War Relics

While new deals are few and far between in the current environment, deal tombstones still clutter up the desks and window sills of offices.

Not long ago, when deals actually got done-say, in 2007-bankers had their special way of celebrating the close of a transaction. Deal toys, also known as Lucites or tombstones, have long been a fixture in M&A circles. And while new toys are few and far between in the current environment, the old trinkets still clutter up the desks and window sills of offices or occupy the spare nooks in conference rooms.

For many, the deal toys carry a variety of memories, whether it's experiences shared with a corporate client or an inside joke shared with colleagues about a tough assignment.

Gregory Milmoe, a partner at law firm Skadden Arps, has been involved with some of the biggest bankruptcies and out-of-court restructurings - Mirant, Revlon and Vlasic, among them. But his favorite deal toy is one that summons up memories of his firm's work on the 2005 bankruptcy of Refco, when Skadden represented the now-defunct brokerage.

There is nothing elaborate about the Refco deal toy, and typically Milmoe would not get too involved in the creation of a Lucite. But in this case the memento was created for Skadden staffers, making light of unusual developments on the case and alluding to one of the firm's more creative arguments presented in court.

"This one is a bit humorous. It is poking fun at ourselves," says Milmoe.

The tombstone has a picture with an old fashioned printing press producing securities, and it lists Skadden as both counsel and restaurant in the workout.

That's the punchline, but the joke is a reference to a few key points in the proceedings. Amid the complex Refco bankruptcy process in a New York court, it was determined that securities held by Refco as collateral were bogus. The CFO of Bawag PSK, an Austrian bank, had printed up fake certificates representing hundreds of millions of dollars to be used as collateral for loans.

The bizarre case of fraud came to light while Refco was in bankruptcy, and had little to do with the actual court-supervised workout, but to the lawyers it was a source of humor in an otherwise arduous case. "It was a side show," as Milmoe puts it.

As for the restaurant reference, Milmoe recalls that it alluded to an argument made before the judge overseeing the case. "We were trying to demonstrate that as a matter of law Refco was not a broker. It was not a securities broker even though it did hundreds of thousands of securities transactions every year," says Milmoe. "Our analogy was that while Skadden serves thousands of meals each year to employees and clients, that does not make us a restaurant. Those are services ancillary to our principal business." The judge may not have bought into the argument, but that didn't stop Milmoe from donning a chef's hat when handed out the tombstones to colleagues at a post-deal party.

"Lawyers usually don't make tombstones. In restructuring deals there is not enough money to pay for such frivolity," says Milmoe, who paid out of pocket for the Refco deal toys.

Deal mementos are by no means a new custom in M&A circles. Indeed, veteran dealmakers recall seeing tombstones as far back as the early 1960s.

Deal toys have been used to celebrate everything from the completion of an initial public offering to the sale of debt securities such as corporate debt or bonds pooling consumer debt. Of course, mergers and acquisitions have also been enshrined in these Wall Street trophies.

These days, many transactions are still celebrated with simple plastic blocks, but the transaction memorabilia has gotten more elaborate. Wall Street's deal toys are no longer just plastic, they are wood or pewter and have lights as well as sound thanks to computer chips.

A Google deal, for example, used a Lava lamp, while a film production company deal was feted with a miniature reproduction of a movie theatre. The elaborate rendition of the theatre even had cupholders in its miniature seats and a tiny movie screen was lit to highlight the terms of a deal. Meanwhile, a transaction for a billboard company was celebrated with a small rendition of men working on scaffolding.