MBO Attempt No.3 "Call Me Santa Claus"

Martyn is shredding old files today being the tidy fellow that he is, and has just handed me a memo issued by BFF in October 2002 announcing our third (doomed) MBO attempt: "Call Me Santa Claus".

It was a complicated proposal put to us by the CEO of Lamont Holdings Plc. He had only been in the joint chair of Lamont and BFF for about three hours when I introduced myself to him with the words "my name is Clive Birnie and I am going to buy your consumer goods business".

"Er right..." He said. "Let me get my feet under the table and we will talk."

A few weeks later he put the deal to us. It clearly was designed to leave him with as much control as he thought he could get away with whilst pumping as much cash back into the empty coffers of Lamont as possible. He thought it was the best deal anyone would ever give us.

"You should call me Santa Claus!" he beamed.

We sat down with our lawyer Richard Tall. "As long as we proceed cautiously I see no reason why this cannot work out for you." He advised. So proceed we did.

Why? Because our view was bank this deal and increase control by attrition once we are in the chair.

Why did it fail?

Too complex. Too clever. Too Late. And no one asked The Bank if they could sell 1% of the assets covered by the ALL Assets Debenture they were holding.

By late December we were sat in the offices of the opposing lawyers, pens out, ready to sign.

One document was missing. The release from The Bank. It never arrived.

"We just want our accountants to have one final trawl through the books." They said, and six weeks later put the whole group into Administrative Receivership.

Our 1% turned out to be pivotal. Because it had always been treated as a low priority distraction internally there was an assumption that The Bank would be ambivalent.

They were not.

But, every cloud and all that. On 27th March 2003 we completed our acquisition from the Receiver. On our terms. At a lower price. For 100% of the equity day one.

Lessons:

Be a realist. If there is only one deal on the table it is the one you have to consider.

Be patient. Be tenacious.

If everyone else is playing short: play long. If might just play out your way after all.