Shadow Account (18 page)

“Whenever a company switches accounting firms, you need to find out why. There’s always a possibility that the new accountants won the assignment by agreeing to be more aggressive about pumping up the company’s EPS. You know, using a little sleight of hand. What makes this situation even more suspicious is that a man on Global Component’s audit committee got all these options the same year they switched accountants. By the way, Alan Bryson wasn’t just a member of the three-person audit committee, he was the chairman of it.”

“You’re telling me he was bought off.”

“I wouldn’t stake my life on it yet. I’m just telling you it’s a good bet. But I’ll keep digging.”

Lucas glanced at the phone’s dial pad. The white buttons were dirty, and he made a mental note to buy Q-Tips and rubbing alcohol at lunch. “You’ve been busy this morning. Is that all, or is there more?” Perhaps there was an opportunity here.

“There’s more.”

“I’m listening.”

“Last night, when we met in the parking lot, I told you I’d talked to a friend of mine in New York who works for one specific client.”

“Yes,” Lucas said, playing the conversation back. “You said the client had an interest in Global Components, too.” He couldn’t believe what he was thinking.

“That’s right.”

“You know something more about that?”

“My friend has a few men who work for him. A couple of other ex-FBI guys who handle the day-to-day investigative stuff.”

“And?”

“And he lost one of them a few days ago on the Upper East Side of Manhattan. My friend believes the guy was pushed off a fire escape.”

“How does that tie in?”

“He’s a loyal guy. Eye-for-an-eye and all that. But he hasn’t gone after anyone yet. He’s sure he knows who killed his guy, but he’s been standing down.”

“I still don’t understand why this is so important,” Lucas said.

“It means the mission is more important than the man. It means that there’s something huge at stake.”

Lucas closed his eyes, debating whether to tell Cheetah what he’d learned about Alan Bryson.

“Anything else on Bryson?”

“No,” Lucas answered curtly. “Call me when you have more.”

“Right.”

Lucas hung up the phone and leaned forward, putting his face in his hands. Five years ago, Alan Bryson had quietly settled an incredibly ugly sexual harassment suit with a female subordinate at Morgan Sayers. A woman who had secretly taped Bryson promising her promotions in exchange for sexual favors. It had cost Bryson $12 million to keep the woman out of court and the story out of the papers.

But Lucas had a friend from Northwestern at Bryson’s Manhattan law firm. And, an hour ago, he found out what had happened.

For Bryson to have forced Global Components to hand him 550,000 deep-in-the-money options, there had to be a good reason. As managing partner of Morgan Sayers, he would have been wealthy. But even Bryson wasn’t wealthy enough to gin up $12 million without tipping off his wife.

So, like any good capitalist, he’d been opportunistic.

14

“Thanks for meeting with me on such short notice, Mr. Hammond.” Conner sat in front of the accountant’s desk, gazing out the large window behind Hammond at the dome of the Capitol in the distance. It was Conner’s first time in Washington, and he’d been impressed by the classic architecture on the short ride from Union Station to Baker Mahaffey’s offices on Seventeenth Street. “It was good of you to do this.”

“You were lucky to catch me,” Hammond replied. “I’m on the road constantly. I’m
the
top earning partner in Washington, and top five in the entire firm. You don’t achieve what I have by sitting around. Remember that as you go through your career, Mr. Ashby.”

Hammond was completely self-absorbed. Conner had sensed that about the man right from the start. But, at this point, Hammond was his only connection to Liz. So he was willing to stroke a healthy portion of ego to get what he needed.

“Thanks for the advice.”

Hammond had white hair, blue eyes, and a ruddy complexion. Despite the white hair, Conner guessed that Hammond was no older than forty-five. He had a sleekness about him that belied age. And he spoke with a deliberate precision that made it clear he knew exactly what he was talking about.

“How are you set up here?” Conner asked. “Do you have responsibility for all companies in this geographic area? Or do you—?”

“At Baker Mahaffey we don’t believe in being generalists,” Hammond broke in. “One can’t provide truly value-added advice when one is involved in many different business models. A bank versus a company that makes furniture, for instance. So we specialize. I run the firm’s manufacturing practice for the entire East Coast. I’m responsible for manufacturing companies headquartered from Maine to Florida. Other people handle service companies and the financials.”

Conner nodded respectfully. “Maine to Florida. That’s impressive.”

“Of course, I travel to quite a few cities outside the region to audit client facilities in other parts of the United States and the world.”

Conner glanced at a bookcase beside the desk. On the top shelf, inside a small frame, was a photograph of Hammond and a woman Conner assumed was Hammond’s wife. “Must keep you busy.”

Hammond chuckled without smiling. “Let’s put it this way. I’m on a first-name basis with a lot of flight attendants.”

Conner glanced at Hammond’s left hand. No wedding band. “Traveling gets old.”

“It sure does,” Hammond agreed with a sigh. “And the more I do it, the less I like it. Especially with terrorism in the back of your mind every time you get on a plane these days.”

“I can understand that. I—”

“I was actually in the air on the morning of September eleventh,” Hammond continued. “On my way down to Miami.”

“Must have been nerve-wracking.”

“More of an inconvenience really. The pilots put us down in Atlanta. I had to rent a car and drive the rest of the way to Florida.”

“You’re a dedicated man.”

Hammond looked up, a curious expression on his face. “What do you mean?”

“You kept going,” Conner said, glancing at the woman in the photograph. If she was Hammond’s wife, she hadn’t aged gracefully. Or there was a big age difference. Maybe there was another reason Hammond wanted to get to Miami so much that day. “You didn’t come back to D.C.”

“Oh, right.”

“Most people would have turned right around and come home. What you did shows a lot of dedication to your client.”

“My wife and I don’t have children,” Hammond explained, understanding the inference, “and her family lives in the area. She went to her mother’s after that plane went into the Pentagon. Hell, she was fine.”

Conner gestured at the photograph. “Is that her?”

“Huh? Yeah.” Hammond glanced at the photograph, then quickly away. “You know, if I’d been on any of those planes that went into the Trade Center or the Pentagon, I’d have made damn sure they didn’t reach their targets. At a minimum we would have ended up in a field like the plane in Pennsylvania.”

Conner shifted in his chair. “I think it’s tough to understand what it was like to be on those planes. It was a terrible tragedy, and that’s probably all we’ll ever really—”

“Look, I only have a few minutes,” Hammond broke in impatiently, checking his Rolex. “In fact, I’ve got to catch a flight this afternoon. So why are you here, anyway?”

Before Conner could answer, the office door opened and an attractive brunette walked to where Hammond sat. She handed him a note, turning her back to Conner as she leaned against the arm of Hammond’s chair. Conner noticed Hammond nod subtly up at her, then watched her fingers graze the accountant’s shoulder when she turned to walk back out.

“There’s another good reason not to travel,” Conner observed, nodding at the door when the woman was gone. It was a risky thing to say. Hammond might be offended. But Conner had only a few minutes with the man, so he had to build a bridge quickly.

Hammond’s eyes flashed to the door. “Yup.”

Conner saw a slight smile crease Hammond’s face.

“A man who works as hard as I do deserves a few perks.”

Conner smiled back. “The founder of our firm has the same attitude.”

“That’s Gavin Smith, correct?”

“Yes.”

“The same Gavin Smith who ran Harper Manning’s mergers and acquisitions group for so many years?”

“That’s right.”

“The son of a bitch,” Hammond said good-naturedly. “He isn’t just a legend on Wall Street. We know him in the accounting world, too.” He chuckled. “I’ve lost a few clients thanks to him. Companies he bagged for his clients who were audited by the acquirer’s accounting firm the next year. Of course, he helped some of my other clients get bigger by acquiring companies for them. And we earned bigger audit fees because there were more divisions to examine. I guess after it’s all said and done, everything turned out even.”

“He’s been a force on the Street for years.”

“Didn’t I see an article about him in
Forbes
or
Fortune
a few months ago?” Hammond asked.

“Both actually, but he was on the cover of
Forbes
.”

Hammond snapped his fingers. “I remember those articles. They described how he was starting his own firm.”

“Yes. It’s called Phenix Capital. Which is why I came down today, Mr. Hammond.”

“Call me Vic,” Hammond offered. “Everyone here does. I hate formality. Gets in the way of business.”

Conner’s mind flickered back to Wednesday night’s e-mail. It had been addressed to “Victor.”

“Conner.”

Conner glanced up. “Sorry. As I was saying, I came down to Washington today to introduce you to Phenix Capital. We want to find ways to work together.”

“Why did Gavin leave Harper Manning?” Hammond wanted to know. “The articles weren’t clear.”

Conner was ready for the question. “There were differences over management styles. Gavin felt that after making Harper Manning so much money for so many years, he didn’t need the kind of day-to-day oversight he was getting.” That sounded plausible. Not the whole story, but enough.

“I can understand that. Fortunately, my managing partners in New York give me a lot of leeway.”

“You make them a lot of money. Anyway, Gavin decided to start his own firm specializing in merger and acquisition advisory work.”

“When was that?”

“Two years ago. I joined Phenix last August. We now have thirty people at the firm.”

Hammond sniffed. “I think it would have been appropriate for Gavin to come to this meeting. Baker Mahaffey is one of the biggest accounting firms in the country, and, as I told you, I’m one of the top earning partners. I’m sure there’s plenty we could do together, but I’ll need to meet the man in charge. No offense, Conner.”

“None taken,” Conner answered calmly. “Gavin was hoping you would come to lunch with us next time you’re in New York City. Our treat, of course.”

“I’m not up there very often. I don’t like New York. I make my New York clients come here. They seem to like it that way.”

“Or we can come back down here,” Conner continued.

“Fine. Well, I’ve got to get going,” Hammond said, standing up. “You can arrange that lunch with my assistant on your way out. Get her to give you one of my business cards, too.”

“I was hoping we could talk about a specific transaction we’re working on at Phenix before we finished,” Conner said, staying seated. “One that could be very profitable for both of us, Vic.”

“I really am running late.”

“We’ve been retained by a large, precision manufacturer of equipment components.”

“Oh?” Hammond sank slowly back down. “What’s the name?”

“As I’m sure you can understand, I’d need you to sign a confidentiality agreement before I could tell you.”

“Give me the agreement,” Hammond said, picking up a pen and motioning at Conner’s briefcase sitting in an empty chair beside Conner. “I’ll sign it right now.”

“I don’t have it with me,” Conner said quickly. “I’ll fax it down tomorrow when I get back to New York.”

Hammond put down the pen. “What exactly have you been retained to do for this company?”

“Explore strategic alternatives,” Conner explained. Which anyone even remotely connected to the financial world knew was code for one thing: Sell it. “I noticed on your Web site that one of Washington’s big clients is Global Components.”

“That’s right. In fact, Global is
my
client.”

“Really?” Conner asked innocently.

“I personally brought Global in-house five years ago,” Hammond bragged. “I took it away from Deloitte and Touche. Global is the most profitable client in the Washington office.”

“Congratulations.” Conner paused. “I also noticed on your Web site that Baker Mahaffey has started a consulting practice. Like a lot of big accounting firms.”

“The managing partners want us to get our share of that business. It’s tough, though.”

“I couldn’t find much information about that side of the business on the site. What kind of assignments is your consulting practice looking for?”

“Typical stuff. Business practice. Industry studies. Strategic initiative directives.”

“What about investment banking work?” Conner asked.

Hammond shook his head, frustrated. “We’ve tried to get those kinds of deals and we’ve had some limited success with smaller companies. But the big companies,
Fortune
25 companies like Global Components, still want to deal with firms like Harper Manning and Morgan Sayers.”

Morgan Sayers. The name rattled around in Conner’s head, reminding him of why he was sitting in Hammond’s office. Liz Shaw. “Does Baker Mahaffey have a mergers and acquisitions practice?”

“Yes, but it’s tiny.”

Conner needed to take a chance if he was going to get anywhere. “Just between us, the company that retained Phenix would be a perfect fit with Global Components. Any chance you could arrange for me to meet with someone in your mergers and acquisitions group while I’m here? Or are those people all in New York?”

“No, we have M and A people here. But I thought you said I had to sign a confidentiality agreement before you could tell me the name of the company you’re representing. Given that, what could you say to them?”

“I could give them a couple of quick sound bites to see if there might be any initial interest.”

“Why don’t you give them to me?”

“Well, I . . .”

Hammond’s expression turned steely. “Look, if this deal makes sense, I can get you in front of someone at Global Components this afternoon. The company is just a thirty-minute cab ride from here.”

Anticipation surged through Conner. He’d been hoping to see someone at Global by the end of the week, but Hammond was going to get him in right away. He had no idea what he’d find when he got there—he didn’t really even know what to
look
for. But just having a connection to someone at Global Component’s headquarters might be all he needed. “It’s just that—”

“There’s no reason to involve our consulting people,” Hammond said confidently. “Especially the M and A guys. I hate to say it, but they’re not very good. If they were, they’d be at an investment bank, like you, earning a lot more money. I’m the senior person on the Global account. You should feel comfortable discussing the opportunity with me. Like I said, I’m more than happy to call someone at the company. But you’ve got to give me some details first.”

Conner nodded. “Okay.” Phenix hadn’t really been retained by a precision manufacturer of machine components, so he had to play this carefully.

“Is your client public or private?” Hammond asked.

“Private.”

“How big is it?”

“I can’t say exactly. That would violate the confidentiality agreement we’ve signed with them.”

“Is it over five hundred million in sales? If it isn’t, the guys at Global Components won’t be interested. Buying companies smaller than that doesn’t make sense for them because they’re already so big.”

“It’s over five hundred million,” Conner assured Hammond.

“U.S.-based?”

“Yes.”

“Why do the owners want to sell?”

“Estate planning issues.”

“And Phenix has an exclusive mandate to sell this company?”

The risk here was that Hammond might call Gavin to confirm the mandate. It would be a convenient way for him to initiate a direct relationship with a legend. Then there’d be a problem because Gavin wouldn’t know what in the hell Hammond was talking about. Hammond would find out this was a sham, and Gavin would find out where Conner had been. Which, for some reason, Conner didn’t want yet.

“Yes, we have an exclusive.”

Hammond reached for the phone and punched out a number. His call was answered immediately. “Jenny, this is Vic. Right, right. Where’s Jim?” A pause. “At the Miami facility today?” A chuckle. “Third time this month, isn’t it?”

Conner glanced up. Miami again.

“Terry down there, too?” Another chuckle. “Of course he is. Why wouldn’t he be? What about Glen? He ought to be in the office. He doesn’t get into all that.” Hammond nodded at Conner. “Good. Let me talk to him.”

A few moments of silence.

“Glen? Yes, it’s Vic. I’ve got a guy in my office from an investment bank in New York who has a mandate to sell a company you guys might be interested in. Yeah, it’s a precision parts manufacturer. Uh huh, sales are over five hundred million. Sounds like a good fit. What? Phenix Capital. No, it’s not bulge bracket. It’s a boutique shop run by a guy named Gavin Smith. Yeah, that Gavin Smith.” An irritated expression twisted Hammond’s face. “
What?
Because I
want
you to see him. Jim would, too.” Hammond nodded. “Conner Ashby. He’ll be out there within the hour. Okay?
Good.
”