Due Diligence
Page 7
She nodded. “They’re buying a company or a division of a company here. It’s called Chemitoc, Chemitac, Chemi-something.”
“Chemitex Bioproducts?”
She smiled. “That’s it.”
“What was Bruce doing on the deal?”
“Some of the due diligence.”
“Ahh,” I said with a knowing smile.
Due diligence. Utter that dull gray phrase around a pack of corporate lawyers and watch them leer. That’s because the final tab for the due diligence in a significant transaction will easily exceed ten million dollars. Those kinds of numbers enchant even the most somber of practitioners.
Due diligence is the stage in every corporate acquisition between the handshake and the closing, between the engagement party and the wedding vows, between that press release announcing the deal and the day the New York Stock Exchange opens with one less listed company. Due diligence is what squadrons of lawyers, accountants, and other specialists do to the books and records and the assets and liabilities of the target company during the months before closing. Think of it as a massive and extraordinarily expensive physical, with the target company face down and naked on the examination table for weeks, or even months. Usually, the patient checks out fine, and the deal goes through. But occasionally the head of the due diligence team removes his rubber gloves, steps out in the hallway, and grimly reports to the board of directors that, in the words of Gertrude Stein, his team has discovered that there is no there there, or even worse, that there is something rotten in the division in Denmark. That’s when the spin doctors put out the carefully worded release explaining that, after lengthy and careful consideration, the board of directors had concluded that the goal of maximizing shareholder value blah blah blah.
“Where was Bruce doing the due diligence?” I asked.
“In town. Chemitex is south on Hampton Avenue. Bruce spent a lot of time down there over the past two months.”
“What sort of due diligence?”
“I’m not sure. You see, he was a chemical engineer and he was an accountant. Sometimes they had him do engineering stuff, sometimes accounting stuff, sometimes both.” She raised her eyebrows. “He was really smart.”
“What kinds of things did you do for him?”
“Some typing, some filing, answering the phones—you know, secretary stuff. I had two other bosses, too. It keeps you busy.”
“Did he have you do any typing or filing on the SLP deal?”
She frowned in thought. “Not much typing. Just an occasional dictation tape or letter, but that’s all. He had a laptop computer that he took with him everywhere. As for filing, he kept his SLP documents in the file drawers in his office and did most of the filing, but I helped keep them organized.”
“Was that typical?”
“Sort of, at least on the big due diligence projects. When they’re over, I usually have to type up all the reports and memos to the file, but I don’t do much while they’re still going on. That’s ’cause the guys are usually out of the office reviewing the documents at the business site.”
“Is the SLP deal still going on?”
“Oh, yes. Definitely.”
“Are there others at the firm working on it?”
“I think three others. But none of them had Bruce’s background.”
“What do you mean?”
“He was the only chemical engineer working on it. He was the only one reviewing the drug files.”
“Is someone taking over his part of the due diligence?”
“I don’t think so. At the end of last week I was told to pack up his files and ship them off to the lawyers for SLP.”
“Did anyone tell you why?”
She smiled at my naïveté. “No one tells secretaries why. But I asked around ’cause I was curious. I heard that SLP decided to have its own scientists review Bruce’s files instead of postponing the whole deal to wait for another chemical engineer to get up to speed. It would have taken a long time. Bruce had been working on it for almost two months.”
“Did Smilow and Sullivan save a copy of Bruce’s due diligence files?”
She shook her head. “There were thousands of documents.” She paused, her forehead wrinkling in thought.
“What is it?” I asked.
“I don’t know,” she said tentatively. “He missed three days of work before we found out he was dead. None of us knew anything was wrong at first. I thought maybe he was busy down at Chemitex and too busy to call. Anyway, I went into his office that first day to straighten up.” She paused. “His due diligence files were a mess.”
“That was unusual?”
She nodded. “Definitely. Remember, Bruce was an engineer and an accountant. He kept everything in that office neat and organized. That’s why I remembered about those due diligence files. I straightened them as best I could. I thought to myself that maybe he came in that morning real early looking for something in a big hurry and made the mess. At least, that’s the way it looked—like someone searching for something in a big hurry.”
“Was anything missing?”
“I wouldn’t have been able to tell, Rachel. There were so many documents to begin with, including a bunch written in scientific gobbledygook. I tried to put the files back together that first day. Bruce didn’t come in the next day. That’s when I started to get nervous. Finally, Mr. Sullivan had us report him missing. The police talked to me. I answered their questions, told them what he was working on, showed them his office. I was really worried by then. Having the police there made it seem serious. After they left, I went back into his office to look around. The first thing I noticed were those due diligence files.”
“What?”
“They were messed up again—even more so than the first time. Maybe the police did it, but I don’t think so.”
“Why?” I asked.
“Nothing else in his office was messed up. Just those darn files.”
“What kind of documents were in those files?”
“A real mishmash. Bruce’s work papers and spreadsheets, of course, and then gobs and gobs of photocopies of company documents. That’s how Bruce did due diligence on these deals. He would go down to the company, dig into their files and start tagging documents to be copied. Hundreds of documents. Then he’d come back to the office with all those copies and stay there till midnight sorting them and marking them up and arranging them in different folders and typing notes and comments on his laptop.”
“Do you remember what kind of documents he copied?”
She shrugged. “Not specifically. They were mostly the usual types he’d copy when he did due diligence—memos, lab reports, scientific stuff, correspondence, financial records.”
I leaned back, trying to make sense out of what she had noticed about the state of his files. According to the police detective I had spoken with earlier that day, Bruce Rosenthal had most likely been assaulted in the firm’s offices late at night and then shoved into the trash chute, feet first. Judging by the extent of the fractures in his leg bones, he had fallen a good distance, which meant he probably had been dumped into the trash chute opening on the Smilow & Sullivan floor.
There was, I realized, an innocent explanation and there was a far darker one for the condition of Bruce’s due diligence files. The innocent explanation was that Bruce himself had messed up his files the first time, looking for something in a rush, and the police had messed them up the second time. The darker explanation was that whoever killed Bruce had gone into his office the first time, probably right after he dumped the body down the chute, looking for a specific document or, more likely, a specific group of documents. A day or two later, the killer discovered that he may have missed one or more of the key documents, so he sneaked back into the office to search again.
I looked at Karen. She was wiping her eyes. “Are you okay?”
I handed her a tissue. When she got her emotions back under control, she made us both some herbal tea. We took our mugs to the living room.
I took a sip of tea and asked, “During the last few weeks, did he mention any concerns or worries?”
She shook her head. “No.”
“Where did Bruce keep his due diligence notes?”
“Mostly in his laptop computer. He took it with him just about everywhere—to job sites, to meetings out of the office, on business trips. Sometimes he dictated his notes into one of those portable recorders. But when he did that, he always had me type them up right away. He’d make corrections and have me copy the corrected version onto a disk so that he could load it into his computer.”
“Did he ever have you do that on the SLP deal?”
“A few times.”
“Do you remember what you typed?”
“No, but I might recognize it if it’s still in his computer.”
“Where is his computer?”
“Probably at the office.”
“Really? The police didn’t take it?”
She shook her head. “We made them a copy of everything on the hard drive. I heard that Mr. Sullivan didn’t want them to take the computer. Those things cost thousands of dollars, you know, and he’s a real penny-pincher.”
I leaned forward. “Karen, do you think you could get me a copy of whatever files are in his computer?”
“Well,” she said hesitantly, “I guess so.”
“Maybe there’s something in there that will tell us what he was so worried about.”
“I can try tomorrow,” she said.
I took out one of my business cards, wrote my home phone number on it, and handed it to her. “This is my office number, and this is my home number. Don’t tell anyone at the office why you want his computer files. If you get asked, have a cover story ready.”
“Okay.”
“One last thing,” I said, reaching into my briefcase. “There was a list Bruce gave my friend. I’m not sure what it is, but maybe you typed it for him. Or maybe he found it on his SLP due diligence. Here’s a copy.” I handed her the list. “I have the original.”
I came around behind so that I could look at the list too:
She studied the list and then looked over her shoulder at me. “I don’t recognize it.”
“You don’t think you typed it?”
She shook her head. “I don’t remember ever using that font.”
“Have you seen that font on other documents?”
She frowned as she examined the document. “I can’t tell for sure. I can’t remember if I ever saw it in any of the due diligence files. Gosh, I wish we still had those files.”
I came back around to the couch and started getting my things ready. “You said you were told to send those files to SLP’s lawyers. Do you remember who the lawyers were?”
“No, but I can find that out real easy tomorrow. I still have a copy of the Federal Express receipts in the file. I’ll check them in the morning and give you the name when I call on the computer files.”
She walked me to the door.
“Karen,” I said, putting my hand on her arm, “I really appreciate all the time you gave me.” I gave her arm a squeeze. “You’ve been very helpful.”
“You don’t need to thank me, Rachel. It was just terrible what happened to Bruce. I feel sick whenever I think about it. If I can help you find who did that to him, that’ll be thanks enough.”
Chapter Seven
Late night was the worst time. During the days I kept busy, sometimes frenetically so, and most days I could sustain the momentum well into the evening—a noisy dinner with the radio tuned to NPR; walking and grooming Ozzie; doing a load of wash; vacuuming the rug; straightening the house; writing a letter to a friend. A little Ted Koppel, a little David Letterman, and, then, finally, unavoidably, lights out. Once upon a time I fell asleep within seconds of clicking off my reading light. Now the light served the same function as a campfire on the African savanna: it kept the hurtful things at bay. When the light went out, the memories and the pain crept in close. Often it took more than an hour to fall asleep.
The mornings seemed to fit a pattern: I would awake, and for a fraction of a second it was all just a nightmare. David was alive! And then reality would yank me back down. From there it would take a conscious effort to marshal the will to restart my day. But I would do it each morning, and as soon as my bare toes touched the carpet, Ozzie would scramble to his feet on the floor near the bed, his tail wagging furiously, and I would feel the adrenaline start to flow. By the time I left the house, I was usually dialing my after-hours answering service on my portable phone to pick up messages from clients.
This morning’s messages included a frantic call from Sara Allen, the head of a small advertising firm that I represented. I felt my pulse quicken. The day’s distractions had begun. I called her on my way to the office and learned that her firm had just been served with court papers filed by one of the major St. Louis advertising firms. True to form, the big boys had retained one of the largest and most expensive firms in town, and the signature block on the motion listed seven attorneys on the case. Their court papers included a motion for a temporary restraining order, a forty-seven-page supporting brief, and a notice informing us that the motion would be heard that morning at ten o’clock in Division Five of the Circuit Court of the City of St. Louis. Seems that the big boys were miffed over the recent loss of a lucrative account to my client, which was a four-person ad agency whose managing partner was, of all things, a woman.
“Forty-seven pages,” I said with a chuckle. “Perfect.”
It was a crucial strategic error. Asking a state court judge to read a forty-seven-page brief was asking for trouble. It was the equivalent of asking the judge to grab a shovel and head for the Augean stables. He’d refuse, and you’d rile him in the process.
“But seven attorneys!” she moaned.
“Relax, Sara. I’ll meet you in the courthouse lobby at quarter after nine.”
“Relax?! Rachel, we’re going into court against seven lawyers!”
“I know those guys. Think of them as redcoats. Big, lumbering, conventional redcoats. Sara, we’re the Green Mountain Girls.”
It wasn’t a complete rout, but the redcoats were in disarray by the time the judge denied their motion for TRO at 11:30 a.m. “Gentlemen,” he warned them, “I don’t see much here besides a bad case of sour grapes, and last time I looked there’s no cause of action in Missouri for sour grapes unless you’re in the winery business. If your people want a trial on the merits, I’ll give you a setting for next month, but if I were you, gentlemen, I’d try to talk some sense into them.”
Sara was delighted. She insisted on treating me to a victory lunch at Union Station. I got back to my office at one-thirty that afternoon. Jacki seemed a little frazzled as she handed me my telephone messages.
“You feeling okay?” I asked her.
She heaved a giant sigh. “It’s the hormones. I feel like I’m riding the Screaming Eagle at Six Flags.”
“What’s the doctor say?”
She fanned herself with a legal pad. “He says it can take a couple months to get the dosage right.”
I gave her a sympathetic smile. “Hang in there, kiddo.”
I leafed through my telephone messages as I walked into my office. There were four of them. One was from Karen Harmon. I returned her call first.
“Here’s the story so far,” she said in a conspiratorial voice. “I found Bruce’s computer in the supply room. I made a copy of all the files in the hard drive.”
“Great.”
; “It’s four disks. You want me to mail them to you?”
“No. I’ll send a messenger. Leave them in an envelope at the reception desk.”
“No problem.”
I thought back to my encounter with Hiram Sullivan, chairman of Smilow & Sullivan. “Just to be safe, don’t put my name on the envelope. Instead, put, um, Professor Benjamin Goldberg, Washington University School of Law. I’ll make sure the messenger knows to ask for that envelope.”
She giggled. “This is fun.”
“Did you find out anything else?”
“A couple of things. I checked Bruce’s time sheets. He worked most of the last two months on the SLP deal. By the way, SLP stands for—I’m not sure how to pronounce it—Société Lyons Pharmaceutique.” She spelled it to me.
“Got it,” I said as I scribbled the name onto my legal pad.
“That’s why we just call it SLP,” she said with a laugh. “Anyway, he spent most of his time on that deal. About six weeks ago he billed a couple of hours to an intellectual property audit we did for Naiman Electric. Three weeks ago he billed about eight hours over three days to a personal matter for Mr. Sullivan.”
“What type of matter?”
“I can’t tell from his time sheets. He didn’t describe what he did for Mr. Sullivan.”
I paused to jot down: Sullivan—“personal” matter? 8 hrs.
When I finished, I asked, “Would it be a problem to make me a copy of his time sheets for his last two months?”
“Not at all. I’ll put them in the package along with the disks.”
“Great. By the way, who is the Smilow of Smilow and Sullivan?”
“Oh, he was a sweet old man. He died a couple months after I started work here.”
“When was that?”
“About two years ago.”
“How did he die?”
“It was so sad, Rachel. He was down in Miami on a consulting project. He was out walking one night after dinner and someone shot him.”
“Who?”
“They never caught the person. It was a drive-by shooting. The police said it was probably one of those drug wars.” She sighed. “He was a nice man.”