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Jack Smith

Executives, hide that deadman's trigger with a sugarcoated fig leaf on the bottom line

June 10, 1986|Jack Smith

Illiterate in the field of banking, high finance and big business, as I have confessed before, I didn't know the rules or the language for that new game--the corporation takeover.

In writing about paradoxes the other day, I quoted a reader's example of one: "We had to take over the corporation to save it."

The implication, of course, was that such statements are employed by corporations and bureaucracies to disguise evil intentions as good, as in such Pentagonese as "We had to destroy the village to save it."

In an otherwise amiable letter, Sanford C. Sigoloff, chairman of the board, chief executive officer and president of Wickes Co. Inc., takes mild exception to the statement about corporate takeovers.

He says, "The one that caught my attention, of course, was 'We had to take over the corporation to save it.'

"As a person who has spent almost 20 years of his life doing just that, I must tell you that, in the case of this phrase, it happens to be true.

"Without having been invited in to 'take over' Republic, Daylin and Wickes, those companies wouldn't have made it, and thousands of jobs would have been lost. . . . "

So much for the big bad wolf of corporate life; if Sigoloff is right, he may actually be the good fairy.

Meanwhile, John A. Main of Yorba Linda sends a glossary of "corporate takeover terms" revealing that this form of evidently benign cannibalism has produced a colorful jargon of its own, and one that reflects its reputedly predatory character.

To begin with, the firm that sets out to take over another is known as the predator , and its prey as the target .

A friendly third party in this skirmishing is called a white knight , and generous bonuses offered to executives of a prey company are known as golden parachutes .

A golden handcuff is a long-term financial inducement to retain a valued employee of the target company. A golden handshake is a bonus to induce an executive to leave the company. In plainer language, a payoff.

Bleeding or hemorrhaging is slowly going bankrupt. To bite the bullet is to face the facts.

Some of the phrases in use, like bite the bullet , are not peculiar to corporate life, but are borrowed from the general language. To bomb , for example, is to fail; a bone is a "goodie" offered to pacify those you are about to undo; the bottom line is "to hell with everything else, this is what counts"; burnout is total exhaustion from living in the fast lane; brinkmanship means negotiating close to catastrophe.

I believe brinkmanship was coined to describe the kind of diplomacy practiced by John Foster Dulles as President Eisenhower's secretary of state. Remember when he used to career around the world, committing us to one harrowing position after another?

Doomsday machine and deadman's trigger are phrases that mean action taken by a corporate takeover target to show the predator that even if he wins, he loses. There is a sort of suicidal hubris about those phrases; they suggest that we, the stockholders, will be the ultimate victims.

Fig leaves are cover-ups, secrecy by management or board.

In a defensive strategy known as Pacman or biteback , the target company resists the takeover attempt by buying shares of the predator.

Pull the plug means to release previously suppressed information, usually with malice. To tell all. Puff-piece is an article overextolling the virtues of a company or person (a phrase not unknown in other forms of endeavor.)

Scorched earth is divesting or reorganizing to show the predator that he will end up with only a hulk of the target company. This sounds a little like doomsday machine and deadman's trigger.

To stonewall (from Watergate, of course) is to take a firm, resistant stance, whatever the consequences.

To sugarcoat (another term long in general use) is to make an offer more palatable with tasty packaging; also, to torpedo , to spike a deal--kill, cancel, sink--is an oldie.

As I have said, I am a nincompoop when it comes to business, so I have no credentials for judging the corporate takeover syndrome from this glossary alone.

It may be that Main has picked up phrases dropped here and there in the journals of big business and the general press and given them more weight than they merit.

I will say, though, that if these words and phrases are indeed the language of the board rooms, the two-martini lunches, the long-distance phone calls and the stock-exchange floors, and they accurately reflect the gargantuan struggles of great corporations locked in mortal combat, then the "corporate takeover" may be a much more perilous, sanguinary and brutal business than Sigoloff's happy experiences with it suggest.

The reader might well ask why, if I am so ignorant of such matters, I write about them. I remind myself of a European peasant during the Thirty Years' War. I simply tend my little acres, trying to save my pigs and cows, as titanic forces swirl about me, exchanging mighty blows that, in some remote way, beyond my understanding, affect my fortunes.

Like that peasant, I keep trying to get a glimmer of what it's all about.

Anyway, Sigoloff sounds too decent a chap to have given anyone a golden handshake, or to have hidden behind a fig leaf or forced anyone into pulling the deadman's trigger.

And that's the bottom line.

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