“Hello, this is Dave Shyster, and I work for the firm of Cunning, Devious, and Filcher, the financial consultants.”
“I am sorry, but I am really busy right now, and I can’t talk to you. My favorite cartoon show is on. Besides, I don’t want to buy any stocks. The only stock I want to own has four legs.”
“Wait a minute, don’t hang up!” begged the fast talker. “We don’t waste our time anymore making cold calls in an attempt to sell you shares of stock. That’s for suckers. There’s more money today in LBO’s.”
“What’s an LBO?”
“It’s a leveraged buyout,” replied the financial sorcerer.
“Never heard of them. How’d you get my name and phone number?”
“We bought it. Everything in this country is for sale these days, everything from phone numbers to politicians. Companies are buying up other companies right and left in this period of merger mania. I just heard a cigarette company bought a chain of hospitals. The more cigarettes they sell, the busier the hospitals, now that is creative. So is the way they are financing all these deals… something called leveraged buyouts.”
“I still don’t know what you are talking about.”
“Let me put it this way, do you have anything you want to sell right now?”
“I got an old milk cow who’s drying up, and I was thinking of taking her to the sale barn.”
“What’s she worth?” asked Shyster.
“I was hoping to get $500 for her.”
“How’d you like $10,000?”
“Mother, turn down the cartoons! Please go on.”
“I’ve got a company I consult with that wants to diversify, and they have told me to be on the lookout for a company to buy. We will sell them your milk cow for $10,000. But since this company that I am representing doesn’t have any money, we will sell junk bonds to outside investors. In other words, we’ll promise to pay these investors who want to own a piece of your cow a real high rate of interest for the use of their money, let’s say 10%. Then in ten years, we’ll promise to pay them back their principle. In the meantime, since they don’t know much about cows, we’ll hire you as CEO and pay you $100,000 a year salary to manage their cow, which should just about cover my fee. And if you don’t like working for them, you can drop out with a golden parachute.”
“You really think you can find some folks to pay $10,000 for my old cow?”
“It’s a snap. These people trust me; I have made them all rich, at least on paper. In selling companies, integrity and honesty count for everything, and once you’ve learned to fake that, you’ve got it made.”
“What happens in a year or two when old Bessie ain’t milking enough, or she dies so you can’t pay the interest on these junk bonds?”
“In that case, both the junk bond investors and the company I consult with will just write off the loss.”
“I don’t like the sound of this LBO business. I don’t think my cow is for sale.”
“I am warning you. We have ways to make you sell her to us. Don’t be stupid and fight this attempted leveraged buyout. This is the best get-rich-quick scheme ever devised. Wise up, there are literally unmade millions out there. Why not cash in your chips, literally speaking, like the rest of the country is doing.”
“Speaking of this country, is the leveraged buyout of America really good for our economy?”
“I don’t know if it’s good for America, but it sure has been good for stockbrokers, CEOs, lawyers, accountants, and me.”
“I don’t know much about finance, but these LBO’s sound to me like the farmer who sold his only milk cow to buy a milking machine.”
