is size, real size.
Perhaps Thayer sensed hesitation, the sure sign of a newbie, for he dispensed with pleasantries. He attacked. A thin, fit man with a shock of black hair, he looked at me impassively through rimless glasses. Glancing at his watch, he announced, “You have forty-five minutes.”
You scheduled the appointment, I thought to myself.
“Plenty of time,” I replied, glad the game had begun. The butterflies disappeared in that instant. They gave way to the confidence that accompanies practice and years of training. Slick pitch books and exhaustive research were never a substitute for experience anyway.
Thayer saw nothing different. He wore the kind of face CEOs pull out of the closet when unimpressed. “There’s no one joining us?” It was more accusation than question.
“No.”
“At Goldman Sachs, a dozen people met with me. Same thing at Merrill, Morgan, and Lehman. Your competitors fill the room every time with portfolio managers, stock-hedging teams, even their chief strategists.” Thayer had mastered the fine art of putting people on their heels. He drummed his fingers on our conference table.
“If head count is important to you,” I replied calmly, “half the firm will join us. But it’s not what I recommend during a forty-five-minute meeting.”
“Forty now.” Zing . “Don’t you want me to understand your firm’s capabilities?” Zing . Even in his chair, he lorded over me like a boxer who had just decked an opponent.
“The problem with a roomful of suits,” I countered, “is they trip all over each other trying to sound clever. No one listens. I can’t understand what’s really important to you if everybody’s competing for air time.” Zing .
“I like that,” Thayer mused. Sometimes a simple jab changed the dynamicsof a meeting. “In fact, your bankers told me all I need to know about SKC,” he continued, warming to our discussion, ceding ground. “I’m more concerned about what to do now. My money is tied up in private stock, and once we go public, there won’t be much time to evaluate advisers. I have a business to run.”
“Do you have children?” That question was the one I feared, a sure segue to financial topics involving death. I had to ask. It was my job.
“Two. A daughter, she’s eighteen. Her little brother is fifteen.”
“How do you feel about taxes?”
“Four-letter word.”
Time for a war story, the sure way to establish myself as a seasoned veteran. No one with money ever volunteered to serve as a tackling dummy for stockbrokers starting their careers.
“Several years ago,” I began, “one of my clients put thirty percent of his stock into a grantor retained annuity trust. At my suggestion he made the contribution prior to going public.”
“A grantor what?” Thayer asked, taking notes on a pad from SKC’s conference table.
“GRAT for short. In any event, thirty percent of his holdings were worth a million dollars while the company was private. The stock took off after the IPO. That same thirty percent equaled fifty million when we sold.”
“You just set the bar for my deal,” he said, salivating over the appreciation. “What was the point of the GRAT?”
“The CEO paid nothing in gift taxes.”
“What about capital gains taxes?”
“He still paid those. But here’s how the numbers worked. After capital gains taxes on the sale, the CEO had forty million left. The money was inside the GRAT and outside the estate. Had he died and left the forty million outright to his kids, his estate would have paid around sixteen million in taxes.” I paused for my words to sink home and then added, “Not now.”
Thayer blinked once, then again. “You saved him sixteen million! Bet he genuflects when you meet.”
“Sometimes the most important decisions are the ones you make before investing the first dollar.”
Thayer took off his glasses and cleaned
Perhaps Thayer sensed hesitation, the sure sign of a newbie, for he dispensed with pleasantries. He attacked. A thin, fit man with a shock of black hair, he looked at me impassively through rimless glasses. Glancing at his watch, he announced, “You have forty-five minutes.”
You scheduled the appointment, I thought to myself.
“Plenty of time,” I replied, glad the game had begun. The butterflies disappeared in that instant. They gave way to the confidence that accompanies practice and years of training. Slick pitch books and exhaustive research were never a substitute for experience anyway.
Thayer saw nothing different. He wore the kind of face CEOs pull out of the closet when unimpressed. “There’s no one joining us?” It was more accusation than question.
“No.”
“At Goldman Sachs, a dozen people met with me. Same thing at Merrill, Morgan, and Lehman. Your competitors fill the room every time with portfolio managers, stock-hedging teams, even their chief strategists.” Thayer had mastered the fine art of putting people on their heels. He drummed his fingers on our conference table.
“If head count is important to you,” I replied calmly, “half the firm will join us. But it’s not what I recommend during a forty-five-minute meeting.”
“Forty now.” Zing . “Don’t you want me to understand your firm’s capabilities?” Zing . Even in his chair, he lorded over me like a boxer who had just decked an opponent.
“The problem with a roomful of suits,” I countered, “is they trip all over each other trying to sound clever. No one listens. I can’t understand what’s really important to you if everybody’s competing for air time.” Zing .
“I like that,” Thayer mused. Sometimes a simple jab changed the dynamicsof a meeting. “In fact, your bankers told me all I need to know about SKC,” he continued, warming to our discussion, ceding ground. “I’m more concerned about what to do now. My money is tied up in private stock, and once we go public, there won’t be much time to evaluate advisers. I have a business to run.”
“Do you have children?” That question was the one I feared, a sure segue to financial topics involving death. I had to ask. It was my job.
“Two. A daughter, she’s eighteen. Her little brother is fifteen.”
“How do you feel about taxes?”
“Four-letter word.”
Time for a war story, the sure way to establish myself as a seasoned veteran. No one with money ever volunteered to serve as a tackling dummy for stockbrokers starting their careers.
“Several years ago,” I began, “one of my clients put thirty percent of his stock into a grantor retained annuity trust. At my suggestion he made the contribution prior to going public.”
“A grantor what?” Thayer asked, taking notes on a pad from SKC’s conference table.
“GRAT for short. In any event, thirty percent of his holdings were worth a million dollars while the company was private. The stock took off after the IPO. That same thirty percent equaled fifty million when we sold.”
“You just set the bar for my deal,” he said, salivating over the appreciation. “What was the point of the GRAT?”
“The CEO paid nothing in gift taxes.”
“What about capital gains taxes?”
“He still paid those. But here’s how the numbers worked. After capital gains taxes on the sale, the CEO had forty million left. The money was inside the GRAT and outside the estate. Had he died and left the forty million outright to his kids, his estate would have paid around sixteen million in taxes.” I paused for my words to sink home and then added, “Not now.”
Thayer blinked once, then again. “You saved him sixteen million! Bet he genuflects when you meet.”
“Sometimes the most important decisions are the ones you make before investing the first dollar.”
Thayer took off his glasses and cleaned
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