Being at the upper end of middle management (or the lower end of senior management?) in an buyout firm means you spend a lot of time dealing with portfolio companies. In theory I don't mind that. In fact, I always thought it would be a plus and add some variety to the job. It was even part of my "early employment theory." You know, the lofty aspirations you have for how cool your finance related job is actually going to be. I did, after all, want to use my strategic and marketing casebooks. Those are fixed assets. They were expensive. I need a positive Return on Assets figure for them.
"Sinister, LLC" is a portfolio company on the left coast. Sinister has issues. Armin would tell you that the problems started after a bad month in November. Personally, I think the problem was that we bought the company.
Sinister was snapped up just before I joined the firm. Good thing too because I would have put all my waking hours into sinking the acquisition. It is not that the firm doesn't have potential. It is not that there are a bunch of Stanford grads running it. It is not that it isn't in an interesting industry (financial services, basically). It is not that the firm's name starts with the wrong letter. (You know, I've given it time and effort but I still can't get over what a yahoo Kawasaki is). It is that the firm's management and sales team have zero concept of what it means to work for a living.
Part of the role of being a parent to the firm is nurturing and helping the firm along. Of course, we don't do this because we are the Red Cross. We do it because that big debt payment needs to get serviced with regularity. We do it because we paid for the damn thing and we want our money back. Yesterday.
Building value in a daughter firm means that, at least if you want to be credible, you need to have some kind of operational expertise. It has grown quite fashionable among LBOs to claim a high level of operational expertise. It shows your limited partners that you can extract value out of a firm by doing more than just restructuring the balance sheet. You can build revenue. You can help the firm excel. Well, most firms.
Right after we bought Sinister we pushed them to put together an entirely new product line. Armin thought it up and cracked the whip until something presentable was crafted. I had mostly been able to avoid entanglement in Sinister's affairs until late last month when I was asked to help review some materials for the product line. They were mostly ok. Perhaps a little techno-babble filled, but that was to be expected as the development team was composed of 6 Ph.D. holders and one graphic designer. A little tailoring and it was a solid B+ presentation.
This month, through no small amount of effort and the leveraging of a series of personal contacts, Armin managed to secure for Sinister a Wednesday meeting with one of the members of the "Hedge 100" list, the top 100 hedge funds in the world ranked by size of assets under management. It should go without saying that adoption by this firm of Sinister's product would, by itself, make the firm. It should also go would out saying that this would, therefore, be the biggest and most important sales call Sinister's sales team would make. Should go without saying.
Armin, quite cleverly in my opinion, generally has visiting luminaries, be they from clients, limited partners, daughter firms or even competitors, stay at the estate if their visit is to be short, so when 3 of the Sinister team were put on the list to make the sales call in Manhattan their efforts to book rooms at the Peninsula ran into a hard stop (against a brick wall). Instead, they have been booked at "Chateau Armin."
You would think this presented no problem. Chateau Armin is, in fact, much nicer than the Peninsula. Particularly, as it happens, with respect to scenery. You would think. You would think wrong. In fact, the whining was so intense it prompted a detailed review of the last 18 months of expenses and, though he won't know it until Friday, one of the team has already lost his job on this account.
Two days ago, because I made the tactical error of agreeing to review the materials last month, I was asked to review the sales presentation and provide some direction. Herein lay the abyss.
Yesterday, I arranged a conference call with two Ph.D. Vice Presidents and the sales guru assigned to the project. Of course, the first thing I asked for on the call was the PowerPoint presentation. It took me 20 minutes to finally extract from them that there was no PowerPoint presentation whatsoever. None. This is now two days before the meeting with the hedge fund. Well, there was really no reason for us to be talking then, was there? They should immediately put one together and we would reconvene in three hours. I set up a conference line and went off to other things.
As is my habit, I called in 10 minutes before the appointed time and left the speakerphone on mute, listening to the hold music and trying to pretend it wasn't bad. The meeting time came. And went. And so did 10 minutes. Then 20. I called into Sinister's offices and asked for each one of the scheduled participants. Their morose voicemails greeted me with taunting malaise. I had them paged. That only returned 15 minutes of holding, 5 for each of the AWOL participants. Finally, tracking down the head of marketing, I managed to determine that all three of them had been out of the office for the last 90 minutes.
"Where in the world are they?" I was so foolish to ask.
"Well, I expect given the hour that they are at lunch."
"For 90 minutes?"
"This isn't New York, you know." Oh, that's quite clear, I think.
Cell phones rang the full 6 rings (telling me they weren't turned off, I was just being ignored) after which even more morose voicemail recordings were the only reward for my efforts.
By this time I was tempted to pass the issue up to Armin. Mind you, I don't like to be a tattletale, but I, to some extent, was on the hook for this presentation and I knew the lengths Armin had gone to in securing this meeting.
When I finally got the three stooges on the phone again (don't worry, they had been at a "working lunch") I was told to take it easy. They had matters in hand.
"How many slides is the presentation."
"How long have you scheduled the meeting for."
"You have given them a timeframe right?"
"Ok, who is presenting?"
"Is anyone presenting?" I could feel the anger, swelling in me.
"Hey, Dave, why don't you do it?"
"Yeah, ok, cool. I'll do it."
"Ok, are you bringing a projector?" Personally, I think this is critical. Why depend on someone else's machine which you have never used before at someone else's facility? I can't tell you how many times I've been witness to the embarrassing desktop icons on some young presenter's laptop revealed to a laughing audience of twenty because the wrong button was pushed on the projector.
"Well, don't they have one?"
"I have no idea," I replied. "Hasn't anyone called them?"
"Ok, so have you talked to their IT department? You do plan to do an online demonstration right? You will need an internet connection, right?"
"Guys, you are the sales team. Who is it you think is going to do this for you?"
"Well, we thought that since it was your contact that all that stuff would be arranged," whined one of them.
"Yeah," chimed in the fat one, Dave. "Will there be food? And diet soda. I can't drink non-diet soda." Given his bulk, how he was even going to remain standing for 12 slides was beyond me. Then it occurred to me that the real problem was the food. Maybe he could remain standing all that time, but he was never going to make it 12 slides without eating.
I have this problem. I think in Technicolor. Even about bland things. Blue skies when I make airline reservations. I see the Google logo whenever I think of bubbles. Suddenly, the vision of a fat, slobbering Dave, talking about statistical values with his mouth full while desperately trying to cram down his throat yet another one of the wet, squishy, yellowish muffins that always seem to haunt lunch plates at financial services firms struck me. Crumbs on his chin. Moving as he spoke. One of them just about to fall off, hanging on for dear life to avoid the fate of his comrades, squished ignominiously into the $200 per yard carpeting in the executive conference room.
Oh my god.
I counted to ten in my head. "Breathe," I thought. "There's no need to vomit. Really. That mouth watering you are feeling is just a trick of the brain. Breathe. Breathe."
It pains me to even continue to relate the rest of the conversation. Suffice it to say I spent the better part of today doing their presentation for them. That's the rub when you are the parent firm. You own them. Even if they are a bunch of fuckups you have to carry them. Much as you might want to, you can't fire the entire sales and marketing team. As a result, they are almost rewarded for underperforming, particularly if you've already cut staff to the bone, because you parachute in at the last minute and pull the slack in when they trip (or are caught sleeping) on the job. Why work? Our wonderful parents will save the day! Hey, does the Peninsula have in-room massages?
So here I was. We were flying three sales boobs over just so I could do their entire presentation for them and they could blithely handle the subsequent Q&A session. (I am due to go to Europe for a transaction today but know this is how it will turn out instead). Subsidizing mediocrity. There is nothing closer to anti-matter to me. It is the bane of my existence. It is time I should spend on the next deal wasted on the pits of the last one. I know that will sound arrogant to the non-industry readers. You industry people know exactly what I mean though.