The Chairman
by: Stephen Frey

Lesson to note in life from the book (for businessmen out there)
The Chairman. The chairman of a large private equity firm is the ultimate decision maker. Which companies to buy. How many billions to pay. Who to hire as CEO. How many millions to pay.
If his judgment is flawed, the chairman losses everything. Maybe even his freedom. But if he negotiates the lies, lawsuits, and vendettas that haunt his world, he becomes one of the riches and most powerful men on earth.

Private equity. High- risk investment dollars committed by large institutions and wealthy families to a few financial gunslingers who operate from behind a shroud of secrecy.
The gunslingers’ mandate: Deliver huge returns. Fifty, 75, 100 percent a year – consistently. Much more than investors earn on money market accounts, bonds, or publicly traded stocks. And don’t tell anyone outside the circle how you do it. Confidentiality at all costs.
If they get it right, the gunslingers make their investors – and themselves – incredible amounts of money. Billions and billions. If they get it wrong, and the extent of the risks taken comes to light, they scatter for places where English is rarely spoken.

Negotiations. The purchase of a company – price, cash or paper, representations, warranties. Details of a senior executive’s pay package – salary, bonus, stock options, perks. Terms of critical financing – interest rate, repayment schedule, covenants. Issues that the private equity professionals deal with constantly because the CEO of a company owned by a private equity firm cant make a move without his chairman’s approval.
And, in a world cominated by constant negotiations, there is one hard and fast rule. It isn’t the one who wants something less who has advantage. It’s the one who appear to want it less.

Conflict. Nation vs nation. Neighbor vs neighbor. And the most destructive conflict of all – self vs self. The fuse of all evil.

The male curse. The rentless urge to hunt. The ruthless drive to conquer. The insatiable need to amass.

Allies. As vital in business as in war. Because business is war.

Enemies. They are everywhere.

Unconditional trust. In a world dominated by the cutthroat race to extraordinary financial gain, unconditional trust is nonexistent. In the end, a private equity professional must assume that those circling around him are ultimately driven by money – and nothing else. Otherwise, he is setting himself up for failure.

Confrontation. Most people hate confrontation in any form – standing up to the boss in person, fighting an unauthorized credit card charge over the phone or calling a neighbor out for somethingher child did to yours. People shrink from confrontation like vampires from the sun, putting off the battle until it becomes unavoidable. Oftentimes they’ll roll over at the last moment rather than face the enemy.
And people hate confrontation for good reason. It causes their palms to perspire, brings on shortness of breath, makes their hearts race like there’s no tomorrow. It isn’t natural to like confrontation.
But a private equity professional must embrace confrontation – almost seek it. Because, ultimately, confrontation leads to progress – one way or the other. And any progress is better than no progress. So, the sooner the better. After all, time is money.

Economic incentive. If you believe that those around you are ultimately driven by what’s in their best interest, you have only one choice if you want their best: pay then well. More than they could earn anywhere else.
It is called capitalism.
It’s also called common sense.

Partners. The hardest thing in life to have.

The government. Serving and protecting, faithfully.
Until the evil in those who weild their power deem the probability of their crimes being discovered small enough to abuse their positions for personal gain. Or, worst, they’re blinded by ambition.
If you’ve never been the target of a government conspiracy, you cant truly comprehend the frustration – and, ultimately, the fear – involved. If you have, you know that despite your innocence, you’re very vulnerable. Because the government can do almost anything it wants in its pursuit of you – legal or not. And you can do almost nothing to stop it.
Then, even if you’ve been an atheist all your life, you suddenly believe in God. Because, at that point, he’s your best chance. Your only chance.

Subordinates. Only slightly less difficult than partners.

The wild card. You never know.

Infatuation. So powerful sometimes. Powerful enough to distract a man who prides himself on never being distracted.

The urge to trust. Even the most skeptical and cynical among us are, at times, vulnerable to deception. In the same way that we struggle to keep secrets to ourselves, we want to believe that those who’ve chosen to associate or partner with will not hurt us. Perhaps we want to believe our ability to assess character is superior. Because we want to believe we are so endearing that others would hate to take advantage of us. Or because we desperately want to believe people are inherently good. For whatever reason, even the most inexperienced and savvy have their moments of vulnerability.
It is then the enemy can advance.

Conspiracy. Two or more individuals working together in the shadows to carry out evil – assassination, overthrow, fraud.
The strength of a conspiracy is neasured by the commitment, planning, and ability of the conspirators to maintain secrecy.
But the success of a conspiracy is ultimately determined by the ability of the conspirators to make all traces of their bond evaporate after the crime is committed. Like specters fading into the mist, their relationships vanish, trails grow cold, and there is nothing and no one to connect.
Then no person of authority will question what has been achieved. Or, if they do, nothing can be proven or altered. And those who have been targeted – dead or alive after the crime – never get the justice they deserved.

Quid pro quo. Literally, this for that.
There’s always a quid pro quo. Nothing comes for free.

Choices. Sometimes there are no good ones. Sometimes, because of our own actions, we create situations where any choice is awful. Then it comes down to making the one that’s simply the least bad.

The attack. Most times you cant predict exactly where or when it will come. All you can do is prepare and try to anticipate what the enemy will do, then counter with everything you have when the guns go off.

A price. Everyone has one; you just have to find it. Then be willing to pay it.

Routines. Most of us are creatures of habit, more comfortable with order than anarchy. By maintaining a routine, we avoid original thought. We make it easier on ourselves.
But routines can also create opportunity for the enemy.

The showdown. Someone must lose.