Day 134 - Day of Infamy

          One week to the garage sale. Two weeks to moving day. I’ve scheduled two crews to help us load and unload the truck. We’ll take one load to the storage facility near our son’s house and a second with us to my father-in-law’s place on the East Coast. We’ve also arranged to distribute, temporarily at least, some of our extra bedroom furniture and appliances to the kids and grandkids. This will include a newish 42 inch LCD TV, which I’m not too happy about but what else can I do. There’s only so much space available, and it’s obvious that I’m not going to be able to keep everything I want.

         The Biblical parable about it being easier for a camel to pass through the eye of a needle than for a rich man to enter the Kingdom of Heaven comes to mind. I’ve been told that the phrase ‘eye of the needle’ actually refers to a small gate in one of the walls of Jerusalem. The gate was small enough that camels laden with goods from trading caravans had to be unloaded in order the get through it. Knowing this takes some of the onus off becoming rich. It’s not as impossible as shoving a camel through the eye of a sewing needle for rich people to get into heaven, but they’re obviously not going to get through unless they unload their stuff first. It’s a you-can’t-take-it-with-you thing as opposed to a you-can’t-be-saved kind of thing. Good news for all the prosperity preachers out there. Of course, now that I think about it, the prosperity preachers just might be the source of this more relaxed and altogether kinder interpretation.

          Either way you cut it, I’m going to have to off-load a substantial amount of my possessions in order to enter the paradise of Southeast Florida. The irony is that I’m not even rich by any stretch of the imagination—in fact I’m soon to be quite poor—whereas, presumably, the rich traders in the Bible got to reload their camels on the other side of the gate.

* * * * *

          The consultants we had at Albatross were experts in bankruptcy reorganizations and dissolutions. They had earned huge fees from the then still fresh collapse of Enron. I won’t argue that these fees aren’t justified, although sometimes the amounts seem exorbitant. The fees, in any event, have to be approved by the judge presiding over the bankruptcy, so one should be able to assume that they are fair and reasonable in the circumstances. Still if you are an unsecured creditor getting pennies for every dollar owed you, or a loyal employee whose pension plan has turned to dust, it has to be painful to see millions of dollars flying out the door and into the coffers of the consultants whose very purpose is to feed at the trough of your troubles.

          Of course the consultants weren’t the only ones enriching themselves in the midst of our travails. Executive management had a hand in there too, as did, to my everlasting amazement, the new chairman of the board.

          The new chairman was a decorated Knight of the Realm—an honest to goodness ‘Sir’ who had achieved some notoriety in the UK for the successful conclusion to a sticky hostage negotiation back when radical fundamentalist Muslims first raised their turbaned heads. Since that time he had enjoyed some further success resuscitating both public and private enterprises that were failing in spectacular fashion. He had been appointed chairman by the board, which was comprised mainly of representatives from the consortium of banks and creditors that now owned us. He came to the U.S. to receive reports and issue orders for one day each month, and for this he received the princely sum of $25,000 per day plus expenses. Did I mention that he was a complete idiot?

          He was a small man with a high squeak of a voice. When he got excited, which was often, people in immediate ear-shot would cringe and wince as if someone were scraping their fingernails on a chalkboard. He made no sense whatsoever that I ever heard, but he certainly did not lack for confidence in himself or abject disdain for everyone around him.

          There was one company among the ownership group that was not a bank. It was a large and well known European manufacturing concern, very successful, with a substantial penetration into U.S. markets. They had fronted many millions of dollars to our former UK parent to conclude its initial purchase of Albatross. They now held about 30% of our stock. They had a significant presence on our board owing principally to their actual experience in manufacturing operations. They did not have enough seats however to prevent the banks from installing Lord McSqueak as chairman. That they were not thrilled by this choice was made abundantly clear by their near constant eye rolling and sideways glances at board meetings when His Lordship was holding forth with his customary high pitched exuberance.

          At one point management and the consultants tried to persuade this company to buy up the rest of Albatross from the banks. This probably would have been a pretty good deal for us. We would have had an ownership that actually understood what needed to be done, and they surely would have sent the chairman packing back to the UK with his last $25,000 check and a fare-thee-well. It didn’t happen though. They just bailed right before the end. They walked away from their considerable investment without a whimper or even looking back. They’d had enough.

          In the midst of our cash flow difficulties, in a surprise move that seemed calculated to make them seem as venal and self-serving as possible, executive management decided to take retention bonuses. They didn’t say anything about it. They just did it. Apparently they thought they could keep it quiet, but it is awfully hard to hide a handful of checks totaling nearly a million dollars from a payables section that is struggling daily to pay complaining vendors a few thousand bucks here and there. News of the bonuses spread like waters from a burst dam through the finance section. Everyone knew about it before the ink was dry on the checks.

          Rod was furious that the news had leaked. He wanted to blame Eddie. I don’t know why he wanted to blame Eddie specifically. Maybe he overheard Eddie discussing it with someone. Eddie was in a position to know about the checks of course because he was helping Dennis and me monitor our expenditures. His knowledge of systems and report generation was extremely helpful to our efforts in this regard. At any rate Rod’s reaction to the leaking of the news was to pitch a fit and basically forbid anyone from discussing the matter at all. I don’t know what he hoped to accomplish. I mean, seriously, that ship had sailed.

          Rod came into my office and shut the door—always a bad sign. He wanted to know if I had heard anything about some bonuses. I had. He wanted to know where I had heard it. I told him the checks were on the list of disbursements for the day. They were in the system. It was my job to know what we were paying. He wanted to know if Eddie had brought them to my attention. He had not.

I should point out here that Rod was on the list of people getting a bonus. His take was $35,000. I had my own opinion about the bonuses in general and Rod’s in particular, but I wasn’t about to say anything. Rod was placated somewhat by my answers to his queries, but he still seemed hell-bent on being angry at someone. I suggested that if they wanted to keep the bonuses quiet they should have considered paying them out of another account, one that wasn’t being scrutinized by the whole accounting department on a minute-by-minute basis because of our crippling cash shortfalls. I did not point out that those shortfalls were now exacerbated by these unconscionable bonuses.

At that point Rod felt compelled to explain the logic of the bonuses to me. They had apparently been agreed to in the last reorganization. Their purpose had been to retain the executive talent, then newly hired and seen as essential to our future success, through that reorganization when there was a substantial likelihood that the company would collapse, and executive talent being what it is, that is whorishly self-interested, would be naturally motivated to seek another street on which to peddle their affections. They were R-E-T-E-N-T-I-O-N bonuses, Rod explained to me, slowly and with emphasis so that I would be sure to understand, and they were a contractual obligation that had to be paid within 18 months of their inception. The 18 months was up that particular week, so the bonus checks had to be written in spite of our pitiful cash position. There was no choice.

Personally I thought there was quite a bit of choice available. The executives on the list, all of whom were still there, could have elected to forego or delay those bonuses. If the obligation was to them, and they had negotiated it in the first place, they could certainly change the terms. That would have been the prudent and altruistic thing to do in the circumstances. That’s what most of the long term loyalists at Albatross would have done. That’s what I would have done, but then I wasn’t an executive on the list and that pesky altruism perhaps explains why.

Only a little while later, after the bankruptcy we eventually filed and the reorganization plan that provided for me losing my job, it occurred to me that the 18 month deadline for payment of those bonuses notwithstanding, the real reason for the unfortunate timing of those bonuses was to get them discharged well in advance of any statutory look-backs that were apt to be applied by the federal bankruptcy court. Management lined their pockets to the detriment of the continuing operations of the company in time to ensure that they wouldn’t be forced to give them back by some do-gooder judge. Naturally this is pure speculation on my part. No one in management would ever admit to such a scheme, but really...come on.

More than anything else that happened at Albatross this one event sums up for me the failure of management to faithfully discharge their responsibilities to the company they were supposed to be running. They took an unconscionable bonus at a time they could not have calculated better to injure their charge. They did it, either through ignorance or arrogance, in such a way as to rub everyone else’s face in the offal. And they got angry that anyone would construe their actions as less than honorable.

Day 95 - Variance Schmariance

          We took Bud back to the vet today for another round of x-rays. We were clinging to the hope that what looked like osteosarcoma on his shoulder would actually turn out to be an infection. To this end we had him on some really strong anti-biotics and anti-inflammatory drugs. If our hope turned out to be true the shadow on Bud’s x-rays should have been markedly diminished. It was not. This is as close as we can get to absolute certainty without getting a biopsy. We don’t see the need to put him through the additional pain just to be certain of what is by now obvious to us. Bud has bone cancer, and he is rapidly failing. Still he offers no complaint. He continues to eat well and seems to enjoy his walks as much as ever, although he is noticeably slower.

*****

The new president at Albatross, let’s call him Jed Boome, went about the business of stacking the local executive management posts with his buds and cronies from past companies. Notably, we got a new CFO and a new supply chain manager. Then it was back to business as usual with the new guys in charge. Just because they were new didn’t mean they were any smarter or any more qualified to run the company as they soon proved.

Several new initiatives were started that accomplished, in the final analysis, not much more than stirring the pot. That may have been their sole purpose all along because nothing makes a cook look more like he or she is doing something useful than stirring the pot, but as any cook will tell you the main thing it does is keep things in motion so they don’t stick to the bottom and burn up.

To keep anything from sticking to the bottom and burning we started a huge strategic sourcing project, an outsourcing project, and an option optimization project. These were all touted to streamline operations, save buckets of money, and return us to profitability. Instead they paved the way to our next major reorganization.

The first of these initiatives to get off the ground was the outsourcing project. The new vice president in charge of supply chain management, let’s call him James Ringcomme, decided, probably because he’d read somewhere that this was a good idea, to start having all the parts that we had been fabricating in-house manufactured and delivered to us by outside vendors instead.

No studies were done, no detailed cost analysis undertaken to determine whether or not this made any sense in our particular situation. It was just done. Not only was it done, it was done as quickly as humanly possible, and accompanied by a great deal of yelling and threats when it still didn’t happen fast enough to suit Ringcomme.

Yes, Ringcomme was yet another of those over-energized, take-no-prisoners managers who substitute hysteria and abuse for good sense and reasonable attempts at communicating ideas. Ringcomme burned through a rapid succession of competent lieutenants by such antics as calling them at two o’clock in the morning to give them unreasonable assignments and then taking them to task in front of the rest of the staff the following day for not having accomplished the job he gave them to his satisfaction.

The purpose of outsourcing is to save total costs. You expect to get some uptick in productivity, in this case reduced labor cost by the amount of labor normally input into the fabrication of the parts now being outsourced. This savings would be offset by the increased cost of materials now purchased from the outsource vendors. The labor that would have been applied to the parts fabrication process may then be applied to assembly instead, hopefully earning a better return.

The better return is essential because there is not a direct trade off between the labor saved and the additional materials costs. The additional materials costs, all other things being equal between Albatross and its parts vendor, will now include the profits of the vendor. In other words if Albatross doesn’t earn more efficiently on its re-directed labor, there is no savings and no reason to outsource. This is not rocket science, but it is complicated and difficult to measure. It requires some sophisticated analysis and intelligence to do properly.

Unfortunately, at Albatross and many other places I have been associated with, managers do not do the kind of sophisticated analysis that is required to make these kinds of decisions. What they do instead is skim through popular business literature to get an idea what the current buzzwords are, and then attempt to manage to those buzzwords.

We even had one manager who made it his business to learn what the president was reading at the time so he could pepper his conversation with appropriate buzzwords from the same book. He never actually read the books himself just skimmed the chapter headings to pick out the buzzwords and get some inkling as to what they meant.

In our case the buzzword Ringcomme was most enamored of at the time was outsourcing. Outsourcing had been touted by several large auto makers, and Ringcomme figured what was good for them would be good for us, so outsource we did. Because we did it without sufficient forethought and analysis and because we did it quickly, it failed miserably.

Our total costs did not go down. They went up. We did not post gains in the efficiency of our assembly operations. Instead we had operators standing around waiting for parts that our vendors couldn’t deliver because, among other things, we had done nothing to ensure that our outsource vendors had the capacity to meet our demands. The materials cost of a 45’ boat increased by nearly $20,000 within several months. The labor cost on the assembly side remained virtually the same.

When it became obvious that something was seriously wrong with our new cost structure, Ringcomme began trying to manipulate the accounting numbers to deflect the blame. He had taken a savings number to the board to get them to approve his outsourcing scheme. He came up with this number by getting the vendors to commit to advantageous pricing at a given (aggressively estimated) volume. We never reached those volumes so the vendors were under no obligation to meet the advantageous pricing that Ringcomme had in effect taken to the bank.

When the smoke cleared the new and advantageous prices were established in the system as the standard cost for the associated outsourced items. Whenever we were invoiced for an amount greater than the standard, the situation that usually attained because our volumes were too low to get the standard prices, the system would spin off an unfavorable purchase price variance for the difference.

The purchase price variance account is meant to allow a company to track the performance of its purchasing department. If they can negotiate better prices than the standard they get a favorable variance, and that reflects well on their performance. If they secure prices that are greater than the standard they get an unfavorable variance that reflects poorly on their performance. Since the purchasing department belonged to the supply chain manager, Ringcomme, these unfavorable variances reflected badly on him. His solution to his problem was to direct the purchasing agents to go into the system and increase the standard costs in order to make the unfavorable variances disappear.

Standard prices are usually only changed once a year and under the direction and control of the accounting department. Standards that are fixed over time allow you to get meaningful data out of your variance accounts. Changing the standards changes the total standard product costs and therefore the standard margins. What Ringcomme was doing was shifting the margin erosion caused by the ill-concieved outsourcing project into the standard cost structure at the same time he was claiming that he had saved the company a ton of money.

When we caught him at it, and called him on it he put on an innocent act that was worthy of an academy award. He promised not to do it any more. Not only did he continue to do it, when one of the purchasing managers refused to bump up a standard cost for some critical hull fittings, Ringcomme had him fired for not being a team player. Naturally he had to give him a big severance package to keep us out of a wrongful termination suit, but we did after all have all those substantial outsourcing savings so we could well afford the severance.

Of course it didn’t matter to the company whether the extra costs were in the variance accounts or the standard cost accounts. Either way we had the same additional costs to deal with. You’d think if Ringcomme was serious about doing a good job, serious about making the company more competitive, he would have been attacking those costs with dogged energy. Such was not Ringcomme’s bent however. He was all about smoke and mirrors. All his energy went to making himself look as good as possible. There was none left over for actually doing the right thing.

Day 84 - On the Cuff

          I got a call today from a recruiter in Colorado about a controllership with a juice packing company here in Orlando. We talked for a brief time. The recruiter asked all the usual questions, and decided that he would submit me to the company. The job actually sounds pretty good. This is surprising and encouraging given the paltry number and dismal quality of the job postings I have seen lately. I am not optimistic, but I have to say that this development has lifted my spirits some. Before the call I was feeling bad about passing on Henry’s offer. Scoundrel though he has been to me, I hated to disappoint him. I know that seems ridiculous, but it’s true nonetheless.

*****

                                           Ivan tries to strike a deal.

Albatross was a wonderful place at first. Everyone was happy to have me. I was there about a month when the HR director told me, “Everyone who has taken a meeting with you has told me that we hit a home run when we hired you.” I felt pretty good hearing that. I felt like I had found a home at last.

Toward the end of my first year at Albatross, Ivan came to visit from Quilnutz. Ivan had been building trawler yachts along the St. John’s River in Florida. They built their own hulls, and had several models based on either a 45 or 60 foot length.

By this time Ivan had tanked Henry’s company and closed it up. I had predicted to several of my friends there as I was leaving that Quilnutz would probably shut the Arkansas facility down in six months time. In spite of many emotional protestations to the contrary by Ivan’s henchmen in the interim, Quilnutz had finally announced they were closing the Arkansas plant, making my prediction come true almost to the day. Now he was looking for another smaller and less expensive hull to build on—something to fill the place in their product line that had been occupied by the Henry’s Arkansas boats.

He thought it would be a good idea to buy these hulls from Albatross, since we had excess capacity, and to finish them out in Florida. Everyone at Albatross thought that I ought to weigh in on the decision. If this were an e-mail, I’d be writing “LOL” right now. I love it when someone else’s bad karma looks like retribution and vindication for me.

I didn’t even have to stretch to make Ivan’s idea a non-starter. This wasn’t purely vindictive on my part. It was a bad idea from Albatross’s perspective, at least to the extent they wanted to stay in the boat business. It wouldn’t have made any sense to sell hulls to Ivan knowing that he was then going to be competing directly with the Albatross boats for retail sales in an already shrinking market. It seemed for a while though that I was the only one at Albatross who fully understood that. Executive management was anxious to try anything that might boost unit sales in the short term, and, to them Ivan’s proposal represented just such an opportunity. That we would find ourselves competing with our own hulls was not the only problem though.

The other problem had to do with Ivan’s solvency. I knew that Ivan was in hock up to his eyeballs. I knew the market for Quilnutz yachts was stagnant. I knew that Ivan’s floor plan lender was putting pressure on him to pay curtailments on his older boats, that they had refused to bump up his line of credit, and that there was significant risk that he was going to default.

Ivan wanted us to provide him hulls on the cuff—that is he wanted us to ship him hulls consignment that he wouldn’t have to pay for until he had sold the finished boat. In effect he wanted us to extend the credit that his floor plan lender would not. If we did a deal like that we would not only be assuming the considerable risk that he would default on us as well, but we would actually be increasing that risk by putting his balance sheet further under water.

The solution was pretty simple. I suggested we tell Ivan that we would sell him hulls, but that we price them high enough to make him choke and make the terms cash on delivery. Ivan went away. I haven’t seen or heard from him since.

Day 81 - Golden Boy

          I got a call from Henry’s son this morning. He and Henry are currently operating another yacht business in Clearwater, Florida. Henry’s daughter has been doing their accounting, but she is leaving to take another job in North Carolina. Henry wants me to come over and take her place. This is almost attractive at the moment, although I’ve had enough experience with Henry to know I’ll have to be very careful how I proceed from here in order not to get on the short end of the ‘bidness’ yet again. Still, they know me and I know them, and if they can make the money right this could be just what I’m looking for. I’m driving over there tomorrow to see exactly what they’ve got in mind.

*****

          When I left Quilnutz, I gave 6 weeks notice. I was teaching a class of high school students at my church in preparation for their receiving the sacrament of confirmation. I didn’t want to leave them until we were through, and confirmation wasn’t scheduled until the end of April. Albatross was okay with this, and Quilnutz was happy to have sufficient time to find a suitable replacement although they wasted several weeks of that time trying to convince me to stay.

A Fine End to Arkansas

          After two years of almost constant grief at Quilnutz, I was suddenly a lustrous resource they couldn’t afford to lose. They promised to match the salary that Albatross had offered. They offered to move me to Florida. They treated me with an enormous amount of respect and deference. Finally they put me on the company jet and flew me to Florida to pick my brains in a week long conference about systems and accounting issues facing the whole company. They even let me interview some of the candidates who’d applied to replace me.

I talked to three applicants and recommended the one I thought would be the best fit. They picked another candidate, one I hadn’t even talked to. They felt they wanted someone younger with higher class credentials. They were looking for a guy on a faster career track. I had recommended a more desperate guy, one who was more likely to put up with their crap. Their last act of second guessing my considered opinion worked out way better for me than it did for them.

Their new guy couldn’t start until my absolute last day. That meant I only had one day to train him. I did the best I could. He was a bright and personable young man, and he had good experience although not in our business. Things were going pretty well until we got into the financial statements early in the afternoon. He was surprised—no shocked—to find that we had been losing money. It seems that no one he’d talked to thus far had bothered to tell him that things weren’t going so swimmingly for us. He seemed pretty distracted by this new and unsettling bit of information for the rest of the day, but still managed to make some sense of what he was going to have to do. Corporate finance was going to send my favorite analyst down to help him with closing so I didn’t worry about it too much.

I had a big party that week-end. All my friends came from work, from church, from my writers’ group. It was a big deal. I had a grand time. I drank too many martinis, swapped funny stories, got slapped on the back by a lot of well-wishers. It couldn’t have been any better. Monday I packed up two weeks worth of clothes and set out for Alabama. My wife was going to join me when we sold our house. I stopped by Quilnutz on my way out of town to say my final good byes. Two things of note happened.

First, and perhaps most surprising under the circumstances, Alicia gave me a hug and a card. I opened the card. She had signed it with ‘love.’ I don’t know if she meant it or not, or to what extent. If she had any affection for me at all, she had a strange way of showing it—not unlike Henry who regularly professed his love for me, often at the very moment he was trying to fleece me. I would love to have been able to give Alicia the benefit of the doubt, but the fact is that she had enlisted with Fische to make the previous two years of my life, years that should have been exciting and fruitful, become instead rife with frustration and disappointment.

The second surprise of the day was that my replacement had not shown up. Apparently he spent the week-end stewing over the accumulated losses and decided that it was not quite the opportunity that he’d been led to believe. It was too late for me to do anything other than gloat. I tried to do it in a nice, mature, and unassuming way. There was no one there from corporate to see it anyway.

Day 68 - Betrayal

          I fired off another eight résumés today complete with tailored cover letters. I think it’s cool how the job boards make the process easy once you’re properly set up. On the flip side, they make it easy for everyone so it’s harder and harder to stand out, especially in the midst of the huge crowd of folks now looking for work.

*****

          Things weren’t nearly so easy for a job seeker when I began to feel that I’d reached the end of my rope at Quilnutz. Back then everything was still intensely manual and cumbersome, and I was working so hard and under such duress that I just didn’t have the energy to look for a better situation. I was pretty much on my own. Ivan had fired Henry over an alleged breach of fiscal rectitude that was both smaller and less obvious than Ivan’s own trespasses. With Henry gone, Ivan shipped Mike off to Florida, and I suddenly found myself fighting battles on multiple fronts without allies. It was a bleak time.

          Henry’s undoing was interesting in a way. He was sucker punched by the one person who should have had his back. That was his supposed mistress, let’s call her Penny. I don’t know if Henry and Penny were engaged in an affair or not. Most everyone thought they were, including Henry’s daughter and probably, eventually at least, his wife. Penny certainly acted as if they were because she took every opportunity to throw her weight around as if it were Henry’s own—so much so that everyone came to take her excesses at face value. I confronted Henry about it once. I told him it didn’t matter to me one way or the other, but it sure was creating problems among the troops and he ought to consider cooling his jets. “When would I ever find time to screw that broad?” is what he said to me. I never brought it up again.

          Penny had been a payroll clerk in the company that Henry bought out of bankruptcy. When they shut their doors, she found herself relegated back to housewife status in rural Arkansas—not a happy circumstance for a woman with Penny’s aspirations. When Henry sent me out to Arkansas to get the plant ready to open again she was one of the first in line to get her job back. I made her an offer that I thought was fair based on the prevailing rates for clerical help, and Henry promptly cut it in half. She was happy to get that. I thought she must be just that desperate to get out of the house. I didn’t know that she was an expert practitioner of the dark arts, and that just getting her foot in the door was the moral equivalent to her of securing a fingernail paring or a lock of hair.

          We weren’t even open before Penny was promoted out of the payroll clerk position to become Henry’s personal assistant. The rest of her days with us, and subsequently with Quilnutz, were spent solidifying and fortifying her position. With Henry’s company that meant hanging onto Henry’s coattails, whatever that took. All her considerable power was derived from Henry and wielded in his name. At first Henry’s wife was a champion of Penny’s ascendancy. They were great chums. They went everywhere and did everything together—when Penny wasn’t busy ministering to Henry’s needs that is. As Penny’s hold on Henry increased, his wife began to fade into the background. Some of the newer customers even thought that Penny was the wife.

          Henry’s wife, let’s call her Pam, took most of this in stride. She’d been with Henry a long time and weathered all his storms and put up with all his shenanigans. She was content it seemed to let Penny play on center stage because she knew that whatever else may happen Henry owed her for her past loyalty and even a witch like Penny wasn’t going to upset that dynamic. She did have a breaking point though, and I was there to witness when she reached it.

          A crowd of us were out to dinner one night—Henry holding court in his usual flamboyant style. His wife was there, Penny, me, my wife, several other couples, most of them customers. When desert was served Penny began loading bites of chocolate cake from her plate onto her fork and feeding them into Henry’s mouth. It was a shockingly personal and intimate display—completely inappropriate in that or any other context. Jaws dropped all around the table. Glances were exchanged.

Henry’s wife’s usually placid and softly smiling face turned to granite. Her eyes glowed like mica fire-screens. You could see the flames licking up the inside of her skull. She was never the same after. Two years later she was diagnosed with breast cancer. She’s had a mastectomy and been through three courses of radiation and chemotherapy already with another to come. I’m sure that she is dying, although no one will say that. I think it was that chocolate cake that killed her.

After Quilnutz bought us out and Henry’s star began to fade, Penny suddenly needed to hitch her wagon someplace else. With Ivan showing no interest in women at all and Fische rooting around in Alicia’s garden, Penny had to get creative. The first thing she had to do was disassociate herself from Henry. At least she’d have a chance on her own. Still attached to his hip she would be consumed in the flameout. At some point it must have occurred to her that if she could be the author of Henry’s undoing she would not only disassociate from Henry but demonstrate her loyalty to Quilnutz and to Ivan in the bargain. Once she’d figured that out she dipped Henry directly into the grease and danced around the sizzle.

It was as thorough and awesome a betrayal as I have ever seen. It eclipses anything that’s ever been done to me and I’ve been the victim of some doozies. What was alleged was that Henry was getting some money directly from customers on deals he was booking for Quilnutz at shows—knocking down cash, always one of his favorite tricks. Trouble was he’d already been warned about it and he knew Ivan was watching him like a hawk. I would have thought that he’d be more careful, but then Henry was always happiest when he was cheating someone. The more Ivan pressed him the more likely Henry was to cave in to his instincts. Cheating Ivan under Ivan’s nose would have been an altogether irresistible proposition to Henry. The mere suggestion that he try it would have been entrapment to his greedy soul.

I don’t know what part Penny had to play in all this. I know that she bore witness against him, and that was enough to undo Henry and cement her position at Quilnutz. Whether she urged Henry to do it, whether she made the whole thing up and Henry was actually innocent, I couldn’t say. Either is possible, but in all probability neither would have been necessary. In the grand scheme of things what happened to Henry was just Karma. For the rest of us life went on. The difference for me was that I was out of players who shared my interests and my fortunes. I was alone in a dark and scary place.

Day 67 - Different Lyrics, Same Tune

          It was another slow Monday on the job boards. It occurs to me that things are going to continue to slow down anyway as we get closer to the holidays. It’s likely to be January before I see any significant pick-up in listings—not even then if the economy stays in this death spiral. Maybe I ought to be stocking up on canned goods and camping supplies.

          We took Bud to the vet today. The tumor on his shoulder is noticeably larger. It’s only been a few weeks so there’s no question that the cancer is progressing rapidly. Bud seems to like hanging out with me more and more. He will stand next to me while I watch television and rest his head in my lap. Somehow this seems to give him comfort. I hope so anyway. It is sad to see him failing when he has so much heart left for living.

*****

          I was losing heart at an accelerating pace at Quilnutz. Every success, every overcoming of an obstacle was answered by a new challenge. Nothing came easy, and every difficult thing was made even more so by the chicanery, bullying, and bone-headed decisions of corporate management.

          When I thought I had the Fische/Alicia conspiracy contained, Ivan started giving me fits. He decided at one point that we had overvalued our used trade-in inventory in the sale. He assigned new values to the remaining stock, and told me to adjust the units on the books accordingly. I knew they had been fairly appraised at the time of the sale, but I also realized that they had declined in value somewhat since the sale. I knew that Ivan wasn’t going to have any of that. Logic was not a path to appeasement for Ivan. I took the adjustment—another significant loss to be charged against the earn-out and against the possibility of my ever cashing out. It was like being mugged in slow motion. There was nothing I could do about it but watch. Ivan was holding the gun, and anything I said would just get me shot.

          The boat that I took the biggest adjustment on, some $40,000 write down in value, Ivan moved to Florida. He sold it there several weeks later and made an $80,000 gross profit on it. I guess our original appraisal values weren’t so far off the mark after all. The rat bastard never agreed to let me reverse the adjustment against the earn-out. He knew what he was doing from the start, and he was not ashamed to flash his avarice in my face and line his pockets at my expense. I guess it was ‘just bidness’. Different lyrics. Same tune.

Day 55 - Henchmen

          I guess I gave satisfactory answers to the recruiters yesterday about my experience. One of them is going to submit my résumé to a client, and the other wants me to come to their office for a face-to-face interview. I’m glad I’ve got the new suit, but now I’m wishing that I had gone with the blue rather than the brown. I’m every bit as adept at calling my own opinions and decisions into question as Ivan was. I just use less profanity when I’m doing it.

          Ivan wasn’t alone in his predilection for strong language. He had a sort of travelling second in command. His real second in command was his son, but his son stayed close to home. In addition to his duties at work the son had a farm. When I met him the whole crew of them had flown down from their headquarters in the Midwest in their corporate jet to start their negotiations with us. Everyone had taken some pains to dress for the occasion except for the son. He wore jeans and a pair of scuffed cowboy boots that were caked with manure. Fortunately for the rest of us he raised cows rather than pigs.

          The travelling second in command, let’s call him Fische, was more urbane in his dress but no less earthy in his demeanor. One of the first things our new management did after they had taken over was to look for assets that they could sell off. We had a little Kubota tractor with a mower deck that we used to cut the grass in front of the plant. Fische came one day to me to ask where it was. I told him I thought it was in the back of the upholstery shop where there was a rollup door to the parking lot. He said he’d looked there and not found it. I told him I’d look into it. I asked around and found out that it was at Henry’s son-in-law’s house. The son-in-law usually cut the grass so this was not unusual or even alarming to me.

          I found Fische on the plant floor and told him where the tractor was. He launched on me in much the same fashion that Ivan had—streams of profanity obfuscating any sense he might have otherwise made. It was an awesome display of invective aimed principally at me that left me literally shaking when he finally ran out of breath. The gist of it seemed to be that we, the old management from Henry's company, were an incredibly ignorant bunch of thieves who were engaged in an ongoing conspiracy to steal the assets that Ivan's company had bought and had a legitimate right to use as they saw fit. It didn’t matter to him that I had come to him to tell him where the tractor was, and had even made arrangements to get it delivered back to the plant. I had no idea what to say in reply, so I just walked away.

          The final irony to this little exchange was that Fische had the tractor loaded onto a flatbed trailer and delivered 600 miles to Ivan’s son’s farm. We were credited for half it’s appraised value—the value on our books after the merger—and so had to take the first of many losses orchestrated by them and charged against our earn-out. It seems they were going to make it as difficult as possible for us to ‘earn’ any of the shares that had been escrowed for us.

          I witnessed a lot of profanity-laced yelling in the ensuing weeks and months of my association with Ivan’s company. It seemed to be one of the hallmarks of their management philosophy. I’ve seen similar management styles employed since, all with the same ultimately disastrous result. While the people engaged in the yelling and invective think they are instilling an appropriate level of urgency in the people they are yelling at, what they really do is ensure that the people they are yelling at will forever after go to great lengths to avoid being yelled at again. This does not translate into a workplace where everyone is efficiently engaged in moving the company toward its goals. It rather translates into a workplace where otherwise talented and creative employees stop taking any kind of risk in order to avoid censure. In other words they stop using their talent in creative ways, and focus instead on the immediate security offered by not drawing any attention to themselves. This becomes a kind of vicious circle in which management begins to believe that only they have good ideas, and that everyone who works for them is a slug requiring constant motivation by way of verbal lashings to accomplish anything at all. Eventually the company is crushed under the enormous weight of management’s artificially inflated opinion of its own worth.

Day 53 - Job Search Reflections: The Heart of the Deal

          The job boards were discouraging this morning. There were only five jobs even remotely applicable on Indeed. None of them were a good fit for me, nor I for them. I fear that my profession has passed me by. While I’ve been toiling away trying to make the companies I’ve worked for succeed, I’ve not paid enough attention to bolstering my own credentials and skills. Now that the job market favors employers, and so many desperate souls are searching for meaningful work, the experience I bring to the table seems woefully underwhelming.

In addition the economy is seriously skittish. The news seems a little bleaker each evening. Now that the housing bust has exposed the cancer at the heart of our financial systems, hundreds of billions of dollars of debt on the brink of default, we seem to be spiraling into some final cataclysmic adjustment. We’ll have to wait to see just how bad it really is.

My wife is tired of listening to it. She doesn’t care much for the news anyway, so I generally let her have the remote. I tell all our friends, anyone who will listen really, that I am not authorized to operate the remote controls or the thermostat in our house. My wife doesn’t think this is very funny, but that doesn’t mean there’s not a grain of truth in it.

          I’m not used to having to look for work. I was at the same CPA firm for thirteen years after I graduated college. Then I owned my own business for a year. Then I went to work for Henry who had been one of my clients at the CPA firm. There was no job search, no resume, and no interview. I knew Henry and he knew me. I went by to see him. He told me he was looking for someone to get his bookkeeper caught up. I told him I could help him out. I started the next day. It didn’t take me long to realize Henry’s problems were way deeper than he imagined. We came to terms, and I stayed with him for 8 years. When we sold the company I stayed with the company that bought us out for another 2 years. Then I got recruited to an Alabama company. I was there for 6 years. That is 30 years of work without ever having to go beat the street for a job. I ought to be able to retire, but I can’t. I’ve had thirty years of managing other people’s money like it was my own while I managed my own money like I was the federal government.

*****

          I thought I had everything figured out when Henry sold his business to a company that traded on the NASDAQ exchange. I thought all my little personal financial transgressions would be fixed by a momentous bit of serendipity. The buyer came to us. One of their customers had recommended that they give us a look because the customer thought we knew what we were doing. We didn’t know what we were doing, but I guess it looked as though we did to someone.

Our sales were flat. We were having quality issues with a new design, and rework and warranty claims were costing us a fortune. Henry had already tried to shop the company around, but he had tried to do it without disclosing what kind of financial shape we were in. He was shopping us to another publicly traded group that was also one of our direct competitors. When I pointed out to him that, even if he did manage to generate some interest, they were going to expect to see his financials and to be able to come in and do due diligence on our books and records before they would settle any largess on him.

Henry knew that there would be two things that would happen if a competitor started nosing around our books. One, they would lose interest in buying us, and, two, before they had got very far they would know enough about our business to make it difficult for us to sell any more competing product. Sure they would sign a letter of intent with a non-disclosure clause, but that wouldn’t stop them from dropping a hint here or making a disparaging comment there when the heat was on in a potential sales deal. Henry would do it, and so would just about everyone else in our business. Henry backed off.

          Then one day comes this new company—also a competitor in one of it’s divisions—and its CEO. Let’s call him Ivan. They were a trucking company. They had already bought one boat company in Florida and wanted to diversify their product line. They thought we had a line that complemented their own products and would allow them to compete over a broader range of price points. They thought we were a good manageable size and that we had good potential for growth. Henry told them that he wanted $6 million for the company. They said they were interested at that price. They did their own due diligence. A lot of firms use consultants to do their due diligence, but consultants cost a lot of money and they sometimes tell you things you don’t want to hear. I believe that Ivan had already made up his mind that he was going to buy us and that he didn’t want any $1,200 dollar suits charging him a couple of hundred thousand dollars to tell him it was a bad idea. Ivan and Henry were cut from the same cloth.

          Henry was very excited. He thought he was going to cash out, have himself some real net worth for a change, and be able to pursue some other investment interests. He came to my office bubbling over with goodwill. The VP, Mike, was there. Henry sat down and started rhapsodizing about how he figured he’d finally made something out of all his scrabbling and worrying. He felt like Mike and I had been a big part of his success and he promised to give us a little something for our trouble when he finally had his money. “I’ll make it worth your while, if you know what I mean,” he said.

          Mike and I looked at one another. We knew exactly what he meant. He meant he needed us to help him do the deal and if he succeeded Mike and I were going to get the ‘bidness’. We’d both been there before. I decided I didn’t want to go there again. If Ivan was going to give Henry $6 million for a business upon which Henry had committed ‘bidness’, Mike and I deserved a fair share of the meringue without having to depend on Henry’s ethical sensibilities.

          I made a modest and logical proposal to Henry. I gave him the following facts:

1.     Since he had no remaining basis in the company, any cash he managed to get out of the deal was going to be taxable income to him.

2.     Absent any compelling business reason for his giving Mike and me any money, those payments were likely to be construed as non deductible gifts.

3.     Ivan’s company was surely going to want to structure the deal as a tax free exchange of stock, and to put some restrictions on Henry’s ability to sell the shares he got to avoid diluting the value of the shares they already had outstanding.

4.     The only way to make sure that Mike and I got the reward he was so generously offering was to give us a share of his valueless company now, before the sale, so that our distribution would come directly from the deal and not be dependent on Henry’s personal tax circumstances.

Henry bought it. I’m sure he didn’t want to, but he really had no choice. To balk would have been to admit that he really meant to stiff Mike and me when it came time to divvy up. He needed us to get the deal done. For the first time in my association with Henry—Mike’s too—I had him penned up and unable to cheat me out of what he had promised. Too bad I couldn’t have penned Ivan up at the same time, because he turned out to be every bit as slippery and duplicitous as Henry.

          Before Henry could change his mind I drew up all the necessary documents. We had a board meeting and a stockholders’ meeting, executed the appropriate notices and minutes, and signed, issued, and recorded stock certificates to Mike and me representing one twelfth of the company each. In an hour or so we had locked in a share of the deal, however it turned out, that Henry could not undo. There would be no ‘bidness’ as usual at the end of the road, not from Henry anyway.

          The rest of the deal was not nearly so easy as Henry had been. There was more back and forth than I imagined possible. Ivan’s people finished their due diligence in pretty short order. Everyone they sent to look us over had other things to do that they were anxious to get back to. Although they asked some hard questions and acted properly skeptical, for the most part it was a lick and a promise. They all knew the result Ivan expected and they weren’t about to deliver anything short of that. It was the negotiations over price and structure that got dicey.

          As soon as Henry understood that Ivan and his board were willing to give us $6 million, he decided that he hadn’t asked for enough money. Henry had thought they would give him $3 million. That’s why he asked for six. When they rolled over on six he decided that was too easy. He must have left money on the table.

          “Call Ivan and tell him we need twelve million,” he said to me.

That he’d already said he wanted six didn’t bother him a bit. It bothered Ivan of course. He thought we’d taken complete leave of our senses. Ivan told me to forget it then. “It was a stretch at six,” he said. It was a stretch at one, I thought; but then I didn’t know that we were going to be paid with smoke and mirrors.

We went through a lot of other machinations and maneuverings. I hired a law firm and a CPA to make sure we structured the sale to get the tax result we wanted and to make sure our private lender was protected. Our lawyers kept throwing their weight around at inopportune times. I think they were trying to justify their fees. They almost killed the deal several times by acting intractable on points that really mattered very little to us. I finally had to rein them in—one of them anyway—by yelling at him in a conference call with all the players in the deal.

I’m not used to having to do stuff like that. I hate yelling almost as much as I hate being yelled at. I am not a loud and assertive person by nature. I don’t think I should have to be. I’m a smart guy. People should pay attention to me because I have good sense and good ideas. I shouldn’t have to act like a jackass to get their attention, although sometimes I think that if I did I would make more money.

We finally got over all the hurdles. The deal died several times along the way, but whenever it did I resurrected it with sweet talk and the grace of good sense. When Henry went off on a jag, I placated him. When Ivan came up with a new twist to screw us, I found a compromise to make it palatable. I was motivated by my one twelfth share. I figured it was worth $500,000 to me. It should have been, but I had no notion of Ivan’s capacity to devalue it. I was just building castles in the air.

We were going to do a stock swap just as I had suspected. Ivan’s company would give us a number of shares equal to $6 million at the market bid price at the close of business the day before closing. At the last minute they wanted to make the whole distribution subject to an earn-out. This was not unexpected, but it wasn’t something we wanted to deal with. An earn-out meant the company would have to post profits for a period of time before the stock would be distributed to us.

We had never posted profits, but we had always thought that we could if we only had sufficient cash. I reasoned that, with Ivan’s executive team effectively taking over management, Henry wasn’t going to be able to tie up our cash flow anymore with his whacked out deposit deals. Besides Ivan’s Florida division, because it operated at a higher echelon of the market than we did, would give us access to markets we hadn’t been able to tap before. For this reason it also seemed reasonable that they would invest in improvements to our manufacturing efficiency and to our products.

We had already talked with them about these issues, and they were excited about the prospects for substantial profits under their guidance. We needed the deal so we took the earn-out. We might as well have walked away at that point. The end result was the same, and we wouldn’t have had to endure nearly so much heartache and abuse.

Day 41 - Sport Negotiating

          Gary called today with a question about the inventory—a simple matter that we disposed of quickly. He asked after my health and I told him about the pain, the fever, and the Cipro. He said that in his experience Cipro takes a minimum of a week and as much as two to begin to work. Once it begins, apparently, it works pretty fast, but I’d have a long wait for any relief. I don’t know if this is true or not. It seems irresponsible on the part of the doctor to prescribe a slow-acting antibiotic for a kidney infection that had the potential at least to become virulent and even life threatening, but what do I know? I’ve got a lot of nerve second guessing a board certified urologist when I can’t even hold a simple job in accounting.

          If you were paying attention during those last two sentences you will realize that self doubt has begun to take root right next to the bacteria ravaging my plumbing. I expect that in this circumstance the hydrocodone is both my best friend and my worst enemy. I’m taking them two at a time now even though the pain has abated to the point of mild discomfort when I urinate. I convince myself that they help with the fever and they help me sleep, although that last is not really true. They don’t help me sleep at all, but they do help me not to care that I am awake.

*****

          Henry was never troubled by self doubt. No feeling of inadequacy, sense of guilt, or pang of conscience ever clouded his mind that I know of. Henry kept his own counsel. By Henry’s reckoning he was the smartest sumbitch in the valley, and while he might pay for good advice that did not mean that he had to take it when it went contrary to his own wisdom. Everyone else’s intelligence was measured by the yardstick of Henry’s own notions, so that the more you agreed with him the more brilliant you became.

          Much of what Henry did seemed to me not just counterintuitive, but downright stupid. And yet he was not, despite his behavior, a stupid person. I began to believe over several years that he made stupid business decisions intentionally just to prove that he could. Just like hitting on bizarre and unattainable women—to prove that he could. He had to constantly reinforce the notion he had of himself that he was above having to listen to anyone else or do anything that anyone else would do in the same or similar circumstances. He would cheat and fudge and screw up wherever and whenever he chose, and because by doing so he gave the impression that he was crazy no one ever called him on it. There were almost never permanent consequences for him. Sure he might have to buy a truck or pay a settlement, but his life, his homestead, his business, his circle of influence remained virtually intact. I wondered sometimes if he’d made a pact with the devil.

          The lowest I’ve ever seen him was shortly after I’d gone to work for him, about a year after he’d run afoul of the IRS, and while we were in the process of moving our whole operation to Arkansas. We got caught out of trust by our floor plan lender. A floor plan is a wholesale line of credit secured by our inventory. As soon as we sold a boat we had to pay it off. Being out of trust meant we hadn’t paid off sold inventory on a timely basis. We weren’t out of trust just a little bit. We were out of trust about $6 million.

          I had walked into this situation without knowing what I was getting myself into. Henry had been pulling the wool over my eyes as the CPA in charge of his tax work and annual review in the same way he was fooling the lender. When I left the CPA firm to go to work for him, I was suddenly in the thick of the very accounting subterfuge he had been using against me. I knew that sooner or later we were going to get caught. I also knew that as soon as the lender found out we were out of trust they would shut us down and padlock the doors.

Henry had been able to hide his out of trust condition because the lender was at best lackadaisical about checking our inventory. They let us know in advance when they were coming. Henry would get on the phone to his customers, and have them bring their boats back to the dealership on some pretext, usually service work. If that didn’t work he would just tell the lender’s agents that the boats they were looking for were out on a demonstration cruise or at a show. Sooner or later the unit would make its way back to the lot, he’d call the lender, they’d come out to look at it, and everybody would be happy until the next inspection. Then the whole process would start all over again. To keep things interesting Henry kept paying units off and ordering new ones from the manufacturers to keep his float alive.

          The internal financial statements he was providing to the lender every month were a joke. The $6 million he was out of trust was being carried as customer deposits. That is he had sold the boats and collected the money, including taking a unit in trade usually, but he hadn’t recorded the sale. The money was be credited to customer deposits rather than recorded as sales revenue. I knew I had to get things honest and I had to do it in a hurry, but I also knew that if I did it all at once the whole sorry mess would come tumbling down on our heads. We were actually making significant progress toward clean books until Henry decided he needed to buy a factory and move his operations to Arkansas.

          I ran the numbers on that too. It wasn’t such a bad deal. We bought a bankrupt manufacturing operation for 10 cents on the dollar. The trouble was coming up with the cash to fuel operations until we started getting production off the line. I told Henry it would take $3.2 million to do properly. Henry raised $1.5 million and pulled the trigger on the deal. We were a million seven short, and Henry made up the difference with out of trust floor plan proceeds. Instead of us getting back into trust and being able to breathe a collective sigh of relief, he plunged us deeper into the hole.

          It all came crashing down when I published the next set of quarterly financials. I made them honest. I knew I had to. It was one thing to fudge on the monthly internal financials, but I just wasn’t about to lie on the published quarterlies. It would go against everything I stood for. I dug in my heels. Disaster was the result.

When the lender realized that Henry was actually losing money they became unbelievably skittish about the whole arrangement. They descended on us unannounced with twice the usual number of grunts to check our inventory. Naturally they couldn’t find a lot of it. Instead of letting Henry waltz them around with a lot of B.S. like they used to do they started asking really hard questions. When Henry told them a unit was at a show they wanted to get on the phone and talk to someone at the show that could go look at the unit and capture its serial numbers. It got really ugly really fast. Henry was sweating bullets. Tension crackled across the property like downed power lines. After two days of trying to salvage the unsalvageable Henry came clean and threw himself on their mercy. That’s when things began to get really interesting.

          The lender didn’t shut us down as I had thought they would. The reason they didn’t shut us down is that they wanted to keep the whole matter as quiet as possible. They had already been caught unawares by another out of trust dealer to the extent of $104 million. That number made our paltry sum seem insignificant. It had also made a big splash in the financial press and caused the lender’s stock price to take a substantial dip. They couldn’t afford any more bad press, and they couldn’t afford any more losses. If they shut us down they would get both. The fiasco would make the papers, and they’d have to liquidate our inventory at a significant discount. They’d be lucky to get out with half what we owed them.

          The far better course for the lender was to throw us into a workout. They made Henry sign everything he owned over to them. He was three days just signing papers that gave them first security rights in virtually everything of value we had except the property itself, which was of course mortgaged. Then they parked two agents in our offices to approve every deal we made. All the cash we collected went directly to them every day. We would submit payment requests to them for all our expenses including payroll. Whatever we spent had to be documented and approved by them before they would release the funds. Everything else they kept. They came with us to Arkansas. It was burdensome and unnerving. It left us scant room to operate and no way to capitalize on any opportunities that might come our way. The lender ran the business, and they ran it with an iron hand. Still we were open for business, working our way out of the mess, and Henry wasn’t in jail.

          At first Henry seemed a broken man. He lost his color. He quit combing his hair or taking any care with his appearance. His attempts at philandering were listless and half-hearted. Gradually though he came out of it. It was another instance of Henry escaping his own stupidity unscathed by more or less blind luck. Were it not for the lender’s previous troubles they probably would have locked our doors and filed charges against Henry. As it was, to all outward appearances they left him doing what he’d always done with the one exception that everything was now totally above board and honest. That part probably made Henry crazy, but he made the best of it and within a few weeks seemed his old self. I guess he had to keep his larcenous spirits up by perfecting the use of his ‘foot wedge’ on the golf course. To his credit, and to my everlasting surprise, the one thing he did not do was hold me responsible for the mess. I knew that somewhere in the dark recesses of him mind he had to be thinking that if I hadn’t insisted on being honest he would have been enjoying ‘bidness’ as usual with impunity.

          One interesting thing happened to me in the course of all the turmoil. The lender sent an auditor from Detroit to look at our books. I’d already made significant strides getting them into shape, and I went out of my way to be as forthcoming and helpful as possible when he showed up. I guess he appreciated that because we developed a kind of cautious rapport that I would not have thought possible under the circumstances. Maybe the controllers he usually dealt with were still trying to cover up their bookkeeping misdeeds. I didn’t. There wouldn’t have been any point. We were already caught out. Keeping the books honest at that point just made everything work better. The more they knew about the reality of our situation the less likely they were to have unreasonable expectations. All I know is that eventually he came to trust me, and I made sure that his trust was not misplaced.

          Now Henry had earmarked a crummy little internal office in the Arkansas facility for my use. The furnishings were awful. The desk and credenza were pressed wood by-products covered in cracked and stained Formica. My chair listed about 5 degrees to port. There were no windows. It shared an air conditioning and heating zone with the windowed offices across the hall that also housed the thermostat. The result was that my office was a good ten degrees cooler than the rest of the building in the winter and that much warmer in the summer. I hated it and so did the lender’s auditor.

          One day the auditor went to Henry and told him he needed to give me a bigger office. He told him that he wouldn’t even have a business were it not for me, and he had no business consigning me to a slum tenement of an office when there was so much prime space available right across the hall. He told him I needed more space, more comfort, and more respect, and that he wasn’t going to be happy until I was moved into quarters commensurate with my importance to the company. That little speech got me moved into Henry’s office. Henry moved down the hall and built himself another, but I inherited all his office real estate and all his furniture. I’ve never had as fine a place to work since.

          The thing was huge. It was the equivalent of three regular sized offices. The entire West wall was floor to ceiling window. The South wall was one huge custom built floor to ceiling cabinet that housed an entertainment center, a clothes closet, file drawers, and a wet bar. The custom made desk was just shy of two acres. There was a matching credenza, and respectable artwork on the walls. The carpet was plush with a hand inlaid design. There was a sofa, two barrel chairs, two end tables, a round conference table and 6 matching custom upholstered directors’ chairs. My new chair was a high backed leather executive chair with padded arms. It did not list to port or starboard. It was so comfortable that I had to eventually get rid of it and replace it with something more conducive to work. I had the Taj Mahal of Middle American office space, and I enjoyed it every day for 7 years before some dirt bag from the company we finally sold out to took it away from me. But that’s a whole other story.

          Eventually we slipped the lender’s shackles. They stayed with us for two years, collecting every dime and scrutinizing every payment. It got to be a huge pain in the ass, and it really stymied all our efforts to succeed and grow the company. The lender hardly cared what happened to us. They only wanted to get their money back, plus interest if possible. In fact they probably hoped that we would eventually fail. I’m sure they thought we had it coming to us. They just didn’t want it to happen until we had got them paid off. We were still a long way away from having done that when we found a private lender who was willing to buy out their position. Of course the new lender wanted a substantial discount, and we wanted to make sure that he got it.

This was my first indoctrination into the world of hard-nosed negotiation. I thought we could probably talk the lender into taking 75 cents on the dollar. I thought that was reasonable, and that they would be happy to get it if they could get out quickly and with cash. The longer they stayed in the workout the more likely it was that we were going to fail anyway. They kept such tight reins on us that we weren’t able to invest in improving our production efficiencies or upgrading our product offerings. We were languishing in mediocrity, and our lackluster sales were telling a story of significant risk for the lender. They would be happy to get any reasonable deal.

I figured we could offer them 66 cents and settle out at 75. Henry and his VP thought we could do way better than that. We offered them 40. I was sure they would balk, but they didn’t. They hollered. They made a lot of noise, but they kept talking. In the end we convinced them that we were going to walk away and let them have the keys. In fact Henry jumped up at one of our meetings with them and threw his keys on the table. It was his car keys, but the gesture wasn’t lost on the lender’s executives who suddenly saw their careers flash before their eyes. They couldn’t afford to take the kind of hit that our abandonment of the enterprise would give them. They were still in too deep, and the memories of their other losses too fresh. Besides, Henry’s demonstrably lunatic behavior over the two years they had been camped out in our back pockets convinced them he was just crazy enough to stick them with the whole mess. They settled for half what we owed them and ran for the exits.

We had a new lease on our future with a new and entirely more accommodating lender. The new lender was an individual. He’d built a huge agricultural operation in the East and sold out to a corporate food processor for a mountain of cash and stock. He was sitting on $150 million, and he was bored. He liked us. He owned one of our boats. He thought we deserved a chance at success. He was just as crazy as Henry but a lot nicer and there was not a larcenous bone in his body. At first he was reluctant to get involved. The risk was considerable. We’d gotten enough of a discount on the deal that his security interest in our inventory was going to be very attractive, but he was still fronting a lot of cash and anything could go wrong. The economy wasn’t that good. Sales were lagging. The VP and I went to his house, stayed with him two whole days talking into the night. We gave him our personal word that we would keep open channels of communication with him and watch his back at every turn. Finally he bought the deal, and we closed out the other lender. He was our savior, and I vowed that I would never let Henry take advantage of him. I never did either—no matter how hard the bastard tried.