distributor?’ It’s your choice, pal; no skin off my nose.” Craft paused, “You know, pal, there may also be some founder’s equity [lowest price insider stock value] lying around that could be transferred to you personally.”
~
The next day, Defoe called Jolene Maroney directly, since they had met at several company functions. Now knowing Craft’s intention, he figured he could bully Mrs. Maroney into a fire-sale and then take his chances with Craft, Costas, and Carr.
“With all due respect, Mrs. Maroney, most companies are looking at the current AFA situation and thinking to themselves, ‘I’ll wait to see if the current management can hold it together.’ Because we worked so closely with Pete, we know AFA well. Even if Dawson, Eddie, and Jeremy were to leave, I’m confident that, after a few initial hiccups, we could make the company prosper. However, I don’t know how big the hiccups might be or how long it would take to restore a healthy growth trend. Fortunately for you and your family, Appalachia not only has a vision, but we also have deep pockets. That’s why we can make you a substantive offer right now.
“We’d still like to offer you fifty percent of book value paid upfront, fifty percent cash and fifty percent preferred Appalachia stock, plus a generous secondary profit-sharing formula.” In plain English, Defoe was offering a quarter of what the company was worth before the Craft sales surge, and a minor share of profits after Appalachia took the majority of profits each year.
The streetwise Jolene Maroney smelled a rat. “What makes you think Dawson, Eddie, and Jeremy want to leave? They are making more money than they’ve ever seen in their lives.”
“I didn’t say they were leaving, but they sure seem confident you couldn’t possibly run things without them. Not to insult you, madam, but you have no operating experience, no business relationships with the field advisors, and no apparent role with employees looking for leadership.”
While he was correct, Defoe had insulted Jolene big time. She and her dad refused to make a counteroffer. Through an unnamed source at Appalachia, Craft learned of Defoe’s double-cross and coolly filed it away for future retribution.
Lou Marshman heard the same story from the company’s other product suppliers as his broker shopped the company around to the other potential buyers. Craft had gotten to everybody with the same speech he’d given Appalachia, including the illegal private stock offer.
As Marshman, his attorney, his broker, and his daughter began to sweat, Craft and company made their own unsolicited offer: $10 million in cash for forty percent of the company, plus an immediate share of profits, and a secondary note at two points below prime to finance the balance of the company over ten years.
An unhappy Jolene Maroney reluctantly accepted the offer as her only real option.
~
Despite my equity understanding with Pete and my growing importance within the company, Costas, Carr, and Craft were hell-bent on eliminating me from the purchase process. “Dawson, do you think we should apprise Martin of the deal?” asked Carr, torn between doing the right thing and concern that his equity position would be diluted.
“I’m not sure,” said Craft. “He’s done some incredible things in the past twelve months to improve the overall value of the company. At the same time, I can’t help but feel Pete was just smitten with his Wall Street background.”
As Craft and Carr seesawed back and forth, Costas sat quietly recalling the early days: how he agreed to embrace Pete’s vision, with no guarantees; how he used his credit cards to live on during the zero-cash-flow days; how the financial pressures destroyed his first marriage and shredded his relationship with his kids. Most of all, Costas remembered sitting on the floor of an office the size of a postage stamp making homemade charts to sell Pete’s vision to prospective financial advisors. It was now his turn to speak.
“Eddie, I agree with Dawson. We’re the ones who did all the grunt work to get this company off the ground while Martin was out making his millions on Wall Street. I’m the one with the bankruptcy on my record. We should make him earn his place, just like we had to. As far as I’m concerned, he’s been paid for his contributions to date. We owe him zippo!”
Carr, never known for his original thinking, played follow the leader. “Jeremy, you’re right. If we do all the work and put up all the cash, why should we let him in?”
“I say we give him a share of the profits, as Pete gave us,” proposed Craft. “But the company equity is ours. Just like Pete did with us.”
“I can live with that concept, depending upon what share of profits you’re thinking,” said Costas.
“I’m thinking ten percent. As in ninety to ten,” smiled Craft.
The three men looked at each other without saying a word.
“So moved?” smiled Craft, breaking the silence.
“Motion carried,” responded Costas and Carr with shit-eating grins on their faces.
6.
Lies, bribes, and other good things.
Craft was well-prepared when I approached him about my verbal agreement with Pete. “Good news, buddy! We plan to honor the profit-sharing agreement, just like you and Pete agreed. After all, we’re family.”
“What about the equity part?”
“Pal, I don’t know what you’re talking about; do you have something in writing?”
“No, it was a handshake.”
“Pal, I do not disagree that you may have thought you and Pete had some general understanding, but Eddie, Jeremy, Pete, and I had been working on an equity participation deal for quite some time. His death only added certain urgency to those conversations. Your name never came up, but there’s no question about your contributions to the firm. That’s why Jeremy and Eddie want you to have a ten percent share of annual profits.” He then handed me a check for $500,000 and said, “Trust me, pal. They’ll be lots more where this came from, and we’ll eventually figure out something on the stock.”
We shook hands as he joked, “Don’t forget to remind your accountant that it’s his job to keep your taxes to a minimum.”
I decided to say nothing about my five percent agreement with Pete. “Dawson, I have an idea. Since you're trying to work out something with the family, why don’t we use this check for my portion of the equity purchase?”
He seemed surprised. “How do you know about the purchase of the company?”
“I don’t know anything. It’s the other three hundred-plus employees who are telling me what’s going on.”
“Pal, this is a complicated thing. I understand your interest. It’s appreciated and won’t be forgotten; I promise you.” Craft started to walk out of my office and then paused. “Oh, I almost forgot. Dawson, Jeremy, and I own a little jewelry company for fun.” Craft handed me a little clear plastic bag with a 3.4-carat diamond ring set in an 18-karat gold setting. “This is for Lauren.”
~
That evening, I filled Lauren in over a bottle of wine. I placed the check next to her glass. “Here’s a little something Dawson gave us today.”
She stared at the amount. “Oh my God, you’ve got to be kidding!”
“Oh yeah,” I said deadpan, taking the plastic bag out of my pocket. “Dawson also wanted you to have this little bauble.”
“I love it,” said Lauren as she slid it on her finger. “These guys certainly know how to travel first-class.”
“Don’t be fooled by a few little crumbs,” I replied sarcastically. “I’m still just an expensive hired gun with no equity stake.”
“You know, honey,” Lauren said sweetly, “You sound incredibly ungrateful. Maybe you heard what you wanted to hear