“Open Kimono”: Financial Expression of the Day

When you really need to know: "Open the Kimono"

When you really need to know: “Open the Kimono” (photo: barbwire.com)

 

“Open Kimono” or “Open the Kimono”, verb phrase, to reveal tightly held information.

Usage Note: This sultry expression is one of the few financial phrases that is not over-used to the point of absurdity. It therefore carries a slight element of surprise when the big-time operator slings this verbalism from his word kit. The business and finance lot are often searching for an angle of advantage or edge (or just trying to not get screwed over) when it comes to their business dealings and transactions. Likewise, investors diligencing a potential opportunity desire deeply to know what the seller knows about the asset for sale. When dealing with counterparties in these settings, there are approved customs and norms that have been created so as to satisfy the “need to know”.

Those engaged in the “due-dilly” know these rules of engagement well. For example, a “data room” is set up, which these days usually consists of an online repository of all business, financial and legal documentation that essentially opens the books for a potential acquirer, private equity buyer or the like to comb through searching for little hints of misdeeds, bad assets, or hidden value. In the old days, a data room was a physical location, often a little-used, poorly-lit storage room at a company’s industrial park office complex where boxes upon boxes of documents were wheeled in and deposited for some poor schmuck investment bankers to pour over for two days without much idea of what they are looking for, let alone hope of finding it inside the mountain of files. This is by design. For the seller or opposing side of whatever transaction this may be often desires to obfuscate, becloud, and befuddle on account of some unsavory elements in their offering.

So after the data room has been picked over and nothing of real consequence is found, it comes down to the hard-boiled, face-to-face negotiations between the barons, capitalists, and big-wheels in a board room. By this time, the more polite rules of engagement are dispensed with and the bankers on one side of the deal will have found some compromising information, perhaps by untoward means.  Whether it’s something on the CEO’s personal life, such as the T&E (travel & entertainment) expenses that show his black car waiting for three hours at night outside a hotel in mid-town twice a week, or some covered-up corporate malfeasance, they have found their hook. After an unsentimental banker drops the nuclear bomb and it’s evident the opposing side is had by the “short and curlies”, he will dryly deliver the ultimatum: “Now, let’s open the kimono and see if we can’t come to an agreement”. What he means is, he now wants a full disclosure of all the things that might bring his offer down.

Your correspondent once sat in a meeting with his German MD at an investment bank of same origin wherein the delicate sentiments of this phrase were misunderstood.  The MD (whose apropos surname was “Geldmacher”, literally “Money Maker”) shouted on a conference call “Tell zem vee know vhat’s in zeir undervear!”.  An awkward silence followed.

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