Excerpts: “Under Siege: One CEO’s battle to save his small public company from a hostile takeover”
- Sitting in his 26th-floor office, high above the throb and pulse of midtown Manhattan, John Sheldon oozes self-assurance. The baritone timbre of his voice matches his assertive style of dress: dark-blue suit and brilliant-yellow tie offset by a pale-blue shirt.
- Sheldon, now 34, was the vice-president at Goldman Sachs who led the defense of Walbro in its fight against UIS. ‘More Walbros will happen in the future. Small companies will be more active takeover candidates than in the past,’ he says with conviction.
- “Buyers are focusing more and more on acquisitions that will give them a competitive edge.” Small companies, Sheldon says, tend to fit that bill. “Small companies tend to have features that are more attractive to an acquirer. They’re cleaner; they’re better run; they have lower overhead; they’re more focused.” Walbro, Sheldon argues, is one such “franchise.” Its products, considered unique, are sought by established customers.
- Sheldon proceeds to offer a more subtle assessment regarding small-company vulnerability. “Smaller companies tend to have extraordinary events in their lives that affect them profoundly because they are the creatures of their founder’s being. The founder gets fired; the founder gets divorced; the founder dies. This is a dynamic that you pay attention to.”
- Goldman, meanwhile, had told Walbro that the company would inevitably be sued by stockholders eager to cash out and by UIS wanting much, much more. Hire the best to defend you, the firm advised. Althaver signed up the noted mergers-and-acquisitions law firm of Wachtell, Lipton, Rosen, & Katz. The fee would be $400,000 — modest compared with those charged Fortune 500 companies, which often range into the millions.
- The Japanese, meanwhile, have invested widely in a number of U.S. investment and merchant banks. Take, for example, Walbro’s former defender, John Sheldon, who now works for The Lodestar Group, an LBO firm that is partially owned by Yamaichi Securities, Japan’s fourth largest brokerage house. The name on his business card is in both English and Japanese.
- John Sheldon’s job was to put himself in UIS’s shoes and try to psych out what Andrew Pietrini was really after. Then, within that mental construct, Sheldon and his Goldman crew could probe for weaknesses.
- But the leverage that talent can provide is lessened as a company matures, John Sheldon suggests. While partnerships, by definition, are shaped in the images of the partners ‘and end theoretically when the partners die, a corporation never ends.’
- Come hell, high water, or hostile takeover, a corporation is obliged to endure for the benefit of others — namely its stockholders.
Source: Inc. Magazine