Following the closing of our first transaction as a firm, Andrew and I arranged a road show for our client, the CEO of which and a director of which came to New York to meet bankers, lawyers, IR/PR professionals, etc. Our clients are very good guys and their trip to NYC was filled with all of fun that one would expect from two out-of-towners taking their bite of “The Big Apple”.
At the meetings, our clients were questioned as to all of the attributes of their company: business model; capital structure; etc. At first, the initial meeting went well and Andrew and I had little need to intervene in their otherwise smooth presentation.
Then it happened.
A banker at the initial meeting asked “So what is your competitive advantage?”. Based on our prior discussions, the client had numerous factual statements that could have been made in response to this question, any or all of which were true, forthright, and acceptable answers. Our client simply answered “We know people”. In response to the banker’s questioning look, and before Andrew or I could interject, our client repeated this answer. At that moment, the otherwise positive meeting seemed to move through the space-time continuum as Andrew and I looked at each other with a sense of dread. Silence hung in the air. After what seemed like an eternity, the banker responded, “I understand. It’s all personal relationships. I get it.”
I think my blood pressure dropped from pre-stroke to low.
Over our objections, the client gave this answer at each of the six meetings with investment bankers which we scheduled over the next two days. They received indications of interest from five of the six bankers.
The moral of the story: Irrespective of the amount of preparation, spontaneity and randomness have key roles in the outcome of events. Stay calm and perhaps an unexpected random bizarre spontaneous answer to an otherwise simple question is the correct answer.
