A Middling Outcome Would Be A Surprise

After being laid off from her long-time employer, my friend landed a well-paying, responsible position with a European bank over two years ago. The bank announced that it will close its San Francisco office, and she’ll have to look for another job.

We circulated an offering package to a list of financial institutions that purchase transportation assets. One of our regular bidders called to say that his division will be shut down, and his company has called a halt to all investment activity.

Salespeople in our office have been diverted to working on restructuring deals that we thought were safely put to bed. New business will have to wait. In the financial services industry everyone who has not been laid off is worried about losing his job. People are keeping their ears close to the ground. There is worry, if not fear, in the air.

On the other hand, over the past 30 years our most successful deals have been transacted when the economic outlook was poor. Both the oil-patch crash of the early 1980’s and the recession following the first Gulf War enabled us to purchase high quality investments at low prices.

Why didn’t you buy more, the quarterbacks in the corner offices always ask, years later when everyone is ebullient. Well, now’s their chance to make their mark. In this uncertain environment a wise deployment of capital can earn many times your original investment, but you can also lose it all. A middling outcome would be a surprise.

Some people I know, not just the famous in New York and Washington, have prospered as critics and advisers. Now that they control the ball, I am eager to see the plays that they’ll call. © 2009 Stephen Yuen

Earnings from old deals enable us to pay the rent.