The Counter Party

Yesterday for breakfast I ate three pieces of fish (arctic char, salmon, and sea trout—in that order—all pan-roasted) with a big bowl of yogurt and sliced cucumbers flavored with cumin and lemon. I drank three pots of coffee. I had a jelly donut for fun. I had been dreaming of turtles.

When I get to the office, which is only a short walk from my home, I ask my secretary to prepare some plates of donuts and a few carafes of coffee. I want the donuts to be a mixture of high-end ones—the only source for these in New York is Donut Plant; middle-end ones—like those you get from Dunkin Donuts or Krispy Kreme; and low-end ones—Entenmanns’s, Hostess, et cetera. Among high-end donuts I like plain vanilla, maybe chocolate, maybe filled with cream; I don’t much care for the other flavors, which strike me as an egregious confusion of art and food, all too typical of our fallen times. At the middle-end, I like only chocolate glazed; at the low-end, I prefer chocolate frosted or cinnamon, though I will not refuse coconut either. I like to munch on the donuts while I am talking business, especially when I am in the middle of a complex negotiation, such as I am having this morning. This morning I am due to meet with three different parties concerning the same transaction. The first group is in trouble; they need to unload some properties and associated debt. I want them to give me the properties at the lowest possible price. We are apart by a hundred million dollars; that sounds like a lot but not really. The second party is a group of lenders from whom I need to negotiate a loan to buy these properties and debt. They will lend at different rates based on the price that I agree to with the first group. If the price of the properties is lower the lending price will be higher, and vice versa, on the theory that the lower the price the more they can extract from me. I don’t like this at all, but this is the way business is done when you need a short-term loan quickly. The third group is a pension fund that might buy the properties from me as soon as I get them. Why would they not buy the properties directly, instead of from me? The major reason is that they don’t have expertise in this area; they can’t find deals directly and must have them funneled to them via known channels. They need to buy from someone like me who has vetted the properties properly and who, therefore, knows what a fair price for them would be. They also don’t have the contacts necessary to buy the properties directly, and the sellers, in any case, would prefer not to sell directly to a pension fund. The sellers don’t have a problem with me passing on the properties; they know that that is my business.

And I will, in any case, pass along parts of this deal to a number of funds; the fund with whom I am negotiating today will take the bulk of the investment, however. I need to pass on these properties at about 15 to 20 percent more than I pay for them. The buyers want to pay about 10 percent more. This will not do for me. At 10 percent I will make about 1 percent on the deal. I need to make at least 6 to 10 percent for the deal to make sense for me. Making 6 to 10 percent on this deal, which will take about two weeks from start to finish, would give me a decent return on my money, time, and mental energy. At 1 percent I will actually lose money. The accounting is too complicated for me to go into the details. The point is that I need to make the third group believe that they should pay more. I might try to get the second group to lend to the third group and pay me a small commission for finding them a lucrative loan, which would then offset my own cost of borrowing from them in the first place, and then the deal either becomes more profitable for me or it becomes doable at the lower price that the third group wants. And that—and this is important to me—means that I will not have to haggle too much over a sell price, where I am weakest in my negotiating strategy anyway, since the third party must know that whereas they can hang on to these properties for a while and eventually turn a profit, I cannot. Come to think of it, though, they probably don’t know this even if they should, and it is not because they are dumb. It is because they have no reason to think about the deal that way. Their interests lie elsewhere, and their fund uses a different calculus, one that takes into account the performance of investments over a much longer time horizon than would allow them to demand the lowest possible price for this particular deal. Pension funds, in other words, are loose with their investment money, a surprising fact, I’m sure, for most people to learn. And now that I think of it, I would wager that their price for the deal could easily come up to where I need it to be. I think that I will serve them the low-end donuts. I will give the middle-end ones to the lenders, and I will give the high-end ones to the sellers. That will allow me to say something like: Look guys, I have enough money to buy fancy donuts, but not enough to overpay for your properties. Something like that anyway—a joke that only I am privy to.

I suspect that the sellers will sell to me for the price that I want. They are distressed. I know that they need to sell badly; I know that they need to protect their reputation; I know that the price they have given me is only the first sally and is entirely unrealistic. I have dealt with these guys before. They like to imagine they are tough, but I happen to know that their business is very risk-averse. The moment they get wind of a possible problem with one of their properties, they get antsy and want to be rid of it. They stay in business because they are lucky enough to pick a sufficient number of good apples, and perhaps because they know when to get rid of the bad ones. If I were them, I would not be so quick to get rid of the bad apples, but I am not them, and I am glad that they are them, because I profit by taking some of the risks that other people are uncomfortable with. I profit by putting together deals for people who get easily scared. I can tell that they are getting more scared every day. I sense that this deal will happen just as I want it to happen today. By the time they have arrived and sat down, I have eaten four of the high-end donuts. I must call for more. I offer the plate to them; they say no thanks. I know they find me appalling: the sight of this large, overflowing man—for I am a large, overflowing man—stuffing himself, yes, messily, with donuts, while taking loud sips of coffee, and meanwhile also smacking his lips a bit, the coagulated sugar accumulating thickly at the corners of his mouth and on his fingers. I am acting, but only sort of, for this is who I am, alas. I pick up some papers, being careful to smear my fat, sugary fingers all over them for effect, lean my right elbow on one thigh, and deliver my line about the fancy donuts, or something like it. Then I say to them that I know they need to get this deal done today and so do I. Why don’t we each name a price somewhere between our two numbers. They consult and come back with a number; I show them my number. There is a little back and forth about this and that; they overrate and I underrate; they feign strength and I adopt an attitude of imperturbability. The only thing is, I am imperturbable. So I look at their number and say no, and they look at my number and say, come on you’re stealing from us, and I continue to munch on the donuts and drink more coffee. I think about wiping the back of my hand across my mouth, but impeccable manners prevent me from undertaking this action. After a sufficient time and six cups of coffee, I get up and excuse myself to go to the bathroom. I go to my bathroom and listen to them discuss the numbers among themselves; of course the room is bugged, and I am surprised that they are not smart enough to know that. And so in fact they do discuss the possibility of a lower number to get the deal done. When I come back in I give them this lower number, and they agree to it, like I knew they would. I celebrate this first part of the negotiation with another couple of donuts. My mind is starting to swim.

When this first group leaves, I tell my secretary to stall the second group for twenty minutes or so. I go into my bathroom to purge myself, and when I come out, I ask for the second plate of donuts to be brought in. I really don’t like these glazed ones; the taste of the oil in which they were fried is too apparent to my nostrils. I don’t like the smell, but I eat one anyway because these are the kind of donuts I used to eat when I was a kid and I have such a fond memory of eating them. I like the way the chocolate adheres to my top incisors as I bite into the donut; I enjoy the saltiness against the tip of my tongue. I have thought about this sensation ever since I was little, and I continue to think it now, no matter how often I eat these donuts. I offer some to the new group in my office. They each take one. This confirms a theory that I have about people: they refuse fancy things, but always accept middle-class kinds of things like glazed donuts. While they are eating I give them the numbers for the purchase and the terms I would like for the loan. They look things over. Since they have modeled every price scenario, they simply have to look into their spreadsheets to produce for me their terms. We quickly agree. Then I tell them that if they give me an appropriate discount on the loan, I will pass along a third party to take on a much more lucrative loan from them, and since the loan to this third party would be related to the set of properties for which they have already done due diligence, there would be little extra work and a lot more fees. They of course agree. We move on to another plate of donuts. I very much enjoy the second donut, now that I am used to the smell of the oil, and I take a third one as well. They all stop at two. Another insight of mine about human nature: no adult male will ever eat more than two glazed donuts. It is a pity. I once had a woman in my office, a counterparty to a negotiation, who ate three glazed donuts, but she was alone. I think she was also a lawyer by training—large but not obese, a little grey hair, large facial features. She said she hadn’t eaten breakfast and in any case donuts were her weak spot, an addiction left over from her childrearing years. She even saw a hypnotist in Brookline about it, but to no avail. I lost that negotiation, so mesmerized was I by her unabashed consumption of glazed donuts. Men, however, will eat two at most. I sent this group packing without even bothering to offer them more donuts.

It’s now closing in on eleven o’clock. The third group is supposed to come by at eleven-thirty, but I realize now that this will present a problem. This will be the toughest negotiation of the day. I will undoubtedly eat a great number of the little low-end donuts—probably at the rate of one every two or three minutes. I suspect that we will take at least an hour to come to terms. They will want details; they’ll want to know about the properties; I’ll explain to them how I can put them in contact with a lender to sweeten the deal for them; they’ll want to know how that will work; I’ll model some numbers for them, walk them through a few steps, hold their hands a little. I calculate, conservatively, that I will be eating around twenty-two little donuts—almost four packs of the little Hostess kind. I haven’t even begun to count how many Entenmanns. These come in packs of two—I should think I’ll eat at least three packs. I love the little Entenmanns, the coating of fake chocolate so crisp against the spongy yellowish flesh inside, a perfect texture to satisfy our need for doughy, cottony comfort. That would make around twenty-eight donuts. If the negotiation takes longer than an hour, I’ll eat even more. Then there will be lunch. Donuts of this variety leave an unpleasant residue in the alimentary tract; I won’t have time between the donuts and lunch, which I unfailingly have at one o’clock (it has been a rule of mine since the beginning of my working days and what is life if there are no steadfast rules?), to dispel their pernicious residue. I’ll be tasting them, in other words, throughout my lunch, and today I am going to a favorite Japanese place to eat food whose flavors reveal themselves only to an uncluttered and extremely discerning palate. What shall I do? Postpone the meeting? Impossible. Eat fewer donuts? Yes, but eating donuts for me is like breathing. I can’t do without them. I really like them. Push lunch back so as to let the donuts pass? You would think this would be a reasonable option, but I cannot live in a world where rules should prove so pliable. No, the only solution will be to speed the meeting along and try to moderate my eating of the donuts, like an athlete who tries to control how many breaths he takes. I will simply do less coddling, less handholding. It might cost me a little. I might agree to a lower price just to get the meeting done faster. You might think it’s not very shrewd of a businessman to let his pleasures get in the way of profit, but you would misunderstand me. Profit is good; it certainly is necessary, but it must coexist with our species existence, or at least, my species existence, for I do not wish to gain the world if it should cost me my harmony with the rhythms of my inner essence. I shall have the pleasure of my lunch no matter what; I shall eat maybe only twenty-five of the little low-end donuts; I shall still make a good profit on the deal.

When the guys from the pension fund arrive, I quickly get down to business, not even bothering to offer them any donuts. They have brought a team of thin, money-counting types, guys whose razor-thin instincts are matched by their razor-thin physiognomies. I see in their faces tight lines and withdrawn cheeks, as if they were habitually sucking in air in heavy drags and grimacing while exhaling. They would not eat a donut, of whatever variety, anyway. They want to make you think that they are all business, that they are in command of their numbers, that they know what they are talking about. It’s sad. The pension fund has sent the wrong team. I’m angry about the fund’s incompetence. Don’t they have a duty to the pensioners to get it right? I change my mind about the price I want. They will pay the higher price. I will gobble up donuts and run circles around them; I will discombobulate them with real and fictitious information and numbers; I will feint and parry and dance my way to the number that I want. And why? Because these guys with their conventional educations, their conventional number-crunching personalities, their conventional salubrious thinness, their conventional ‘I would never eat something as unhealthy or low-class as a Hostess donut’ attitude: these creatures of restraint all quail in the face of the thing they cannot understand, and that is, in a word, excess. In this case, it is excess bodied forth as authority that comes from sources unrecognized by their worldview, competence coming from a slovenly form. From a fat man with his hands covered in powdered sugar and his lips smeared with chocolate, overflowing from his chair, his jowls sagging relentlessly, his flesh flowing in all directions; a man of such utter intellectual and physical failing, and yes, moral failing as well—for isn’t obesity a matter of self-control? Is this not what everyone thinks?—a man like this, who makes them doubt their own understanding of the deal, who makes them feel uncomfortable and unsure of themselves, and most importantly, makes them want to call their boss and ask for direction, because I am going to make them think that they are not going to get this deal, that I have another option in mind and they will lose out on a deal that will bring their fund a stellar return. And these guys don’t want to disappoint their boss. They are young gunners who need to bring in deals. I will make them understand that even at the price I want, with the help of the favorable financing I am offering t
o make available to them, they will be bringing in a deal that will redound mightily to their credit. Their boss gave them directions about price, but he gave them leeway. He understands how negotiations go. His guys have to be able to make the ultimate decision.

So they come in thinking that they will spear the fat man, but as the donuts start to roll and the numbers start to swirl I get into my act, creating fear and anxiety even while dangling before them the promise of returns and slowly but surely making them think that it is they who are taking advantage of me, and I see them begin to think, Well yes, that seems right, I think we could get there, we’ll have to check to make sure. I’ll give you some time to talk it over, I say. Let me go and retrieve a few more packets of these delightful little donuts. Are you sure you won’t have some? And I go away to listen in. Did you see how many of those disgusting donuts he was eating? Man, what are we going to do? I think we should sell the boss on the higher number. With additional leverage this deal’s golden. This guy’s a slob; his numbers are messy; we snowed him. I think it’s an even better deal for us now. Let’s get him back in here and sign now before he has time to go over his numbers more carefully.

There is more chatter as they work through their insecurities, but that last sentence is music to my ears. When someone else thinks he is smarter or better prepared than I am, then I know that I have won. I walk back into the room, still eating a donut—now utterly enchanted and delighted by the little nuggets—and ask them if they’ve come to a decision, and they of course tell me that they have checked with their boss (at which I smile and dip one of the powdered ones into my coffee) and are willing to do the deal at the number I have given them. You drive a hard bargain, they say (with a wink to one another), but the boss wants this deal done today. Let’s sign then. It’s been good doing business with you. Are you sure you wouldn’t like a donut? No, no, it’ll spoil our appetite for lunch. Oh? And where are you off to for lunch? We’ll probably just get something quick and head to the gym for a little squash afterward, maybe go for a quick run. Really? You can eat and work out just like that? It’s like a habit. Your body gets used to it. Oh, I see. I never get to the gym myself, but I do like to take a walk through the park after lunch now and then. I like to watch the runners go by. You do? I mean why? Oh, I just like the idea of bodies in fluid motion. I can’t really run much myself. You know, everybody’s got to start somewhere. (The one who says this is tall and thin with blonde hair, Scandinavian for sure, probably went to Wharton—undergrad, not the business school. Earnest. Probably has a wife named Tiffany. I imagine he will be a happy man some day.) I know, but it’s these damn donuts; I can’t stop eating them. What is that, like a habit with you? No, no, not a habit. Is breathing a habit? I like them; I really like them. Are you sure you don’t want one? We really should be getting along. Gentlemen, it has been a pleasure, and I make sure that there is powder on my hands before I shake theirs. I walk them to the bank of elevators, wait with them until the doors open, tell them the papers will be done by the end of the day, and leave a smudge of white powder on each of their shoulders as I give them each a last pat before leaving. I turn around and pull a package of donuts from my pocket. The coconut ones. How can I refuse?

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