A new year and a new dawn for my posts. Nothing more on Europe. Instead, it’s time to reflect on the past in order to guide my future, especially as it pertains to investing.
Working as I do for a firm that buys and sells companies, hard / soft assets, private equity, real estate, magic beans, domestically and around the world, I can tell you the most fun one can have is exploring a new idea, developing an investment thesis, transacting the deal and guiding it to fruition over several years. All this to make money for our clients. I love it.
Which brings me to Project Vortex. This was a deal that was made long before I got to the firm. It had been handed to me by someone else. It was a mess and wasn’t making money. The potential that this daughter company of ours would gain my love was limited. In fact, if things went south, I would be in a not too happy position within my firm.
So, why did I take it? Sometimes, cleaning up messes yields the most interesting investing lessons. Sometimes, cleaning up messes successfully can be very good for one’s career.
Vortex is a company that I would classify as a soft asset. There are no physical factories, properties or cash flows that make the company inherently valuable no matter how poorly run. Vortex is a management company that provides a service to its clients (think accounting firm, law firm, etc.; you would be on the right track). If things go south with these types of investments, the potential for losing every nickel is high (there is no furniture to sell).
For the last several years, Vortex’s management had made millions for its clients and investors. However, Vortex would make an ill-fated foray into another country that had the potential for bankrupting the company and its management along with it. It would drag its investors (us being one of them) into downward spiral leading to finger-pointing, threats, hatred, deal fatigue and god knows what else.
If it isn’t painfully obvious to my dear readers, Vortex is obviously a code name. The last thing I need is for people to discover who the company is. I will not be disclosing any confidential information or even hinting at the nature of the company. Details will slightly be embellished or altered to create a narrative that will hopefully prove whatever point I happen to be making. I do this for legal reasons. I am afraid of lawyers.
Project Vortex will be a small chronicle over a series of posts that will hopefully hammer home the point that INVESTING IS HARD.