go on, get out of here. Get some sleep. Be back at four.”
Rob looked through a couple of documents, remembering a detail here or there that he had wanted to check. Nothing important. Yet something kept him in the war room. Over the past seventy-two hours, he’d had maybe ten hours’ sleep. Yet he wasn’t ready to leave. He didn’t know what had gone into the document Phil Menendez had just taken with him, other than the valuation grid he had worked on. Yet there was something immensely satisfying about having seen that document go, despite the sheer physical ordeal that it took to get it into shape, despite Phil Menendez’s yelling and cursing. Or perhaps because of them. It had been a baptism of fire. He’d gone into it, and he’d come out the other side. He wanted to hold on to the moment. He knew it was unique, a first experience, something he’d never have again no matter how many times he went through the same thing. He wasn’t ready to let it go.
He saw that Sammy was looking at him. Maybe guessing what he felt.
“You all right?” said Sammy.
Rob smiled. “Yeah. Thanks, Sammy. I mean … you know, thanks for all your help.”
“We’re not done yet.”
“I know.”
Sammy nodded. “Go on. Get out of here.”
Rob sat for a moment longer, then got up. “See you at four.”
“Right,” said Sammy, and he had already turned back to whatever he had been doing.
Rob left. He walked to the elevator. He was exhausted, but in a good way. Like Sammy said, they weren’t done yet. He guessed they’d hardly started. B
ut that was why he was here. That was what it was all for.
As he got out of the elevator, Steve Pippos was arriving for work.
“Hey, Rob,” he said. “You look like crap.”
Rob grinned. “Thanks. And good morning to you.”
“Pulled an all-nighter?”
Rob nodded.
Steve laughed. “See, remember what I told you?”
“And remember what I told you?”
“You’re working with Phil Menendez, right? What’s the deal? Who is it?”
“Can’t tell you,” said Rob, feeling a tingle of pleasure as he said it.
“Secret, huh?”
Rob nodded.
“Big, huh?”
“Couldn’t say.”
“Well, I know one secret. I heard we’re getting forty bips.”
Rob looked at Steve, not quite comprehending.
“I heard we’re getting forty bips,” said Steve. “Our fee. Forty basis points on this deal.”
“Forty?” said Rob. “That’s kind of high, isn’t it?”
“No,” said Steve. “Mount Everest is kind of high. Forty bips is somewhat higher. Pete Stanzy’s crowing.”
Pete Stanzy? Rob’s mind was blank.
“Your MD.” Steve peered at him, then laughed.
“We’re getting forty bips? Why?”
“Because the analyst is so great, apparently. I don’t know, it’s just a rumor. Who knows if it’s true? Go on. You going to get some sleep?”
“Yeah.”
Steve gave him a friendly shove. “Go on, then. You deserve it.”
Steve left him behind and headed for the elevators.
Rob went out the door into the chilly air of a crisp New York Monday. Around him, the sidewalk was full of people on their way to work.
Rob shook his head, trying to clear his mind. It wasn’t a rumor, he knew. That was why they had called the deal Project 40. That’s why Phil Menendez had looked so smug when he said it.
He was working on a deal where they were getting forty bips. Great! It made it an even better deal to be part of.
Suddenly the accumulated exhaustion of the past three days and nights hit him. He was too tired to think straight. The forty bips—true or not—went out of his mind.
But it was very much in mind the next evening when the mandates committee convened in the boardroom of Dyson Whitney.
9
The mandates committee met every second Tuesday at six o’clock to review the new business brought in by the MDs and to approve the terms of engagement. Clients always demanded changes to the bank’s standard letter of agreement, which were negotiated individually by the MDs involved. The committee’s role was largely a formality. Most Tuesdays it was done by six-thirty.
But not this Tuesday. Bob Browning, or the Captain, as he was known, stared at the letter in his hand. He was on the fourth page.
“Is this a typo?” he said.
Lou Caplan, the bank’s general counsel, craned his neck to see what the Captain was looking at.
“It says here we’ve got an advisory fee of forty bips.” He looked at Caplan. “Is that a typo?”
“No, Bob, I don’t believe it is,” said Caplan.
Browning raised an eyebrow. He turned the remaining pages of the letter. “This is our exact letter. No changes. Isn’t this our exact letter, Lou?”
Lou nodded. “Looks like it, Bob.”
“Did Pete talk to you about this?”
“No. But if there aren’t any changes, he wouldn’t have to.”
“Can you remember a letter we never had to change? Not even our indemnity clauses?”
Lou shook his head.
The Captain glanced at the others around the table. They shook their heads as well.
There were various myths about the way the Captain had acquired his epithet. He had been an officer in Vietnam, which is where it might have started. More likely, it had something to do with his piratical dealings back in the eighties, when he was close to Mike Milken, the junk bond king. Those were the glory days of Dyson Whitney. Thanks to the Captain and a couple of other aggressive MDs, the bank got a healthy piece of the first leveraged buyouts that were to become the hallmark deals of the decade. Then the big boys muscled in, and Dyson Whitney was pushed to its usual place at the back of the line. Bob Browning left for Salomon Brothers. After the Salomon takeover by Smith Barney, he came back to the chief executive job at Dyson, and had held it ever since.
Beside him sat Frank Nardini, head of mergers and acquisitions, Pete Stanzy’s direct boss. In addition to Lou Caplan, the others at the table were Tom Dixon, who was the next most senior MD in mergers and acquistions after Frank; John Golansky, head of capital markets; and Bruce Rubinstein, head of credit risk.
“What do you think, Frank?” asked the Captain, putting the letter down. “Has Pete run this past you?”
“He mentioned the deal to me, I don’t know, Thursday, Friday. Told me it’s an eleven-billion-dollar play. Said he was counting on getting forty bips.” Frank Nardini shrugged. “I thought he was kidding.”
“Looks like he’s got it,” said the Captain.
“Looks like he does.”
“So it’s kosher?”
“Bob, all I know is what I know. He told me he was going to get it and it looks like he got it.”
The Captain looked at Lou. “What do you think, Lou?”
Caplan hesitated. As the in-house lawyer at an investment bank, Lou Caplan lived his entire life under fire. Investment bankers hate lawyers, even the ones they pay themselves. Lawyers are cautious. They’re paid to point out obstacles, pitfalls, and any other reason they can find to back off from an opportunity because of problems that might arise later. To investment bankers, caution is poison. It’s the toxic sludge that separates them from their fees, and if they had a choice, they’d hose it away along with every lawyer on Wall Street.
“I don’t know, Bob,” said Lou diplomatically. “The client didn’t change the letter, but on the other hand, we propose those indemnities because we think those are the ones we think we should have.” Lou allowed himself a wry smile. “Maybe this particular client just saw how fair that was.”
That was so ridiculous the Captain decided to ignore it.
“Frank,” he said, “you know anything about this client?”
“Not really,” said Nardini, whose own area of expertise was aerospace and defense. He glanced at the letter. “Some electricity company in Louisiana, I think.”
“Any of you guys know anything about it?”
There was silence for a moment.
“I’m not so sure we don’t have a problem,” said Tom Dixon.
The Captain looked at him sharply. “What kind of problem?”
Tom shrugged.
“Do you know this client?” asked Frank.
“John Deeming does. He says there might be something going on. The client has a relationship with Merrill Lynch. It’s done all its acquisitions through them. This is a substantial deal, their biggest deal ever by a mile, and they come directly to us.”
The Captain shot a glance at Nardini. Nardini shrugged. They both knew about the situation between John Deeming and Pete Stanzy. If Pete was about to pull off an eleven-billion-dollar deal at forty bips, you couldn’t trust anything John said. And John, as everyone knew, was one of Tom Dixon’s protégés.
“Tom, I think you’d better declare an interest here,” said the Captain.
Tom Dixon grinned. “All right, I declare it. But that’s what John said. He does know the industry. He knows it as well as Pete.”
“Yeah, but he didn’t get the deal, did he?” said Nardini. “What was John’s last deal? A couple of hundred mil? What was it? Milwaukee Sewage or something?”
“All right,” said Dixon. “Jeez, I don’t know. I’m just saying what he said, all right? By the way, he asked me not to let Pete know he’d spoken to me.”
“Tom, hold on,” said the Captain. “That’s not go
od enough. Are you saying there’s a problem or not? Let’s get this clear. What you’re saying is John says the client’s got a relationship with Merrill. Is that it, Tom? Is that all you’ve got?”
Tom shrugged. “That’s it. I just felt I had to raise it.”
Nardini glanced at the Captain and rolled his eyes.
Bruce Rubinstein coughed. “I don’t mean to intervene…”
“What is it?” asked the Captain.
“Well, normally I wouldn’t comment on the matter if it was just an advisory fee on an acquisition…” Rubinstein paused, turning the pages of his copy of the letter. The Captain watched him impatiently. Rubinstein was the kind of guy who made a thing of the fact that he couldn’t be hurried. “It does appear that we’ll be raising a considerable amount of debt to get this deal off the ground.”
John Golanksy grinned. “Looks like it,” he said. Stanzy, knowing he needed an ally at the committee table, had given John Golansky the lowdown in some detail.
“In which case,” said Rubinstein, “I agree with Tom.”
Dixon’s eyes narrowed. He rarely found himself in agreement with Rubinstein, and it didn’t make him feel too comfortable when he did. As head of credit risk, it was Bruce Rubinstein’s job to make sure that the bank’s exposure to the portfolio of debt it was selling on behalf of its clients didn’t pose a threat to Dyson Whitney itself, and if necessary to advise restrictions. It was also his role to cast an eye over the long-term quality of that debt. Not because it would hurt Dyson Whitney financially if the client later defaulted—the loss would hit the investors and other banks to whom they had sold the bonds—but because of the damage it would do to Dyson’s reputation and ability to sell further debt in the future. This role was an essential part of the checks and balances in any bank, as were Lou Caplan and his in-house lawyers, but it put Bruce Rubinstein and his team in conflict with just about every other executive at Dyson Whitney, whose sole aim was to get transactions completed. And there was no one with whom Bruce’s role put him in greater conflict than John Golansky, the head of capital markets. Golanksy’s guys were the ones out there selling bonds into the market. They got their bonuses according to how much debt they could shift, and so did Golansky. They wanted as much debt as they could get, and once it was off their hands, they couldn’t care less if the client defaulted.
Due Diligence: A Thriller Page 5
