Shared Bid

The boardroom at Blackwood Capital smells like money and a fight I already won.

I took the head of the table because I asked for it and nobody here has the spine to argue. Across from me: three people from NexaTech, a mid-size software shop that has been shopping itself around for six months. Beside me: two analysts who have been with me for three years and know better than to interrupt when I have a knife out.

I have been taking Hartwell Group's bid apart for forty-five minutes. Before anyone sat down I had already marked three holes in their CIM, two in their quality-of-earnings pack, and one in a customer-concentration footnote Hartwell's team treated like decoration. I do not need an hour. I take forty-five because I like the room to watch me work.

NexaTech's last twelve-month revenue is $184 million. Forward guidance, their number: $218. Hartwell's model uses $218 like it is gospel. It is not. I have the contract schedule. I have the deferred revenue roll-forward. I have the clause in Section 4.2 of their master services agreement that lets enterprise customers terminate for convenience on ninety days' notice with a pro-rata refund. Hartwell priced the book like those customers are married to the product. They are not. They are rented.

"NexaTech's valuation is based on a revenue multiple of twelve times forward earnings," I say, and click. "Hartwell's offer values you at eight. That's a thirty-three percent discount to fair market. Mine is eleven. You leave one point on the table. You get speed, certainty, and a management team that will not gut your engineering division."

Paul Brennan looks like he hasn't slept since the Obama administration. He leans in anyway. "Hartwell's offer includes an earn-out that could push the valuation to fourteen."

"Could," I say. "Key word. An earn-out is a promise, not a price. Hartwell's earn-outs are notoriously hard to hit. I read their last three acquisition agreements. Average payout: twenty-two percent of the promised amount. You would be banking on a fairy tale."

I click again. Hartwell's last three: a logistics bolt-on in Jersey, a warehouse software shop in Atlanta, a cold-storage operator in Ohio. Earn-out language in all three used trailing twelve-month EBITDA with a working-capital collar that moved the goalposts after close. Atlanta hit 19 percent of the promised pool. Jersey hit 31. Ohio hit 16. Average: 22. I did not invent the math. I just bothered to read the filings.

Paul blinks. He didn't know that. I did. I have spent two years reading every Hartwell Group agreement they have produced, looking for weaknesses, patterns, leverage.

I am good at this. I have been doing it for two years.

Every deal they go after, I am there. Every bid. Every offer. Every room. I dismantle their numbers. I outmaneuver their team. I make sure they do not win.

It is not personal. It is a scoreboard.

At least that is the version I tell other people.

The NexaTech team starts exchanging looks. They are leaning toward Blackwood. I can feel the room tip. I did the homework. My offer is better. My team is sharper. My—

The door opens.

I do not need to look up. I know the stride. I know the cologne — cedar, sandalwood, something expensive I have been smelling across tables for two years and refusing to like.

Derek Hawthorne walks in like the lease is in his name.

Charcoal suit. Navy tie. Hair that cost more than my first intern. Smile calibrated to make people trust him, which is exactly why I don't.

"Paul," he says, hand out. "Sorry I'm late. Traffic on the West Side."

Paul shakes. "Derek. Good to see you."

"Always." Derek turns to me. The smile stays. The eyes sharpen. "Sloane."

"Derek."

Two years. Twenty-seven deals. He smiles. I don't. He makes a joke. I break his numbers. He charms the client. I remind the client that charm does not close.

I lead. He pretends he doesn't notice.

"I assume you're here to make a counteroffer," I say.

"I'm here to make a better offer."

"Your last three were worse."

"My last three were made before I had NexaTech's actual financials. Now I have them." He sits — not at the end, not on the side. Directly across from me. Deliberate. "And my new offer is better than yours."

"Prove it."

He slides a document across. I read it.

It is good. Better than good. Valuation at ten point five — half a point under mine — but the earn-out is structured differently. Not the standard Hartwell trap I just roasted. Specific milestones. Measurable. Achievable.

Section 3.1: $12 million if NexaTech holds net retention at or above 108 percent in year one. Section 3.2: another $9 million if engineering ships the platform rewrite by Q3 without slipping more than one major release. Section 3.3: $6 million if they keep the top twenty enterprise logos through the first anniversary. No working-capital collar. No trailing-EBITDA reset. Cash in escrow at close, released on a schedule a first-year associate could audit.

If NexaTech hits the targets, the total exceeds my offer by eight percent.

I do not flinch. I have a reputation. I intend to keep it.

"The milestones are aggressive," I say.

"They're achievable. I modeled them against historical performance. Engineering hit similar targets in three of the last five years. Retention sat at 111, 107, and 109. The rewrite is already 60 percent staffed. I talked to the VP of engineering last Thursday."

Of course he did. Of course he went around my room and collected a quote I did not have.

"Three of five is not a guarantee."

"It's a probability. And the probability is in your favor." He looks at me. Really looks. The look I have been pretending is just competitive energy. "Paul, take a minute. I'm confident you'll find ours compelling."

Paul takes the document. Starts reading. His CFO — a woman named Lauren Pike who has not smiled once in forty-five minutes — flips to the escrow schedule and actually writes something down. That is a point I did not want him to have.

I sit back. I flip to page six of his mark-up while Paul reads, because I do not perform stillness for an audience. Working-capital target is $18.4 million, pegged to a trailing three-month average, not a trailing twelve. That is cleaner than Hartwell's usual. Indemnity basket is $2.5 million, cap at 10 percent of close cash. Survival on fundamental reps is six years. Someone on his side stayed up. I hate that I can see his handwriting in the margin of a definition.

Derek is looking at me. I look back. The space between us has never been about NexaTech.

"You changed your earn-out structure," I say, quiet.

"I learned from my mistakes."

"You don't make mistakes."

"I do. I just don't advertise them."

Small smile. Controlled. He knows something I don't.

I hate that. I hate him. I hate that my pulse does something stupid when he walks into a room.

"Clause 6.4 still lets you claw back if they miss two consecutive quarters of billings," I say. "That's not generosity. That's a leash with better lighting."

"It's a leash they can walk. Your offer has no earn-out because you don't trust them to execute. I do. That's the difference."

"The difference is I don't pay people in stories."

"We'll see whose story closes."

Papers rustle. HVAC hums. Neither of us is watching Paul.

Two years. Twenty-seven deals. Twenty-seven times I have called this rivalry and meant it. Twenty-seven times I have also been lying.

Paul looks up. "We need time to review both offers."

"Of course," Derek says. "Take the weekend. We'll check in Monday."

"Agreed," I say.

We stand at the same time. We walk to the door at the same time.

He holds it. Of course he does. Gentleman. Charmer. Man who smiles while he takes your deal.

"After you."

"I can open a door, Derek."

"I know. I'm being polite."

"I don't need you to be polite."

"I know." He steps aside. "I'm going to be anyway."

I walk past him. I do not give him the satisfaction of looking back.

Elevator. Button. Doors. Through the glass I catch him in the boardroom doorway, hands in his pockets, expression unreadable.

I look away first. That counts as a loss. I will not let it.

In the cab I open his mark-up again. Escrow schedule. Milestone dates. The leash in 6.4. I write three counters I will send Paul on Sunday if the room has not already tipped. I am not waiting for Monday like a guest.

I have a deal to win. I also have a man who rebuilt an earn-out overnight because I roasted him in public. I should hate that less. I do not. I hate it exactly enough to stay sharp.

Home. Studio. One ugly wash. Then the model. Then sleep I will not remember.

Sunday I will send Paul three counters and I will not copy Derek. Monday I will find out if the room tipped. I already know it might not. Apex has a smell I do not like — too much cash, too little homework. If they walk in over the weekend I will be angry and I will still be right about the earn-out. Being right does not close. I close. I have twenty-seven deals that say so. I will have twenty-eight or I will have a war. I can live with either. I cannot live with looking away first again.