Wednesday, June 8, 2011

The Data Are ? - A Country Christian in Corporate America #2

Note:  This is Part 2 of an intermittent series on corporate life.  If you want to read Part 1, please see Data Room Drama.

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Data is an odd word, in that it can be either singular or plural, like the word deer, but it really sounds weird when used in the plural.

The data is showing us ... sounds right.
The data are showing us ... sounds goofy.

But both are correct.  Unfortunately, the data one is shown when working on a Merger and Acquisition (M&A) project may be right, goofy, both, or neither.  In other words, it is anybody's guess.  My job in this whole drama-rama was to make very good guesses.

Just entering the data room can be a chore.  First you have to contact the third party administrator (a company who specializes in maintaining such data rooms) and be recognized as an "authorized user" of the intel.  Then you are issued an electronic password and personal code that must be entered each time you enter the "room" - that is, the website containing all the documents and information that the company to be potentially acquired has provided to the potential buyer.

In each of the three M & A projects that I worked on we were the potential buyer.  That made my objective somewhat straightforward.  I needed to figure out who the best players were on their team, decide what a fair compensation package might look like, determine who needed to be released and how soon after closing the deal, and finally figure out where the bodies were buried in the corporate history book.  Piece of cake.  Not!

It is, however, far trickier to be the seller, as that was often likened to trying to "put lipstick and earrings on a pig."

In other words, if you were trying to sell your company, you usually tried to comestically cover up all your flaws and problems to make the whole organization look better.  It was, so I have been told, exhausting at best, fraudulent at worst.  No picnic either way.

Oh, and one other little tidbit one needed to keep in mind that was each and every time anyone on either side of the equation entered the data room, an electronic footprint was left of each page they had visited, whether or not they had made any changes to the document being viewed, and how long they remained in the data room.

And all this says nothing of the veritable phalanx of lawyers on both sides of the line, often playing a neener, neener, neener game of "our lawyers are better than your lawyers."  And if things got tense, or even nasty, it quickly degenerated into a game of "our lawyers can beat up your lawyers."

So what was a country Christian to do in such deep and murky waters as these?  In my case, it was my job to diligently examine all the relevant facts, interview everybody from the janitor to the CEO, read reams of resumes, bios, sales reports, corporate historical documents, and memos between all relevant players, going as far back as when they first had any idea they might be going to sell their company. 

If there were going to be any shenanigans, they usually started a few months to a year or so before the actual sale went live. Kind of like cleaning house just before company arrives for a long visit.

No doubt about it, we were going to get into their cupboards, look behind their refrigerator and stove, check the downspouts and the roof tops, and most assuredly find out what might be buried in the basement. 

The data room was only one facet of this due diligence, but it was an important part.  And so I waded in - determined to look sharp, reserve judgment, and call the shots like I saw them.

Day after day, I read documents, examined org charts, and analyzed compensation plans. Late one afternoon, something that had been bugging me all day, finally jelled.  First I looked at their total compensation for the prior two years, then I re-read where they were in their year-to-date performance to plan; and then I carefully re-read their incentive plan for the coming year (the calendar year during which our purchase was to close if the deal went through.)

Suddenly there it was, plain as day, just one or two lines buried in a fairly small document. They had deliberately skewed their potential bonuses to be paid at over 150% of the usual rate, if they were acquired during this bonus year.  This was not your usual "poison pill" (prior financial bonuses designed to discourage a potential take over).  No, this was a flat out "take the money and run" gambit, and they apparently thought no one was going to read far enough into these deadly dull tomes to stumble across this little nugget.
Big Bags of Money clipart
If I had missed it, it would have cost my employer a "surprise" of about two million dollars.  It was not illegal, it was debatably ethical, but it would have been legally binding upon us, if it had not been discovered in time to make it part of the current negotiations. 

Whew!  This country girl had earned her money that day.  Calls to the powers-that-be were made, teleconferences hastily scheduled, the official financial analysts apprised of the discovery, and eventually all was hammered out to almost everyone's satisfaction.  They were a little sheepish to have been caught-out, but unapologetic because they thought it was worth a try.

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I dragged home that evening and prayed, as I often did:
Lord, help me do my job to the best of my ability.  But help me to remember that I cannot do it alone, and that I am not the only person involved in all this who is trying to do the right thing.  Help me to be wise as serpents and harmless as doves. Thank you, Amen.

Then it was time to get some sleep and go back and do it all over again the next day.  At least no one had offered to put any lipstick and earrings on me ... that week.

Until next time .... Marsha (once upon a time A Country Christian in Corporate America)

1 comment:

  1. Interesting! Love when the Lord opens our eyes to deceptions and we can reveal them!