The private equity industry was growing crowded. “Overfished” was a term people used. The same five or six behemoths trawling the same waters for the same deals. When a company came up for sale, all six would make bids. An auction ensued. One or two might drop out, but the rest would eagerly join the bidding, upping the ante one hundred million dollars, two hundred million, a billion at a time. With each uptick, the return on the investment declined. It was simple math. Profit equaled the price you received for selling the company minus the price paid to purchase it.
And here was the problem: HW invested in all of its clients’ funds, as did most of the larger pension funds, college endowments, and investment banks. It was a way of diversifying, of keeping risk within acceptable measures. The result was that HW was, in effect, bidding against itself. When Jefferson bid against Atlantic, they were using HW’s money. When Atlantic counterbid, they were using HW’s money, too. It was like playing against yourself at a poker table.
The problem was that HW couldn’t just invest with Jefferson. Atlantic (and the other sponsors) might take that as a compelling reason to stop sending business HW’s way. Fees, not investment income, were HW’s bread and butter.
After analyzing the declining returns HW was earning on its investments with the larger sponsors, Bolden had written a memo to Sol Weiss suggesting the firm stop putting its own money into these mega-funds, and instead seek out smaller, more aggressive funds that concentrated on buying companies valued at less than a billion dollars. The potential return was markedly higher, as was the risk. But at least they weren’t bidding against themselves.
Jefferson Partners, in particular, was showing lagging returns.
Jefferson. It kept coming back to them.
Bolden shuffled through the list Althea had compiled detailing all companies Bolden’s core clients had bought and sold during the past twenty years. Over and over again, his eyes returned to the column under Jefferson’s name. TruSign. Purchased in 1994. Sold in 1999. National Bank Data. Purchased in 1991. Sold in 1995. Williams Satellite. Purchased in 1997. Sold in 2004. Triton Aerospace. Purchased in 2001. Still held. The list went on.
TruSign was one of the primary operators of the Internet backbone, handling something like twenty billion web addresses and e-mails each day. They also managed the largest telecom signaling network in the world-a network that enabled cellular roaming, text messaging, caller ID-as well as handling more than forty percent of all e-commerce transactions in North America and Europe.
National Bank Data handled check-clearing services for over sixty percent of the nation’s banks.
Bell National Holding was a prime supplier of phone service for the Mid-Atlantic region.
All these companies gave Jefferson unfettered access to e-mail transmissions and the Web, banking and credit records, phone and satellite communications, insurance and medical records, and much more. Taken together, they provided a network that could eavesdrop on anyone who owned a cell phone or maintained a bank account, used credit cards or visited an ATM, held medical insurance or regularly traveled. In short, they could spy on every American between Sag Harbor and San Diego.
And now, Trendrite. A deal Bolden had brought to their doorstep. Trendrite was the capper, the consumer loan processing company that promised its customers a 360-degree view of every American consumer.
And Scanlon? It had disappeared but it hadn’t died. There at the bottom of Althea’s list was a company purchased by Jefferson in their very first fund in 1981. SI Corporation. McClean, Virginia. To this date the company had not been sold.
Scanlon was Jefferson’s private army. Muscle on demand.
Bolden tried to call Jenny once more. When he received the same message, he hung up. He dialed information and asked for Prell Associates. The operator connected him.
“I need Marty Kravitz,” he said when the switchboard answered. “Tell him it’s Jake Flannagan from HW. And say it’s an emergency. No, check that. Say it’s a fuckin’ emergency.”
“Excuse me, sir?” asked an offended voice, heavy on the starch.
“You heard me. Verbatim, if you please.” Jake Flannagan, Bolden’s boss at HW, had the foulest mouth on the Street. In the trade, he was known as a screamer. He had three sons that he brought into the office once in a while. Quiet, handsome kids who never showed up without a blazer. The joke was he called them Fuckin’ A, Fuckin’ B, and Fuckin’ C.
“One moment, sir. I’ll put you through.”
Bolden moved to the back of the laundry and stepped inside a bathroom. Where he was going, he needed a suit. He closed the door as Marty Kravitz came on the line.
“Jesus, Jake,” said Kravitz. “You’re scaring the hell out my secretary.”
“Tough shit,” said Bolden, laying on Flannagan’s Southie brogue. “Probably needs a little excitement in her life anyway. Make those nipples stand at attention.”
“And here I was thinking you’d mellowed with age,” said Kravitz, formerly a special agent in charge of the FBI’s New York field office.
“I ain’t a fuckin’ bottle of wine.”
“How you holding up down there?”
“So you heard? What a disaster. Sol’s dead.”
“The entire Street’s in shock. The boss extends the firm’s condolences. Allen tried to call Mickey, but he was with the police.” Then Kravitz’s voice found another tone altogether, quiet, plummy, confiding. “What in God’s name is going on over there? News is saying it was an employment dispute. I saw the tape. I don’t buy it for a second. Looked like you guys were getting set to arrest the guy. Bolden, was it? What’d he do, then? Insider trading? Fiddle with the books? Screw the secretaries? What?”
“Between you and me?”
“You have the firm’s word. Of course, I’ll have to tell Allen.”
“No problem there.”
“Allen” was Allen Prell, and Prell Associates, the firm that bore not only his name but also his imprimatur of ruthless efficiency and airtight secrecy, was the world’s foremost private investigative agency. Investment banks had come to use the firm so much that it had gotten the nickname Wall Street’s Private Eye. Harrington Weiss hired Prell to investigate corporate targets, assist with due diligence, and conduct background searches on prospective hires. But the firm’s expertise went beyond the world of high finance.
Prell was a government in trouble’s partner of choice to help track down stolen assets. It had helped Mrs. Aquino locate the billions pilfered by Mr. and Mrs. Marcos. It had dug up a lesser sum spirited away by “Baby Doc” Duvalier. And, more recently, it had assisted Lady Liberty in her search for the four billion dollars said to be stashed in Libya, and elsewhere, by Saddam Hussein. The company’s ranks were filled with former policemen, army officers, and intelligence professionals. Men and women who moved comfortably in the shadows, and who knew that the letter of the law depended on which language it was written in. They were very expensive, very professional, and very effective. The joke went that if you wanted to find the guy who worked for Prell, just look for the man with dirt under his fingernails. No one dug deeper.
Bolden considered what to tell and what to leave out. He decided to tell the truth. “Mickey Schiff went to Sol this morning with a story about Tom Bolden assaulting a gal at the firm,” he said. “You know Tom?”
“Peripherally. Resident do-gooder, isn’t he?”
“That’s him. Anyway, I guess he asked her to blow him last night at some dinner party, and when she said no, he belted her one. You’ve heard it before, right?”