‘More important to me are the rewards for the firm. I am sometimes asked to define our strategy. That’s easy. In every country where we operate, we recruit the best. Once we’ve recruited them, we retain them. Then we just get on with our jobs, as best we can. That’s it. The rewards for the firm will follow.’
Kramer continued to prowl to and fro across the floor of the amphitheatre.
‘Are there any questions?’
Coming from him, this wasn’t a question. It was a joke. Nobody asked a question, nobody ever had since Kramer started giving these speeches. He smiled once more. Too many teeth again and the smile lasted long after the light had vanished. Without another word, the Lion of Wall Street stalked from the room.
Matthew knew beforehand that Kramer wasn’t exactly a touchy-feely kind of guy. And Matthew didn’t just cope with competition; he thrived on it. All the same, Kramer was genuinely menacing, and Matthew’s mouth felt dry. He glanced downwards and across to where Sophie was sitting. She looked completely composed. She wasn’t licking her lips, or shifting in her seat, or fiddling with her pencils, or doing any of the other things that the other students were doing. She just looked beautiful and desirable. Matthew forgot Kramer.
He opened his folder and took out a card which he’d bought that morning. He scrawled something inside, scribbled Sophie’s name on the envelope, and tossed it accurately on to her desk.
She looked round to see where it had come from and sent Matthew a polite smile. She opened the envelope and read the card. She smiled, not politely this time, and sent Matthew a look, which meant ‘Yes’. With a bit of luck it even meant, ‘Yes, please, I’d be delighted’.
The inscription inside the card was brief. It ran: ‘Dear Mrs Gradley, as today is the first day of our honeymoon, perhaps you would care to dine with me this evening? Eight at The Riverside. Your loving husband, Mr Gradley.’
11
Hank Daggert, the Chief Executive of Tominto Oil, didn’t care too much for the mother country. He liked some things, of course. He liked Maggie Thatcher, the flexible labour market and North Sea Oil. But the list of things he didn’t like was much longer. He disliked the Queen, trade unions, New Labour, John Lennon, unarmed policemen, the BBC, hot tea, warm beer, and cold rooms. He didn’t like the bunch of old Etonians who were helping him buy Aberdeen Drilling but he hadn’t much choice. He was buying a British company and he figured that picking Coburg’s, the biggest independent British bank, was the best way to succeed. All the same, Daggert listened to Piers St George Hanbury with growing irritation.
‘You’re telling me there was a time bomb in that data room all along?’
‘Yes. We believe you should reduce your bid by ten million pounds or insist that the seller insures you against any liability you might be taking on.’
‘Jesus. We’re only a fortnight away from making our final offer. Couldn’t you have told me this sooner?’
‘Yes, I understand. The problem was very carefully hidden, and it took us some time to spot it. But we thought you would sooner know late than not at all.’
‘You’re telling me,’ growled Daggert. Tominto Oil was worth about a billion dollars and Daggert owned about five percent of it. Hank Daggert wasn’t exactly a sweet old man, but if you were a shareholder in Tominto Oil you loved him just the same. ‘Just take me through the problem one more time. I want to be sure I understand.’
Piers Hanbury was too important to care much about details. He was one of the biggest deal-makers in the City of London and he wasn’t unduly fussed over a hundred million pound deal with a miserable little million pound fee. He was there to look distinguished and make the client feel happy.
‘Zack, why don’t you walk us through this?’ said Hanbury smoothly. ‘It’s your discovery, after all.’
Hanbury was polite in front of a client, but he’d been absolutely furious with Zack the day before. ‘Why the hell didn’t you bring this up sooner? We don’t stand a chance of doing the deal now.’ Hanbury was sore.
One thing about buying companies is different from buying a car. With a car, when you call out the AA to inspect it, you pay the AA a flat fee irrespective of whether you end up buying the car. That way you can be sure of getting impartial advice. If you agreed to pay only if the inspection was clean, you’d find yourself with clean reports for cars only a tow-ride away from the breakers’ yard.
For some reason, which no one on earth can explain, it doesn’t work like that when it comes to buying companies. Corporate financiers only get paid if they win the deal, if their client beats the other bidders. The temptation to encourage the client to bid too much is almost overwhelming – and every now and then, there are those who don’t try so hard to resist. Piers St George Hanbury was one of them. If Zack had found the problem when they were in the data room a couple of weeks back, Hanbury would have found other reasons for getting Tominto Oil to pay up for Aberdeen. But now they’d debated the price and fixed it, when bloody Zack Gradley comes along with a ten million pound hole. The deal was running into the sand.
‘OK,’ said Zack. ‘The seller had a problem. They were all ready to sell Aberdeen Drilling, when along comes a major headache. A Norwegian consultancy project they’d worked on returned to haunt them. They’d advised on the construction of a North Sea pipeline into Bergen. They did their work, got paid, and forgot about it. But to win the contract, they had offered a guarantee. Either the work’s OK or they’d pay to put it right. That was the deal.
‘Now, just as they were getting ready to invite you guys into the data room, the Norwegians come along. It turns out there was a major foul-up which the Norwegians say is the fault of Aberdeen Drilling. Well, maybe, maybe not. It hasn’t been tested in a court of law, but let’s just suppose the Norwegians are right and Aberdeen did screw up.
‘Normally, that wouldn’t be too bad. They’ve got insurance. If they have to pay out to the Norwegians, they just get the cash back from the insurers. But here’s the problem. When they signed the Norway contract, they weren’t insured. There was a cock-up in accounts and they were a week late in making a premium payment, something to do with staff sickness, I think. Anyway, the week the contract was signed, they weren’t insured. The sellers are desperate to sell before the liability hits, plus they want to make sure the buyers don’t see what’s coming.’
‘But you said all this was in the data room? Why would they go and tell us if they wanted to keep it quiet?’
Zack smiled.
‘They had to put it in the data room or else you could claim the money back on the warranty. So what they did was smart. They dismantled their time bomb. They broke it into four little pieces and hid three of them in the data room and one in the press. Any of those bits on their own is harmless. But the four of them together stand to make a very loud bang.’
‘Go on.’
‘The first part of the bomb was concealed in some standardised consultancy agreements. That’s where they told us that all their consultancy work was guaranteed. Any problems down the line would need to be paid for. The second part of the bomb was buried in a footnote way down in a mountain of stuff to do with insurance contracts. The footnote pointed out that there was a period of a few days where these insurance arrangements didn’t apply. The third part of the bomb was a note mentioning when the Norwegian contract had been signed, which was – surprise, surprise – bang in the middle of the time when the insurance was on the blink. If you like, the deal was signed after the insurance had passed its sell-by date.
‘And here’s the clever bit. The most dangerous part of the bomb – the bit which would have aroused our suspicions instantly and sent us hunting down all the other parts –