The two of them were sitting in the lounge of a midtown hotel. On the table was an ice bucket which contained a bottle of champagne. Not just any champagne, mind you, but Krug.
‘So what are you celebrating?’ I asked, hoping to be invited to sit down and share what was left in the bottle. ‘Well, it’s not official yet,’ came the reply, ‘but I suppose we can tell you. We’re getting together.’
Greg and Tim were very similar. Both were in their mid-30s and had been equity salesmen who lost their jobs in the shake out of the mid-1980s. Both had then joined leading investor relations counselling firms and left about four years ago, in circumstances which were never quite explained. They had then set up their own firms and each had built up a small but respectable portfolio of medium-cap clients.
Not only were their backgrounds similar, but so were their characters. They exuded a brash self-confidence which belied the somewhat rocky nature of their past careers. And both dressed older than their age – presumably to provide the gravitas which clients expected. The only difference was that one’s style was Brooks Brothers while the other’s was Simpson’s of Piccadilly. For Greg was American and Tim was English.
‘So what’s this getting together all about?’ I asked, sitting down in the hope that a third glass would yet be produced. It turned out that the initiative had come from Tim. His largest client had been persuaded by a tough salesman from a depositary bank that issuing ADRs was the thing to do. He realised his client would appoint IR counsel in New York, possibly turning to an international firm. He would then have been open to the argument that it was inefficient to have different advisers in New York and London. So Tim had concluded that, to safeguard his client base, he needed a transatlantic partner.
He had begun his search by asking some oblique questions of his investment banking acquaintances. He soon realised there were few reputable firms in New York that weren’t already spoken for in some form. But, with persistence, he had drawn up a short list and then gone to the Niri conference to narrow down the field. And so he had settled on Greg.
Greg had never really thought about London. Indeed, like many New Yorkers, he had never really considered that civilisation might exist beyond Manhattan. Of course, most of his clients were based in other states and occasionally he had to arrange meetings for them in other US cities – although teleconferencing was making that less and less necessary.
But he had been persuaded that an alliance with Tim could bring benefits. And now he was in a position to wax enthusiastic about the need for investor relations practitioners to respond to the globalisation of capital markets. And if he sounded as though he was reciting from a press release they had been drafting, that was probably because he was.
As Greg finished, Tim took up the next part of the press release – the bit about the synergies between their two operations. Finally, Greg ended with a flourish, explaining how the value they would create by working together would be greater than the value of the component businesses while providing an enhanced service to clients.
If either of them had managed to obtain a glass for me by now, I might have taken a more benign view of their plans. Instead, I brooded on the problems they might face.
How exactly were they going to work together? If they were going to pitch jointly for business, they would have to face up to the fact that, for all their superficial similarities, their two operations were very different. In the large US market, Greg focused on offering limited but highly specialised services to what he hoped would be an ever growing number of clients. In the much smaller UK market, Tim sought to provide an ever widening range of services to a limited client base.
The way they billed clients could also pose problems. Tim’s income stream was largely based on retainers which never quite explained what clients got for their money. Greg, on the other hand, billed in detail for everything, down to the last paperclip. Single invoices were going to be difficult.
If, on the other hand, they maintained an arms-length relationship, there would also be obstacles. It wouldn’t be long before they got fed up with providing low value-added services, like distributing earnings announcements, for someone else’s clients. And would Greg ever mention that the news which one of Tim’s clients wanted released in the US would have zero impact, or would he just do it and face the flak afterwards?
By now, a glass had arrived and been filled. ‘A toast,’ I said. ‘To the happy couple.’ Something I had drunk to many times before in many different circumstances. And sometimes it had worked.
