by Jan Moran
Click.
Roper never said good-bye. When he was finished with a conversation, he simply hung up. Derrick stared at the phone, thinking. He had to come up with a plan to make the deal attractive to her.
He looked over his shoulder and caught a glimpse of Greta. Just when he had other plans for the evening. Damn him, Roper was always ruining his evenings.
The next day Verena spent hours unpacking and reviewing financial documents. She glanced at the clock. Derrick was late, which wasn’t like him. She opened the oven to check the beef Wellington she’d prepared for him. The doorbell rang out.
“Verena, wonderful to see you again, babe,” Derrick said as Verena opened the door. He took her in his arms and kissed her deeply.
“Babe?” She laughed and pulled away. “You’ve never called me that. What happened to ‘sweetheart’?” Something was different about him, but she couldn’t articulate the change, other than to describe it as a sort of distance she’d never felt before. Even as she thought of that, a stab of guilt slashed at her heart. She had put her engagement ring back on before he arrived, but Lance was tugging at her thoughts.
Verena swept her hair over one shoulder and led him into the kitchen. “Dinner is almost ready. Would you care for a glass of wine?”
“Sure.” He made himself comfortable at the kitchen table while Verena turned to her salad preparations. He’d called her that morning and told her that he needed to speak to her.
“This is a wine I discovered in Paris,” she said, pouring a glass for him. “Let it breathe a little.”
“How was Paris?” he asked, watching her.
“It’s an incredible city.” She rinsed off a handful of vegetables from Mia’s garden. “I made an important connection, and kept the trip short,” she added, remembering what he’d said about the cost of the trip. She’d never had to justify personal expenses to anyone before, but now that Herringbone had been researching the company—the due diligence—she felt she had to explain the expense to Derrick.
Derrick nodded. “Speaking of expenses, we’ve been going over the numbers on your company.”
“How does it look?” she said, trying to keep concern from her voice. Her controller had sent the last financial statements to her by email, and she had gone over them on the plane, and again that morning, analyzing their position. Now that Rose Beauté had passed, she had no one else to turn to. If Herringbone didn’t make the loan soon, she’d have to start terminating employees. She sliced through a carrot. I don’t even want to think about that.
“There’s a deal on the table, Verena.”
Verena paused, her knife suspended in one hand. “What does that mean?”
“Herringbone is willing to do a deal. But the terms have changed.” His dark eyes flashed before a hooded gaze concealed his emotion.
“Has the amount of the loan declined?” Verena felt a chill creep up her neck. The company couldn’t get by on much less.
“It’s not that. You’ll actually have a lot more money to work with,” he said, smiling.
Verena looked at him. An alarm went off in her head. “Why would I want to borrow more than we need?”
Derrick shifted in his chair, picked up his wine glass and swirled it in the halo of light from overhead. “Good color. You discovered this wine in Paris?”
“That’s what I said.” Verena cast a cool glance at Derrick. He’s stalling, he knows I won’t like the terms. After emptying sliced carrots, romaine lettuce, and sweet peppers into the salad bowl, Verena wiped her hands on a kitchen towel, and then sat across from Derrick. “Tell me about the deal.”
He put the wine down. “Look, Herringbone will make the loan, and you’ll have access to whatever else you might need in terms of management talent, lines of credit—you name it. It’s a good deal.”
Verena narrowed her eyes. “We have a good management team already.”
Derrick shifted in his chair. “As you expand, you’ll need a more experienced team. Of course, you’ll always remain at the helm as CEO, but you’ll have a broader knowledge base.”
“We’ve been in the skincare business for decades.”
“Right, but there’s a new opportunity you’re going to need help with.”
Verena arched a brow. She didn’t like what she was hearing.
Derrick licked his lips and went on. “Herringbone has another beauty company that we want to fold into Valent. We believe VSS can be a beauty powerhouse, and this will be the first step.”
“We’re running at full capacity as it is. Why would we want to dilute our efforts when we have such a tremendous opportunity already in progress in Asia?”
“You have to think big, Verena. This nail care company has a great product line, but the management was lousy. With our help, you can turn it around.”
Verena pushed back from the table. “Nail company? That’s not what we do. We focus on skincare.”
“Close enough. Look, it did well in the mass market—”
“In drugstores and discounters? That’s not even in our distribution network. Derrick, all we need is a working capital loan.”
“But this is a great opportunity. It’s called Rainbow Nails—”
“I know Rainbow Nails. It’s a color line for teenagers, and it’s not even in our league. We must maintain our image,” she said, shaking her head. “We can’t lose focus on our luxury positioning in the market.”
Derrick passed a hand across his face. “You need to do this, Verena.”
“No.” She folded her arms. “We agreed on a loan, that’s it.”
Derrick raised a brow and tapped his wine glass, the tinkling of fine crystal shattering the silence. “Herringbone didn’t agree on anything,” he said in a measured voice. “This is the offer. I’ve seen your financials, and I suggest you listen to it.”
Verena stared at him. A sinking feeling began to gather within her. She might need the money, but she had to proceed with caution. “I’m listening.”
“Herringbone will advance funds for a minor equity stake in Valent. You’ll take over Rainbow and reinvigorate that company. We’ll take a seat on the board, contribute some management expertise, and grow the companies together.”
Verena paused, taking it all in. “And then what?”
“We’ll find a suitor, you sell and retire.”
“Why would we want to sell?” She bit her lip, but the sinking feeling intensified. “I’m far too young to retire. My sisters will probably join the business someday, and our children, too. This is our family business.”
Derrick met her gaze. “And this is your opportunity to provide for your entire family. Then they can do whatever they want with their lives.” He reached across the table for her hand, touched her engagement ring. “And so can you.”
Verena shook her head. The idea for Rainbow was just too much. She drew a breath. “I don’t know, Derrick. This is so far outside of our business plan. I can’t see how it makes sense for us.”
“Herringbone can take your company to an entirely new level.” He took her hand in his. “We’re talking millions of dollars, here, Verena. You must think of your family. Mia likes to travel, and she should do it in style. Who knows how many years she has left? And Anika and Bella, what if they don’t want to work in the business? Don’t you want them to be able to do anything they’d like?”
Verena considered his words.
“When Asia is in full stride, can you really handle the business?” Derrick stroked her hand as he spoke, his voice softening. “Especially if we have babies at home. Would you really want to spend weeks in Asia away from them? From our family and the home you make for us?”
“Well, I suppose someone else could take those trips.” She closed her eyes for a moment. Derrick sounded so sincere. He had some good points, and he was much more experienced in business than she was.
The past couple of days with Lance receded in her mind. This is my reality, here, with Derrick. She opened her eyes and gazed into hi
s dark, earnest eyes, realizing that her routine would change as they built their life together. Perhaps he was right. But the thought of tackling another company, especially one so different from their own, was overwhelming.
The culture of Valent Swiss Skincare would change with new managers on board. She’d always run the business based on the ultimate service to their guests. But maybe this is the way big business is done. She rubbed her forehead. “Derrick, I’ll be honest, I don’t know anything about running a business in the mass market. You say Herringbone will support this new venture?”
“Absolutely, I promise. As much as required.”
She turned over the decision in her mind. Something didn’t feel right. Yet, she was not in a position to decline. “I’ll look at it,” she said, her words laced with caution. “If I decide it’s not right for us, can I still count on the loan we need for working capital?”
Derrick shook his head. “This is the only deal on the table, Verena.”
“But surely—”
“Roper made it very clear that unless you agree to these terms, there is no deal.”
Verena slid her hand from his grasp. “That doesn’t make any sense. If VSS is a good investment, then why wouldn’t Herringbone go ahead with it? Seems the addition of Rainbow Nails could destabilize our company, if anything, it would be the riskier proposition.”
Wearily, Derrick drew a hand over his face. “You ask a lot of questions, Verena, and I have to admit, they’re good ones. Here’s the deal, as a defunct company, Rainbow is dragging down one of our portfolio funds, and we’re trying to improve its returns, or its prospect of returns, because we need the investors in that fund to invest in our new fund. You know I have a big stake in this new fund, Verena.” He took her hand again. “We have a stake in it. This is our future, too. You’d be doing Herringbone—and us, our family—a big favor.”
“I don’t know, Derrick.”
“I wouldn’t have agreed to bring it to you if I didn’t think you could do this, sweetheart.”
“I’m thinking of Mia, and of Anika and Bella, too. It could sell for millions, you say?”
He nodded. “How often do you have the opportunity to secure their future? You could set up trust funds for each one of them. Think of the cost of their college education alone.”
“I have. I really want them to have the opportunity that I never had to go to college.” She sighed. “Twins are expensive.”
“It’s a lot of responsibility on your shoulders.” Derrick poured more wine into the glass and offered it to her. “I promise, you won’t regret this. It’s the right thing to do.”
Verena took a sip of wine. “I’ll have to speak to my attorney and accountant. And Rainbow should be a separate company. If it doesn’t perform, I wouldn’t want it to hurt VSS.”
“Of course, absolutely. I’ll send the term sheet to you tomorrow. As long as you approve, we can move to the legal agreements immediately. And from then on,” he added, “you’ll be on the path to success.”
Derrick made it sound so easy. He always talked about buying, building, and selling companies as if they were baseball trading cards.
She rose to remove the beef Wellington from the oven, and then placed it on the counter. Glancing over her shoulder at Derrick, an involuntary shudder went through her. Herringbone’s plan didn’t feel right to her.
But she’d have to make the best of the situation for her family’s sake. The business and life she had always known would change. Perhaps it was time. But am I ready?
15
Verena gave her management team a few days to study the plan for Rainbow Nails that Herringbone had suggested. Even though she initially tried to remain open-minded about it, the more she studied it, the more steadfastly against it she became. Everything about it was wrong, and she knew it, but if VSS wanted funds from Herringbone, they needed to find a way to make the deal work.
Now, Verena’s gaze roved around the conference table in the VSS office. Lacey sat to her right, taking notes, her yellow lace blouse a burst of sunshine among the otherwise weary team. The company controller, Annette Margaux, along with the Vice President of Marketing, Pearl Cho, sat directly across from her. And at the end of the table was the VSS corporate counsel, Jack Epstein. They were all studying the documents from Herringbone that Lacey had passed around.
“So, what are your thoughts on this deal?” Verena asked, leaning forward. She hated even having to consider it, but it was now their only option.
Annette vehemently shook her head. “Rainbow is essentially a defunct company. There’s no infrastructure, so we’d be responsible for rebuilding the company from the ground up. It will be costly. They have a huge inventory assortment—unless you trim the product line—so that will put a lot of pressure on the bookkeeping function. She peered over the rim of her stylish navy glasses. We’ll definitely have to add another person.”
“And we can’t really leverage our existing field support,” Pearl said, brushing her jet black hair over her shoulder. “The team in the field is already stretched thin. I can call on a couple of major accounts, but after next month, my calendar is booked solid with our Asian expansion. Maybe we can outsource sales and marketing, or add another person to sell into those markets and oversee the field support.”
“More expenses,” Annette said, making notes. She ran a hand through her cropped blond hair.
“And then there’s the added manufacturing and distribution management.” Verena nodded, taking in her team’s comments. “That’s two more people.” She jotted down figures on a tablet. This is going to kill us.
“Who will handle product development?” Pearl asked.
Verena shook her head. “That would be me, I suppose. I’ll have to come up to speed quickly on nail care.”
“Where will that fit in your current schedule?” Lacey asked. “Between three and five in the morning?” She shook her head.
“Jimmy Don is taking over VSS product development, so that might free some of my time,” Verena said.
Lacey snorted with disgust. “He’s such a rude young man. What does he know about skincare?”
“Absolutely nothing. We’ll have to train him.” Grim laughter rippled around the conference table, although Verena held back her own vitriolic comment about Jimmy Don. “Jack, what’s your opinion of the deal?”
Jack removed his glasses. “It’s a tough deal to execute. Your resources are geared toward the luxury market. Even though Rainbow is a cosmetics company, it will require more support and a larger investment in inventory. Is Herringbone really serious about opening ten thousand doors this year?”
“That’s right,” Verena said. “They’re trying to re-establish the ground they lost last year.”
“Ten thousand doors—that’s a lot of stores,” Pearl said.
“And Herringbone’s not giving us nearly enough money to support them,” Annette added.
“Mass is different, many more stores per chain. They promise that we’ll have access to whatever funds we need.” Verena turned to Jack. “I know it’s a lot of work, but do you think it’s a fair deal?”
“It’s stacked in their favor, for sure, but as long as they provide the support they’ve promised, you might have a shot at it.” Jack put his glasses back on and scanned the term sheet. “Assuming there aren’t any surprises in the final documents, I’d have to say it’s not a bad deal, in light of the current economy. You would have been much better off with your original plan. However, I don’t see that you have much choice, and believe me, Herringbone is well aware of that fact. If you had access to other capital, you wouldn’t even be considering this deal, in my opinion.”
Everyone fell quiet. Verena looked around the table. “Then should we consider it now?”
Annette cleared her throat. “We have less than thirty days of cash reserves, even with the personal credit card advances that Verena put into the business.”
“Most of the other cosmetic companies are laying off peop
le,” Pearl added.
“At least you can find the talent you need for Rainbow,” Jack said. “Plenty of people looking for work now, ready to take what they can get.”
“We’ve always run pretty lean,” Pearl said.
“Herringbone doesn’t think so,” Verena said. “We’ll have to make some staff reductions, or move some people to the Rainbow side.”
Annette nodded. “Jimmy Don was questioning how much the estheticians make. He suggested we could terminate those with the most seniority, and bring in younger people who would work cheaper and require fewer benefits.”
The room grew quiet again. Jimmy Don is an idiot. Verena tried to stay calm, even though she was appalled by his suggestion. Their reputation was built on excellent service and results. Their clientele went to VSS because their estheticians were the best.
“That’s also age discrimination,” Jack said. “Herringbone should know the law.”
“Don’t worry, we won’t do that,” Verena said. She wouldn’t compromise their quality.
Annette spoke up again. “He was also asking if we could cut costs on ingredients, change the product formulations, even on the medicated line. Or use generic products in the skincare services.” She shook her head. “I didn’t want to tell you.”
“He what?” Anger began to build in Verena. “The only reformulations allowed at Valent are to improve the products. We will not lower our standards.” What a greedy imbecile. What did Jimmy Don know about their business? She made a note to speak to Derrick.
The small group around the table fell silent.
Finally, Pearl said, “We might have some natural attrition coming up, maybe I can combine some territories in the field, reduce some staff there.”
“Instead of a full-time bookkeeper, I can start with a part-time person,” Annette offered.
Jack removed his glasses and began to clean them with a cloth. “In the spirit of the times, we can give you a rate reduction or stretch out payments on your legal bills,” Jack said. “Valent has been a good client.”
“I appreciate your efforts,” Verena said. “I know you’re really trying, and I will take each of you up on your suggestions. But that doesn’t do much to change our financial situation. We expended a great deal of money to put Asia in play, and we did so on the promise of a working capital loan. Now that that’s disappeared, and no other banks or investors are willing to step in, we’re really in a bind.”