Clients From Hell: Part 3

The company that was wacky from day one and a client with whom I almost engaged in a cussing match conclude the series.

• Operation Combat Fairy Dust.  The client seemed normal enough. The maker of back-up power-supply systems, traded on the Nasdaq National Market System, was an industry leader. Formerly family owned, the company had recently gone public, which didn’t sit well with some family members. In fact, the IPO made matters worse rather than better.

The account-team orientation presented difficult logistics. The company is located in a small town, 75 miles north of Madison, Wisconsin. There is a shift change at the plant in the early afternoon, and the lone road leading into and out of the plant/company headquarters was only one lane wide. If we didn’t get there before the shift change, we wouldn’t be able to enter for about an hour  We flew to Madison and checked into the hotel before proceeding north, allowing us to miss the “rush hour.” 

The hotel would be busy that evening  A fraternal organization (which I won’t name but obviously not the B’nai Brith) was holding an event in the evening, and liquor was arriving in cases  After a long day of flying, driving and conferencing, Diane, Bob and I knew we wouldn’t get much sleep that night. We didn’t, but for an entirely different reason.

Ushered into the conference room after arriving, we were told it would be a few minutes. The minutes turned out to be about an hour, with virtually nothing to do but check in at the office. Company management, a nice group who were very apologetic, finally arrived. The investor-relations program had a simple objective: get the stock price high enough so the wacky family members would sell out. The nuttiest one was a woman (possibly the founder’s widow) who would drop by the office and sprinkle “fairy dust” on those she thought needed to see her way of thinking.

Needless to say, we spent very little time learning about the company before it was time for dinner. This necessitated a 10-mile drive south to a supper club in the next biggest town, where the quantity of food vastly surpassed the quality. We finished up around 10 o’clock, and still had the ride back to Madison  Diane and Bob wanted to drive directly home, which was fine with me so long as I didn’t have to drive. After stopping at the hotel (the revelers were still in high gear) to pick up our belongings and call Janet to tell her of my impending wee-hour arrival, we headed out on I-90/94, with Bob expertly piloting the Lincoln Town Car.  My sound sleep was interrupted by noise from the rumble strips at the Rockford Toll Plaza, and I walked through the front door about 3 a.m.

Luckily for all involved, the company didn’t even make it to the next quarterly earnings announcement before being acquired. We no longer had to play catch-up on learning the company’s investment merits or worry about telltale fallout from fairy dust.

• When Keeping Quiet is the Best Strategy.  Real-estate investment trusts (REITs) were all the rage in the early 1990s, with every property classification going to the public markets to raise capital.  I represented a number of them (shameless plug: I was the co-author of the chapter on investor relations in Real Estate Investment Trusts: Structure, Analysis and Strategy, Richard T. Garrigan and John F.C. Parsons, eds.). Because this company’s classification has a limited number of public entities, I won’t provide any more information, which will make the discussion rather cryptic.

Early into the client relationship, the company acquired a development consisting of several properties. The news release was distributed before the market opened; back in the pre-Internet days, one had to manually check the Dow Jones and Reuters news wires, cut and paste the clips, check them for accuracy and fax them to the client. The news was slow hitting the wires, and Wayne, who worked on the account with me, and I headed off to another client’s investor presentation at noon  In hindsight, we should have had someone other than an administrative assistant read the clips before sending them out.

I returned from lunch with two urgent notes: call the client CFO and call my mother  My first call informed me that Janet’s mother had suffered another stroke, but my mother didn’t know to which hospital she would be admitted. Since I couldn’t reach Janet, I called the CFO next.  I’d already seen that the clip from Dow Jones inaccurately reported the wrong real-estate classification was acquired, which didn’t make sense because the company wasn’t diversified and wouldn’t have bought such property. Because of expansions at Dow Jones, Reuters and Bloomberg, the companies were hiring recent college graduates for their news desks, and many of them were clearly not qualified to handle and report breaking news. The client’s investment banker had called the CFO in a tizzy, asking what was going on and, to make matters worse, our administrative assistant had sent the clip to the client without any note other than the basic FYI. 

Upon reaching him, I was greeted with a barrage of profanity and threats I’ve not heard from a client either before or since. While listening to his f-bombs and “Wait until the CEO hears about this,” I thought, “My mother-in-law might very well be dead (she survived but passed away a few months later), and I have to listen to this crap?”  I was just about to unload on him as he finished (o.k., he didn’t know, but that doesn’t excuse his poor manners) but I held my breath. After about three seconds of silence, I heard the click on the other end. I’m glad I kept my mouth shut. 

Not unexpectedly, I was booted off the account the next day and shortly thereafter assigned to one of their competitors (the agency had a loose definition of conflicts). The company’s managements couldn’t have been more different: all the officers of the first company were Jewish, while the new client was very WASPy. Wayne and I got along fine with the new people, tackling their annual report right away. The chairman [“Jack Bell”] arranged for the board of directors photo to be taken at his yacht club. When the designer arrived with the photographer and announced himself, the man at the front desk, said, “You must be Commodore Bell’s boy.” I still call him that.