They met in the afternoon, at Essex House, before the murder. Guy Hands ordered a mint tea. His hair looked unruly, Sorkin observed. It might have been because Guy Hands was in something of a pickle. Back in 2007, the British private-equity executive had plonked down $4.73 billion to purchase the record company EMI, a move which, he sees now, was "an awful mistake." The worst part was that Guy Hands had borrowed the money to make said deal from Citigroup, and now the bank was squeezing Guy Hands by his guy parts.
The bank has become Mr. Hands’s de facto boss now that there is more debt on the books than equity. “Negotiations with one’s bankers, when the debt is so large in relation to the earnings, are always difficult,” he said.
Now Guy is worth only a fraction of what he once was: Around $400 million. He has been forced to move to the isle of Guernsey so that he does not lose any more through paying taxes to the British government. And he is feeling deep shame and regret. "We all had too much money," he told Sorkin, of those heady, pre-bust days. "It was just too easy."
Mr. Hands’s surprisingly candid assessment of the private equity industry is worth sharing. He was in the midst of the industry’s growth to dizzying heights during the debt-fueled boom, and he is now having to deal with the aftermath of its shopping spree. Like others, he is desperately trying to keep businesses afloat and pay off the equivalent of huge monthly mortgage payments to the banks that financed them.
Yes, Sorkin began to think, as his Nathaniel Hawthorne–esque name suggests, Guy Hands is a symbolic figure. He is Every Man. He is just like Intel Jessica, for instance, who recently found herself begging Citigroup to lower her interest rate while the customer-service representative on the other end of the phone played Solitaire. And like Queens hairdresser Jacqueline Tamaklo, in that he has been forced to move to lesser circumstances after over-leveraging himself. He's just like the people who quietly invested their money in 401(k)s — wait, no. Actually, he's not like any of those people. Because no other people spent billions of dollars of borrowed money buying a record company in 2007 — Hello! ITUNES! — and most people don't have $400 million in their savings account, and most people pay their fucking taxes.
This story is wretched. We love Andrew Ross Sorkin, but he needs to be taken somewhere to be deprogrammed, like, immediately.