Part 9 (2/2)
”Because I don't think there's enough capacity for two ten ten-billion-dollar funds, either. Not being raised at the same time, anyway. But there is capacity for one fifteen-billion-dollar fund. More important, I think it's time for one of you to take over. Having two firms this size just bids up prices you both ultimately have to pay for the companies you buy. So make the play, Christian. Head-to-head with Paul Strazzi. Everest raises the largest private equity fund ever.” Whitman paused. ”Or Apex does.”
”I'll think about it, Miles, but the question still stands. At what level will you support me.”
”A billion dollars.” Whitman let out a heavy breath. ”Along with our commitments to Everest's other funds, that'll be over two billion to you guys.” He looked up, his expression darkening. ”That's a lot of money for me to have with one private equity firm. Probably too much. The CEO will question me hard, but I have faith in your ability, young man.” He pointed at Gillette. ”Don't disappoint me.”
”Don't worry,” Gillette answered calmly.
”Your portfolio companies will have to be squeaky-clean during the fund-raising, Christian. No bankruptcies or scandals of any kind.”
”Of course.”
”I can't stress that enough.”
”I hear you.”
”How is the portfolio doing?” Whitman wanted to know.
”Overall, fine. In line with our historical performance. We're on track to generate 50 percent returns with the seventh fund. We've got a couple of investments that aren't doing as well as we'd like,” Gillette admitted. ”The power-tool company, for one. But that's natural. You can't bat a thousand when you control twenty-seven companies.”
”Blalock Industries. That's the power-tool company, right?”
”Right.”
”Roger Nolan runs it.”
”Not anymore.”
Whitman glanced up.
”I fired him,” Gillette explained.
”You've been a busy man. Do you carry an ax with you at all times?”
”He never hit his budgets, Miles, and he whined about foreign compet.i.tion. Yesterday I promoted Fred Cantwell to CEO. Fred had been the chief operating officer.”
”Roger and Bill Donovan were good friends, weren't they?”
”I don't care. I can't let personal relations.h.i.+ps influence my business decisions.”
Whitman nodded approvingly. ”Good for you, son. Too many people do. I think you're going to do just fine as chairman.”
”Thanks.”
”But whatever you do, don't let any of your companies fail while you're raising this next fund,” Whitman advised strongly. ”Keep them on life support if you have to. Put in more dollars even if you don't think you'll ever see the money again. Just don't let a single company go down. That would spook the investors.”
”I don't believe in throwing good money after bad,” countered Gillette. ”We've always been careful about that at Everest. We've only had a few companies go down in twenty years, which is d.a.m.n good. But the reality of this game is if you're in it long enough, sooner or later you're going to have companies blow up. You know that, Miles. Fortunately, we've had a lot more winners than losers. As a result, you and our other investors have done well.”
”Quite well,” Whitman agreed. ”But this is fifteen billion dollars, Christian. Twice as much as anyone's ever tried to raise for this kind of fund. Take my advice. Don't screw up. No bankruptcies, no scandals, and keep the companies running at all costs. Once you've raised the fund, fine, back to financial Darwinism. But not until you have fifteen billion dollars of signed subscription agreements sitting in your lawyer's office. Understand, well,” Whitman agreed. ”But this is fifteen billion dollars, Christian. Twice as much as anyone's ever tried to raise for this kind of fund. Take my advice. Don't screw up. No bankruptcies, no scandals, and keep the companies running at all costs. Once you've raised the fund, fine, back to financial Darwinism. But not until you have fifteen billion dollars of signed subscription agreements sitting in your lawyer's office. Understand, amigo amigo?”
”I understand.”
”How long do you think it'll take to raise Everest Eight?” Whitman asked.
”A year.”
”That's probably right,” the older man agreed. ”Maybe a little faster with a break or two.”
Gillette glanced over at Whitman. ”I a.s.sume that because you're supporting me, you won't support Paul Strazzi's new fund.”
”Bad a.s.sumption,” Whitman replied sharply. ”I'll give Strazzi an early soft commitment of a billion dollars, too. Whoever gets to fifteen first, that's who I'll go with.”
Gillette had antic.i.p.ated that answer, but it had been worth a shot. Getting North America Guaranty out of the market would have been a critical blow to Strazzi.
Whitman smiled. ”Let the games begin.”
”I'll get to fifteen first,” Gillette promised firmly.
”I don't doubt it, Christian. When you focus on something, you seem to make it happen. Even something huge like this.” Whitman shook his head. ”But Paul Strazzi is a street fighter. He grew up in a rough part of Brooklyn, not Beverly Hills,” Whitman said pointedly. ”Paul has the toys now. Boats, cars, and planes. But he hasn't forgotten where he came from. He'll do whatever he can to screw you. He'll be out to prove a hard lesson to a young gun. There won't be any rules, I guarantee you. That's the essence of Strazzi's success. He'll do anything to win.”
”So will I,” Gillette said flatly.
Whitman chuckled. ”Look at you. I just gave you a billion-dollar commitment, and it's like we're talking about the weather. No big deal. In fact, it's almost like you're disappointed.”
”I wanted two two billion.” billion.”
Whitman laughed. ”I admire you, Christian. If I could do it over again, I'd do private equity.” He took a deep breath. ”A fifteen-billion-dollar fund. It's really amazing.”
”You manage trillions, trillions,” Gillette pointed out.
”Yeah, but most of it is in bank CDs and U.S. government securities. How exciting is that? Where's the risk? You're the one buying and selling entire companies,” Whitman said wistfully.
Gillette stood up. He needed to get going, and he had what he'd come for. ”I appreciate your support, Miles,” he said, shaking the older man's hand.
”Of course.”
”I'll be in touch.”
”Christian,” Whitman called as Gillette reached the conference room door.
”Yes?”
”I'm a big football fan.”
”I know.”
”Well, the Super Bowl's coming up. I'd really really like to get my hands on four tickets to it. Good ones. Don't you have a connection with the family that owns the Giants?” like to get my hands on four tickets to it. Good ones. Don't you have a connection with the family that owns the Giants?”
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