Chapter 11: Katie

“Is there a particular reason you think Price Bean & Whitlock is not telling you everything?” I asked, looking up from my uncle’s long conference table where the contract detailing the offer to purchase his company was laid out for my review. I picked up the financials page and looked over the numbers again. “I mean, this is a great offer, Uncle Allen, at least on the surface.”

“That’s one reason I’m a little suspicious,” he said with a sigh that told me he was tired of thinking about the offer, which would have put more than a hundred-million-dollars in his pocket. He sat back in the chair across the wide mahogany table and arched his graying eyebrows at me. “I think this offer may be too good to be true.”

My uncle was Allen Benson, founder and CEO of Benson Digital, a successful manufacturer of computer parts and chips in upstate New York. Price Bean & Whitlock was the Wall Street investment bank that wanted to buy his company for three-hundred million dollars, an enormous sum that was twice what the company was worth on paper, but we both knew investment firms often overpaid to block someone else from making a bid.

“I wouldn’t say the offer is too good to be true, Uncle Allen,” I said. “I would say they’re paying you a premium, probably so you don’t entertain any other offers.”

“Maybe,” he said. “Maybe not. That’s why I wanted you to look over the contract. You’re the sharpest contracts lawyer I know, Katie. I trust your judgment.”

Allen Benson was my mom’s older brother. He was the smart one of a family of idiots and derelicts, leaving South Boston when he was just eighteen to attend MIT on a full scholarship.

He had started his company right out of college and spent thirty-years building it into one of the top computer parts manufacturers in the country. Then he started designing and manufacturing custom computer chips for work stations and file servers, then released his own line of computer chips for the mass market. That’s when his business boomed.

You couldn’t tell it by looking at him because he wore jeans and a black polo shirt to work every day, but he was one of the richest men the country had. He was also fiercely loyal to his family, friends, partners, and employees. He had helped put me through law school and refused repayment. I would be forever in his debt.

“Well, the contract is pretty detailed, but there is nothing out of the ordinary jumping out at me,” I said, shuffling the papers. “It’s a standard purchase in entirety.”

“Purchase in entirety? What the hell does that mean?”

“That means they are buying the whole shebang: physical assets, intellectual property, real estate, customer lists, fixtures and furniture, equipment, employment contracts, debt, etcetera, etcetera, etcetera. Everything that is owned by Benson Digital is being acquired by them if you accept this deal.”

He gave me a thoughtful nod and scratched his chin. “So, no red flags? No ‘oh shits’ or ‘gotchas’?”

“None that I can see,” I said. “The only thing that might be of concern is what happens after the fact that’s not covered by this agreement.”

“Meaning?”

I smiled and gave him a look. Uncle Allen was exponentially smarter than I was, and probably knew more about contract law. I sometimes thought he asked me for further explanations just to see how smart I was.

I said, “Meaning, what do they plan to do with the company once they’re in control? What changes might they make? Have you had that conversation with them?”

His eyebrows knitted in the middle. “They’re not going to be in control after the acquisition,” he said. “Part of this deal is that I would remain as CEO after the acquisition for a period of three years, minimum. I will still be the one making the major decisions and controlling the board.”

“You may still be CEO and running things,” I said, scanning the clause in the document that detailed his employment contract after the fact. “However, you will still be at the mercy of the board of directors. At the end of the day, you still work for them.”

“The board will support me,” he said confidently. “They always have.” I made a sour face that he picked up on. “What’s with that face? You look your mother when you do that with your nose.”

“Boards come and go, Uncle Allen,” I said, rubbing the tip of my nose with a knuckle. I loved hearing that I reminded him of my mom. “And boards change.” I held up the page I had been scanning. “According to this, Price Bean & Whitlock has the right to add three new board seats and appoint members to fill those seats. That would give them control of a third of the board’s votes. And given their reputation, it would not be beneath them to buy the votes of the others.”

He narrowed his blue eyes at me and lowered his voice to an angry growl. “You think Price Bean & Whitlock would try to bribe board members behind my back to vote me out?”

“Not necessarily. I’m just saying that after the dust settles, even with a three-year employment contract, you’re only going to be in charge as long as they allow you to be.” I gathered up the pages into a neat stack. It bothered me that I was causing my favorite uncle such heartburn.

“Shit,” he said, rubbing his eyes. “That’s what I was afraid of.”

“Look, Uncle Allen, on the surface it looks like a great deal for you and the shareholders. At the end of the day, you will personally profit over a hundred-million-dollars. That’s an enormous amount of money. Why are you letting this bug you so? Why not retire and enjoy it?”

“I’m too young to retire, Katie,” he said with a smile that I thought looked tired despite his best efforts to prove otherwise. “I have a lot of years left in these old bones. I’m only fifty-nine, you know. I’m not one to sit on a beach and sip fruity drinks or chase a little ball around a golf course. If I tried to retire I’d drive myself and everyone around me nuts. Besides, it’s not about the money. I already have plenty of money.”

“Then, why not take the proceeds from the sale, and do something humanitarian with them? Invest in small businesses. Start a business incubator. Fund school programs or scholarships? Give it away?”

“Yeah, I suppose I could just cash out and walk away,” he said, rubbing the bridge of his nose as if a headache was coming on. “That’s not what I’m worried about.”

“Okay, then just spell it out for me, Uncle Allen. Obviously, there’s something here that I’m missing. What are you worried about?”

He took a deep breath and blew it out slowly. “Benson Digital employs three thousand people. Those people have families who rely on their weekly paychecks. I just want to make sure that those jobs do not go away.”

“So, you’re worried that Price Bean & Whitlock may want to move manufacturing out of the country?” I asked. “To China or Mexico, maybe?”

He gave me a slow nod. “Yes, that is a concern.”

“And what did your in-house counsel say?” I asked. I looked around the conference room as if I’d just noticed we were alone. “I assume he negotiated this contract. In fact, why isn’t he here?”

“Jeff has been pushing this deal hard,” he said, referring to Jeff Chase, his in-house attorney and oldest friend. “A little too hard for my taste. That’s why you’re here to offer a second set of eyes.”

“What exactly does that mean?” I asked. “He’s been pushing the deal hard?”

“He’s a shareholder, and the shareholders want to sell,” Uncle Allen said with a shrug. “And I don’t blame them. Especially Jeff. He’s been with me since day one and worked for peanuts a lot of those years. He owns a lot of stock. He’ll profit handsomely if we sell.”

There was a red flag if I’d ever seen one. I leaned in and looked him in the eye. “Do you think he is letting his own potential for profit influence his fiduciary duties? I mean, if he is offering you legal advice based on his own best interest, that is so unethical that he could be disbarred.”

“No, no, no,” he said, hands patting the air. “Jeff would never let personal greed sway his loyalty to me, or his professional duties as my in-house counsel.”

“Then why am I here?”

“You’re here because you’re the best contracts attorney I know, and I trust you implicitly. Anyway, back to your original question about outsourcing, Jeff said that even if we added a clause prohibiting Price from moving those manufacturing jobs out of the states after the acquisition, their lawyers could get such a ban squashed after the fact if they could prove the company would benefit by moving things off shore.”

“So why bother adding the clause?”

“Exactly.”

I studied his face for a moment. It pained me to see him so worried. “Have you had this conversation with Price? Who is your point of contact there?”

“Reed Helstrom, the senior partner who I’ve known for years, and the young guy in charge of acquisitions, hot shot investment banker named Conner McGee. He’s probably your age or a little older. Ever heard of him?”

“No, but if he’s in charge of acquisitions at Price Bean & Whitlock before age fifty he must be a shark.”

“Oh, he’s a shark, all right,” Uncle Allen said. “You’ll get to meet them both tonight at dinner.”

“So, when you talked to Helstrom and McGee about your concerns, what did they say?”

“Reed assures me that nothing is going to change. Things will continue exactly as they have been, with me in charge and manufacturing staying here.”

“And you believe them?”

“I have no reason not to, not really.”

“And that’s the only concern you have?” I asked. “That they will shut down the plant and outsource the jobs?”

He thought about it for a moment, then began to nod. “I don’t trust the bastards, but yes, that’s my only fear. Price Bean & Whitlock has a reputation of buying businesses and parting them out to sell off the weaker pieces, but BD is strong across the board. There would be one reason I can think of to sell off the pieces when the whole pie is worth ten times more.”

“Then it sounds like a great deal, dear uncle” I said with a smile, picking up the contract and tapping it on the table. “And I’ll be expecting a very expensive Christmas gift this year. Just tell me what you need me to do.”

“I need you to sit down with these bastards and go over this contract line by line before I present it to the board for signatures,” he said, leaning in to tap a stiff finger to the table. “Get across the table from Conner McGee and make sure we’re not missing something. Make sure that me and my people don’t get double-crossed somehow.”

“Three-hundred-million-dollars is a lot to spend just to double-cross someone,” I said. I sat back and thought things through for a moment. “How long will it take Price Bean & Whitlock to see a return on their investment if things continue as they are now?”

He took a long breath and did the math in his head. “Probably five or six years, give or take changes to the industry and our ability to keep up. Why?”

“You mentioned selling off the weaker pieces.”

“There are none,” he said quickly.

“If they did break up the company, would it increase the time it takes to see a return?”

“I’ve thought about that, too,” he said. “I don’t see how they could speed up or increase return on investment by breaking the company up. The pieces aren’t worth the sum of the whole business.”

“Well, then I guess we just sit down with them and see what they say,” I said. I pushed up my sleeve to look at the watch Uncle Allen had given me when I graduated law school. Instead of giving me a $10,000 Rolex, he’d given me a $50 Timex with a note that read: Time is money, don’t waste either one!

I asked, “What time are we meeting them for dinner?”

He glanced at his watch. “Eight o’clock, so three hours. At the Roxie downtown. It’s a little ritzy for my taste, but they do have a good porterhouse steak.”

“Okay, I’m going to go back to my place to freshen up.” I gathered up the contract and tucked it inside my briefcase, then let him escort me out. He had a car waiting for me at the curb.

“I don’t mind taking the subway,” I said.

“The subway is a dangerous place,” he said. “You need a car.”

“I wouldn’t even attempt to drive in New York City.”

“Then you need to demand a car service the next time you negotiate your employment contract,” he said. “Or just come to work for me.”

“I like my job and I don’t mind the subway,” I said before getting into the car. I stood on my tiptoes to kiss his cheek. “I’ll see you at dinner. And don’t worry, I’ll make sure they’re playing fair.”

“I knew you would, Katie O’Hara,” he said before closing the car door. “With you on my team, I know I can’t lose.”