Read Online Geneva Connection, The by Martin Bodenham - Free Book Online Page A

doesn’t get any worse. The recession means the chances of replacing Grampian’s commitment with other investors today are virtually zero.”
    “But CBC has a great track record.”
    “It doesn’t matter. Most institutional investors are already overcommitted to private equity at the moment. They’re looking to reduce those commitments, not add to them.”
    “I see.”
    “We’re in trouble. This couldn’t have happened at a worse time for us.”

    Kent bought all the main newspapers the next day. They were full of stories covering the failure of Grampian, the once-prestigious Wall Street financial institution. The company had collapsed without any prior warning. There was no hint of any disproportionate losses accumulating in its insurance division in its last quarterly SEC filing, and the share price had been stable in recent months. Press speculation ran wild with theories, ranging from fraud through to massive mismanagement. The commentators were unanimous in praising the Fed for not bailing out another risk-taking institution. Taxpayers would not accept any more. The fact that the whole market was taken by surprise didn’t make Kent feel any better. He was still facing the almost certain failure of CBC.
    The partners spent most of the morning discussing what options they had to rescue the firm. While they knew the market for fundraising was awful, Kent insisted they had to try to generate some new investor interest. He was not going to give up without a fight. He assigned the task to Johnson and Prentis as they had the most relationships in the institutional investor community. They’d know which institutions, if any, had an appetite to make new fund commitments. Although the thought turned his stomach, Kent decided they also had to investigate whether there was any merit in selling CBC to a competing private equity firm. He knew that was likely to be a waste of time; it would always be much cheaper for any competitor to hire those members of the CBC team they wanted rather than buy the whole firm. That’s what he would do if he was in their shoes, but he owed it to all the staff to see if another firm would acquire CBC, even for pennies. He asked Henning to lead the search for possible buyers. If, through some miracle, he managed to hook any interest, Kent would take over the negotiations with the prospective buyer as it would be a messy fistfight.
    The only live deal in the pipeline likely to be difficult to unwind was the Henderson Wright transaction being led by Kirkland. They could not continue with the deal now they had no investment funds available. Kent asked Kirkland to meet with Wright to see if there was an elegant exit from the transaction. Maybe they could suggest another private equity firm to replace CBC. Whatever help they offered Wright, Kent expected trouble. He’d just pushed him into accepting a hard deal for his management team, after all.
    Kent spent the rest of the day fielding calls from the financial press and from existing investors. They all wanted to know the same thing: Did the failure of Grampian Capital mean CBC’s future was in jeopardy? He did what he could to put out a strong, positive message, but he knew the failure of the firm was a real prospect, and the press sensed blood. CBC was losing its reputation as each hour passed. It was killing him, and there was little he could do besides stand back and watch it happen.
    The following day, Kent picked up his Financial Daily . Right in the center of the front page of the Companies and Markets section was the headline “Grampian likely to bring down CBC.” There followed a well-researched and intelligently written article on the massive reliance on Grampian Capital by CBC for its investment funds. It went on to address the difficulty of raising new funds in this recessionary climate, even with CBC’s excellent investment track record. The article concluded, in the absence of a new cornerstone investor, CBC would fail in a