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Perceived Control: Theory, Research, and Practice in the First 50 Years 1st Edition John W. Reich
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For my parents, who encouraged me to read, and especially my mother, who passed on her addiction to the printed page.
Acknowledgments
As with most works involving large quantities of research, many people contributed to the production of this book. Like any hack writer, my first instinct is to blame them for all the mistakes and shortcomings of the present work, and failing that, to blame my editor. Unfortunately, both of my research staffers, the interview subjects, and the overseas editor are all first‐rate in their respective fields. By default, then, the responsibility for this book falls on the author. Any errors, mistakes of interpretation, or misunderstandings of any kind were mine and mine alone.
To properly thank all the people who helped bring this project to completion would require a second book, so I will simply highlight those who stand out in my memory.
First, my good friend in New York City referred to here only as “James.” His work requires that he remain anonymous, but I want to thank him anyway for kicking my butt when the time was right and for introducing me to a vast, globally active corporate group that I had never heard of before. With that, I have paid my debt, and the next time we meet, the wine is on him.
On a more serious note, I want to thank all the executives in the ORIX Group who generously gave of their time to meet with an unknown journalist and answer his foolish questions. Chronologically, let me extend my sincere thanks to Scott Beiser and Bob Hotz at Houlihan Lokey and Bill Michaelcheck at Mariner Investment Group, both in New York City; to
Nishitani Hideto,* Kawai Noboru, and Brian Prince at ORIX USA in Dallas; to David Power and his amazing team in Dublin; to John Carter in Sydney; Soh Kim Soon in Singapore; and Liu Guoping of ORIX China.
Very special thanks are also in order for the many people at ORIX headquarters in Tokyo who provided the information and opinions that were necessary for me to understand the elephant I was blindly holding by the tail. I am grateful to Nitanai Takaaki, Miyata Hiyori, and Mizumura Nozomi of the public relations department for their tireless help when I had questions or needed data, as well as to Tominaga Hiroshi and Oishi Tomoko, who offered key off‐the‐record explanations of the company's history and inner workings. Special thanks to President Inoue Makoto for giving me so much time to meet and talk and to get to know his company better.
My professional thanks to Kato‐san, my hard‐drinking journalist friend at the Foreign Correspondents’ Club of Japan (FCCJ) in Tokyo, as well as to Shimizu Kazuhiko and Ushio Shota, two hard‐working local journalists who also contributed their time, research, and professional expertise to facilitate this project.
This book would not have been possible without the help of two special people: Iizuka Toshiaki, my trusted interpreter, who helped manage the interface in Tokyo, and my agent/editor, Cindy Mullins, president of Media Tectonics, a global media giant soon to rival ORIX in size and reach. Cindy introduced me to the good people at John Wiley & Sons and was instrumental in getting this book into print.
A special shout‐out to my publishing sensei in Washington, D.C., Nicholas Smith, for his customary invaluable advice and assistance. (Yes, I owe you a bowl of soba.)
And last, but most important, a very, very special thank-you to the chairman of ORIX Corporation, Yoshihiko Miyauchi. Many years ago, another Japanese CEO told me that the greatest executives treat everyone, even the company janitor, like an important guest. His words, poorly translated, mean, “The higher your status, the deeper you bow.” I never forgot that lesson, but it was Miyauchi‐san who showed me how true this is. In many ways, this book is for him.
* All Asian names are given in the traditional order, with the family name first, with two notable exceptions: The chairman of ORIX has lived and traveled extensively outside of Japan and is fluent in English. Overseas, he normally presents his name in the Western fashion (Yoshihiko Miyauchi), which is how I refer to him throughout the text. Also, the baseball star known as Ichiro, who has made his home in the United States for several years, is referred to as Ichiro Suzuki in Chapter 8.
About the Author
David W. Russell, President of Russell Communications International, is a bilingual teacher, author, and corporate communications specialist who has lived in Japan on and off for 30 years. In 1996, he formed RCI to help Japanese companies improve the quality and scope of their global corporate communications, and over the past two decades he has advised many of that nation’s largest public and private institutions. He is a frequent lecturer and often presents (in Japanese) at management seminars, such as those run by the Osaka Stock Exchange. He still consults and speaks regularly, but devotes much of his time to writing. David has authored more than 10 books and dozens of magazine and newspaper articles, including pieces for Forbes, The Economist, and Harvard Business Review. Among various awards, one of his books was named Best Business & Management Book of the Year in the United States. He divides his time between a home near Mt. Fuji and offices in both the United States and Japan. He can be reached at david@russellcom.jp.
Introduction
Every book is a conversation of sorts, and reading requires some level of personal commitment, not just of time but of attention, much like the commitment we make when we listen to a friend begin to tell a long story. And just as in conversation, I believe that every reader has a right to know who they’re talking to before they make that commitment. Although this book is not about me, I’ve tried to make it as personal as possible to allow general readers to experience this journey as I did. So it helps to know a little bit about the “I” who is narrating the experience.
Although I was born and raised in the United States, I have lived part of my life overseas, mostly in Asia and largely in Japan. I am a writer by trade: I make my living by hunting for interesting stories and finding ways to tell those stories in various media. I’m certainly not a businessman, yet I find the world of international business fascinating. A few decades ago, I started out as a journalist and somehow drifted into business journalism. I’ve always had a nose for a compelling story, and when I find a story that needs telling, I’m willing to do some digging to learn more. I have looked into many kinds of stories, mostly for magazine and newspaper articles (remember magazines and newspapers? Sigh . . .), but also for several books I have either written or coauthored.
As a background to this book, it’s also important to know that I’ve had a long‐standing interest in Japanese business. After college, I learned to speak Japanese badly, and then went to Tokyo to live for a few years and polish my language skills in the myriad bars and clubs of that teeming city.
It was in Japan that I got my first job working for a business newspaper, the Nihon Keizai Shimbun (Nikkei for short, often called the Japanese Wall Street Journal, a comparison that both sides detest). Although I spent several years working and living there, Japan remains a mystery to me: One of the largest, most powerful economies in the world, vying with nearby China for influence, it is small enough that it could pass for just another insignificant province in China. To put it another way, Japan is smaller than the state of Montana, but unlike Montana, roughly 80 percent of the land is mountainous and nearly unusable for either agriculture or industry, which means its entire population, roughly the equivalent of one‐third of the U.S. population, is squeezed into an area the size of maybe 20 percent of Montana. How such a tiny nation, with almost no natural resources, could become a major global power has always fascinated me.
Many years ago, when U.S. companies were up in arms about the Japanese industrial groups called keiretsu, which at the time seemed to pose an unfair barrier to international trade, I discovered that there was very little reliable information available in English about these enormously powerful groups and a growing mountain of rumor and misinformation. So I linked up with a Japanese partner in Tokyo and set out to uncover the truth about the keiretsu, a story that became a major book in its time and won all sorts of awards.
For years, I have also been particularly interested in the growth of transnational companies—the global giants that call one country home, sometimes only for convenience, but do business comfortably in dozens of other countries, moving capital, personnel, and physical assets from one place to another at will. One of the first industries to “go global” was the financial services business. Banks, investment banks, brokerage houses, commodities traders, and others were quick to realize that money flows internationally every second of the day, and no one stops to ask for its passport. Moreover, as the world was linked by faster and faster communications systems in the late‐twentieth century and their business was supported by ever‐faster, more powerful computer systems, the financial companies realized that they must become truly global businesses. Not international companies, which is how thousands of firms in every major nation describe themselves these days, because being “international” simply means having offices in New York and London and
Hong Kong and Dubai, which is a no‐brainer for big companies these days. Simply having overseas offices doesn’t make you a global player, and the financial firms understood that. Some of them had networks around the globe more than a century ago. So what? Being international, they came to realize, is just a matter of renting real estate; but being global is something very different. It’s a matter of perspective.
Becoming a truly global firm means undergoing a fundamental change in thinking, and that is what we see more and more companies doing today: giving up their roots in a particular country or market and looking at the biggest big picture. They begin to think: We’re not an American company or an English company or a Japanese company because those labels are all limitations on how we conduct our business. Now we exist beyond national borders and beyond the culture where we were born; our executives could be Indian or Chinese or French or Brazilian—it really doesn’t matter because nationality is a limited form of thinking that we left behind us. The company is our identity, and the company is everywhere, an independent nation‐state of commerce. IBM got this idea long ago, but the U.S. computer industry as a whole did not.
One American industry that did get it is, as I noted before, the financial industry. We began to see some of the big banks and particularly some investment banks growing at a phenomenal pace, and many of them did deals that were not in the best interests of either major investors or clients in their home market. Was anyone surprised? Hardly. Such companies exist for their own benefit; clients are just a tool to help them grow, and clients are often still encumbered with nationalistic thinking.
I am no longer a reporter with deadlines and a need to pump out a “big” feature once a month, so I have long since given up chasing the next multibillion‐dollar scandal (although the financial industry seems to breed scandals like rabbits). However, I am interested in business, especially the global financial services business, and I still have many good contacts on Wall Street. At loose ends for something to write, I was fortunate to stumble across a credible source with an interesting story to tell about Goldman Sachs, not only the best‐known of the investment banks, but a firm now widely regarded as one of the perennial puppet‐masters in American politics. I had plenty of information on hand, plus independent sources to verify it, and naturally I began to think about developing the story into a new book.
And so it was in the spring of 2013 that I found myself once again in New York City’s Financial District, an area now synonymous with trillions of dollars’ worth of securities, commodities, and foreign exchange transactions that churn daily through myriad Wall Street firms (most of which are not actually located on Wall Street, but it’s a handy term). Most Americans, even most New Yorkers, forget what the area known today as the world’s leading financial center was really famous for centuries ago—it was the seat of political power when the country was first founded. President George Washington was inaugurated right there on Wall Street, and the very first U.S. Congress met nearby back in 1789. Over the two centuries that followed, money trumped politics as the real source of power, hence the current celebrity of this small parcel of downtown real estate. I’m sure if all the Wall Street firms were to pack up and move across the river to New Jersey, this area would still be known as the Financial District for decades to come.
I was downtown this day to have lunch with an old friend, the CEO of a small shareholder surveillance company that has contacts in every major financial capital worldwide. I have known James for more than 20 years, and he has provided me with good advice and great information more times than I can count. He asks only two things of me: that I keep his real name and his company’s name out of whatever story I am writing, and that I never take him to a restaurant without a decent wine list. With those provisos, he’s always willing to let me tap into his awesome memory and even more impressive corporate database to dig out information on hidden shareholdings, hostile takeover bids, and so on. In addition to being a good friend, James is an endless source of trivia, mostly because his work brings him in touch with all sorts of things that very few people in the financial world know anything about. Shareholder surveillance is a highly specialized field, a kind of financial detective service aimed at identifying a company’s actual stockholders. You might think that a publicly traded company would know who its shareholders are, but in a surprising number of instances, you would be mistaken, and so are they. Even companies that think they know for certain the identities of their top 20 shareholders are shocked to discover that one or more of the names on their shareholder registration lists is a complete fiction—often a proxy for some investment fund that doesn’t want its name to appear on the public shareholding record.
Thus, if you are the CEO of a small high‐tech company, for example, or a small pharmaceutical firm with some interesting products in the research pipeline, and suddenly discover that significant blocks of your stock are trading day after day, you have to assume that your firm may be the target of a mergers and acquisitions (M&A) bid.You are, in the parlance of the Street, “in play.” Someone is planning to accumulate a large chunk of your stock and then launch a takeover bid for the remainder. Not surprisingly, many companies that find themselves in that situation hire shareholder surveillance (sometimes called “shareholder ID”) firms such as James’s to investigate and monitor who owns their shares on a weekly or sometimes even a daily basis. Any decent ID firm can tell you exactly who is buying your shares, even if the investor has gone to great lengths to cover his tracks, using anonymous‐looking account numbers at various international brokers to buy the shares. Small firms often worry that a larger firm in their sector might use several different fund names, often based in different countries, to mask their buying. Then, when the predator has acquired enough stock, he can pool all his different accounts and suddenly appear on the little company’s registry as its number one or number two shareholder. Of course, that activity often violates stock trading rules, but in M&A transactions, buyers routinely ignore such regulations, often with impunity.
There are only a few companies that can determine who is actually behind suspicious trading activity, regardless of who the ultimate buyer happens to be, and my friend James runs one of them. I have asked him on several occasions exactly how he accomplishes this remarkable feat of global detective work, and his response is usually no more than a Cheshire cat smile. In his business, that information is roughly on a par with nuclear launch codes. However, the U.S. Securities and Exchange Commission’s (SEC’s) basic policy is that shareholders deserve to know as much as they can about the companies in which they invest, so the shareholder ID firms have been allowed some leeway to practice their trade. That means James is a walking encyclopedia of information about what global investors are doing, both on and off the record. I figured he was the right person to give me background material that I could use for the new book I was planning to write about Goldman Sachs. Hence, my invitation for him to join me at what I’d heard is one of his favorite lunchtime hideaways, a famous steak house just off Wall Street.
Although I was 10 minutes early, I found James seated comfortably at a table to one side of the restaurant with a strategic view of both the bar and all the patrons entering or leaving. Why was I surprised? Wall Street is as much about people as companies, and James had a mental Rolodex that headhunters would kill for. I also noticed that he had already taken the liberty of ordering a bottle of expensive Italian red wine and had a large glass gripped firmly in his oversized hand. He rose to greet me, with a big smile and an even bigger handshake. “So, Russell, you must want something or you wouldn’t have brought me here,” he said.
I confessed that I was thinking of starting a new book and I wanted to bounce some ideas off of him.
“And maybe get a little information on a couple of companies while you’re at it . . . ?”
“James, I’m hurt. How could you even imagine that I would come looking for under‐the‐table info on what certain listed companies were doing?”
“Well, it wouldn’t be the first time.” He was still smiling. I assured him that that was not the kind of information I wanted. What I really wanted was his opinion and guidance. But we would get to that later. My plan was first to ply him with some excellent steak and expensive red wine, his favorite bribe. I could see he was already ahead of me in the wine department, so after we ordered our steaks, I made a valiant effort to catch up.
Gathering what was left of my wits after several glasses of good Barolo, I outlined my plans for a new book, one involving a hint of scandal along with the usual cast of high‐rollers, local politicians, hedge fund managers, secretaries of the Treasury, underworld figures, and more. It was not strictly about Goldman Sachs, but the investment bank appeared prominently among the dramatis personae, which would provide some grist for the publisher’s marketing mill. Yet James seemed visibly unimpressed with this artistic tapestry I was painting.
“Listen. So much has been written, both good and bad, about companies like Goldman,” he said, looking down at his glass. “Not just books, but mountains of magazine stories and tens of thousands of blog pages. Do you really want to add to that mess? Do you really think you have a new angle, a new story, something that’s never, ever been written before?”
Of course, I had something unique and, to my mind at least, special, but his point was well‐taken. What I had wouldn’t be enough to hang a whole book on. And the ground was so well‐trod at this point that any new book, even if it were solely focused on Goldman, needed to be sensational just to get a modicum of attention. So James’s question was left hanging in the air over our almost‐finished steaks. At first I thought I’d have a snappy answer, but as I sat there, contemplating the wine in my glass, I realized that he was right. Another “me‐too” book, no matter how interesting or heavily researched or well‐written, was not what the market wanted and, more importantly, not what I wanted to be doing. As usual, I wanted to be working on something different, something original, and if possible, something with a Japanese business angle because that was my old “beat.”
As we finished our main course, ordered some cheese and another bottle of wine, our conversation wandered to the usual topics—M&A, upcoming takeover bids, creative accounting, which investment banks were doing what, and so on. In the process, James mentioned a deal he was researching for a client that involved an investment bank I’d never heard of. I asked him to repeat the name. Houlihan Lokey, he said. Nope, that’s a new one on me. I asked James to tell me about them, and two things caught my attention right away: First, they were not based in Wall Street or Greenwich, Connecticut, or any of the usual “gold coast” communities where hedge funds and boutique investment banks cluster, but in super uncool (from a financial industry perspective) Los Angeles; second, they had recently been ranked the number one advisory firm for U.S.‐based M&A transactions up to $3 billion.
Of course, deals under $3 billion are not the gigantic headline‐grabbers that you hear about on the evening news. But the gigantic deals are few and far between; there are many more small (under $1 billion) and medium‐size ($1–5 billion) deals on the table, and the companies that advise on lots of those deals are rewarded with a very substantial and more stable income than the fat‐but‐infrequent fees on the big‐elephant deals. Not surprisingly, you’ll find most of the usual names elbowing each other to get a piece of all three pies: big, medium, and small deals. That means Goldman Sachs, Barclays, J.P. Morgan, Merrill Lynch, Morgan Stanley, Citi, Deutsche Bank, and a dozen other big‐name firms all have their snouts in the trough. To discover that a smaller, lesser‐known firm
based in L.A. was coming out ahead of the big boys in some ranking— any ranking—made me smile. I asked James about them, and he said as far as he knew, they’d only taken the under‐$3 billion category for the first time recently, but they had owned the under‐$1 billion category for the past seven years.
Seven years is a long time to stay number one in anything as competitive as the M&A services market, and now it sounded like this little L.A.‐based firm had beaten the Wall Street heavyweights so completely that it dominated the $1 billion‐and‐under market, and was now moving up to the $3 billion market. I liked the sound of that, and especially because they were not an old‐boy firm from the Financial District.
I still felt a kind of emptiness, having lost my moorings at the Next Big Financial Biz Scandal Pier. Now I was drifting again, a writer with a head full of wine but without a story to tell. I wasn’t actively looking for a new one yet, just following my instincts and picking up interesting information whenever I happened upon it. Then James surprised me again: “You of all people should be interested because I’m pretty sure Houlihan Lokey is connected with some big Japanese financial group.”
He was right; that did spark my interest.
Which group? Nomura? Daiwa? Those are the two biggest brokers in Tokyo. Nope, he shook his head.
Not a broker? Well, then, maybe the Bank of Tokyo-Mitsubishi UFJ, the flagship of the old Mitsubishi keiretsu, which now owns a big chunk of Morgan Stanley, or maybe Sumitomo Mitsui Banking Corporation, another giant bank, which long ago invested half a billion dollars in Goldman Sachs?
No, he said, it wasn’t a big bank, either.
“Something called ORIX. I’m not really sure what they are, but I know they’re big. Don’t you know them?”
Of course, I’d heard the name ORIX while I was living in Japan, but I had to tell him that I couldn’t remember much of anything about them. Searching my memory, the best I could come up with was something to do with car rentals, and that didn’t sound like the global colossus he was referring to.
If there’s anybody in this town who knows exactly who owns what, James is the guy. He looks at hundreds of corporate shareholder lists every day. I told him to get his brain in gear and tell me something about ORIX. Are they traded in New York? Do they own stock in any other
U.S. companies? Had he seen their name on any shareholder lists that he could remember?
He scrunched his forehead for a moment and looked out the window. Brokers and secretaries were hurrying back to work, and I noticed the tables around us had begun to empty. James picked up his glass slowly.
“If I’m not mistaken . . . ,” he began, which was a joke because he was never mistaken about things like this, “. . . they’re listed on the NYSE, and they also have a stake in one of the local hedge funds.” Then, before I could ask, he continued: “I think it’s Mariner.”
I looked blank.
“They’re not huge, but not tiny, either. Good rep in the industry. I think they were based out in Westchester County somewhere, but they’ve got an office in Manhattan. Look ’em up and see if I’m right.”
Wait . . . what you’re saying is that a Japanese company I’ve barely heard of owns a big chunk of one of the top investment banks in the United States and also a mid‐sized hedge fund here in New York?
“That’s right. Come to think of it, I think they’ve got a couple of other companies, but you’re already taxing the limits of my offline database.” He tapped the side of his head, smiling. “Call me at the office and I’ll dig out some names for you.”
Why haven’t I heard of them?
“I don’t think anyone’s ever heard of them. Hey, you’re the specialist at researching Japanese companies. Why not do some digging? The ORIX Group could turn out to be interesting. Just looking at the caliber of firms they’ve got their hands on in New York and L.A., I’d say they’re smart, very well‐capitalized, and pretty damn strategic about where they’re putting their money.”
So my Goldman Sachs book died over the lunch table, and a much more interesting story began to unfold.
Chapter 1 New York, the Money Center
Imet James again a few days later. This time, I noticed he was carrying his favorite tool, a leather portfolio with a small ring binder on one side for writing notes and a mini iPad secured on the other. All the various pockets were stuffed with business cards, note cards, pens, and so on. As promised, he’d done some quick digging. He flipped through pages of notes in the binder.
“Houlihan Lokey is many things, but it’s particularly well‐known on the Street as an advisor in financial restructuring.”
What does that mean exactly?
“Well, they help both distressed companies and the creditors of distressed companies manage equitable repayment of debts. Just in the past decade or so, Houlihan has been an advisor in almost all of the top bankruptcies in the United States.”
That sounds significant.
“It is. It means they’re not a niche player. They’ve helped to clean up the mess after some major blow‐ups: Think Lehman Brothers, Enron, WorldCom, Conseco, and a bunch of others. Of course, they were not
the only firm involved—financial restructuring usually involves lots of players—but it means they’re up there with the big boys.”
How far up there?
“Well, there’s a list called the Global Distressed Debt and Bankruptcy Restructuring Rankings. The most recent figure I have shows them ranked the number one financial advisor.”
Over who?
“Over Lazard, Rothschild, Blackstone . . . all the usual suspects.” He looked up from his notes to make sure a lowly outsider such as myself had gotten the point. “These are some very serious players we’re talking about here, and Houlihan is getting ranked ahead of them.”
So what about the M&A rankings you mentioned?
He looked at his notes. “Again, I don’t know the inside story; all I can do is quote the rankings, but in this year’s Thomson Reuters M&A Advisory Rankings for U.S. Transactions Under $3 Billion, they were listed as number one.”
Who was number two?
“Goldman Sachs. And behind them were Barclays, J.P. Morgan, Merrill Lynch, Lazard, Morgan Stanley, Citi, Deutsche Bank, and a whole bunch of other firms big enough to eat Houlihan Lokey for lunch.”
Now I was impressed.
“Wait, I’m not done. Obviously, the key table inside the industry is the one I just mentioned, the ranking in terms of deal volume. But there’s one that also carries some weight outside the industry, meaning clients and prospective clients take it very seriously. That’s the Global M&A Fairness Advisory Rankings. Before they put billions of dollars at risk and sign away millions more in fees, clients like to see who they can trust to advise them.”
You aren’t suggesting that clients don’t always trust the big investment banks who charge those handsome fees?
“Perish the thought,” he said with a smile. “We all know that the investment banks are pillars of ethical conduct.”
Preaching to the choir. So trustworthiness is a key differentiator from the client’s perspective.
“Well, expertise, market clout, and fee structures are very important differentiators, don’t get me wrong. But when all is said and done, clients like to trust their advisor to give them good advice and not to
be working both sides of the street. So some people take those fairness rankings pretty seriously. And in that important category Houlihan has scored number one for . . . I’m pausing for effect . . . the past decade.”
Pretty impressive.
“Very impressive.”
I was growing more and more interested in this company. I could cold‐call them and get an appointment to talk to someone, but I’d be starting at the bottom with some PR flak and have to work my way up to a C‐level manager, and I didn’t want to waste the month or so that would take. More than that, I would have to fly to L.A., where the firm is based, and kill time there trying to get appointments with the senior executives. I hadn’t even decided if Houlihan was worth considering for a story, so I asked James if the firm had a New York office. Stupid question. Every major financial‐related business this side of Neptune has at least a rep office in New York. Next question: Could he possibly save me some time and get me an appointment with someone senior at the firm?
“How did I know you were going to ask that?” He was already pulling a cream‐colored note card from his portfolio. “A good friend of mine knows the CEO, a guy named Scott Beiser. I hear he’s a good guy. Call this number, mention this name, and see if you can catch Scott when he’s in New York. No, don’t bother to thank me. Lunch is on you . . . again.” He smiled as he got up to leave.
A Trusted Advisor
About 10 days later, I stepped out of a cab on Park Avenue, half a block north of Grand Central Terminal. Looking up the street, I could see a line of high‐rent steel‐and‐glass office towers chock full of banks, brokers, and financial companies and, almost hidden among them, the Waldorf‐Astoria Hotel and St. Bartholomew’s Church.Walking up a few steps to my right and entering one of those office towers, I found my name was already on a list at the Security desk and I was soon being directed to the offices of Houlihan Lokey, Inc.Thanks to James’s connections, I had managed to bypass the PR staff and all the lower rungs of the executive ladder. I was shown into a suitably expensive‐looking conference room and, before I could even sit down, a distinguished‐looking
fellow sporting a dark suit and a big smile came in to welcome me. This was Scott Beiser, CEO and senior managing director of Houlihan Lokey, in the flesh. I made a mental note to buy James another steak lunch. He shook my hand warmly and invited me to sit. So much for the image of aloof, inaccessible investment banks. He wanted to know why I had come and how he could help. The answer was simple: I wanted to know more about his business and, in particular, I wanted to know how that business fit into the global operations of something called the ORIX Group.
Scott is a cheerful guy and quite animated when he speaks. I could see he was happy to talk about Houlihan’s business. Although I’d already done some background research, I asked him to give me a thumbnail sketch of the company’s history. Leaning back in his chair, looking and sounding younger than his hairline suggested, he told me the story. Houlihan Lokey was founded back in 1972 by two Price Waterhouse accountants who, as he put it, “didn’t want to be accountants anymore. They started Houlihan Lokey to be consultants; they didn’t really know what that meant, but it sounded good at the time.” They somehow found themselves doing business valuations for employee stock ownership plans, which kept the company going for the first few years. Soon they were doing valuations for tax planning, such as for estate and gift taxes—people making gifts of their businesses to their children or charitable foundations, and so on. It was still just a small L.A. firm.
The 1980s brought a wave of leveraged buyouts (LBOs). During this period, Houlihan Lokey specialized in services that were important parts of the new leveraged buyout environment, such as solvency opinions (expert analyses of an LBO target’s financial health) and employee stock ownership plan (ESOP) business valuations. “We got to Wall Street largely due to our expertise with these valuation services, at first with smaller, privately held firms and then with mid‐ and large‐size public companies. When I joined the firm in 1984, it was 25–30 people, still based only in L.A. and still focused exclusively on business valuations, but now there was a transaction focus on those valuations.”
Within a few years, the firm opened offices in San Francisco, Chicago, and NYC. The partners quickly realized that they were doing business valuations for all the investment banks that were putting together LBO deals, and they began to wonder why they couldn’t do some of those
deals on their own. This led the firm to start a small investment banking effort in the late 1980s.
Strategically, they also began to think about what would happen when the LBO market ran its course. How would the firm grow in a post‐LBO world and especially now that it was making a small name for itself among the big Wall Street houses? The answer was to hire a pair of bankruptcy lawyers who were, just like the founders, looking to do something bigger with their skill sets. At Houlihan Lokey, they became bankruptcy investment bankers. Within a very few years, the LBO market crumbled and the recession of 1990–1992 hit the economy. “We began advising on financial restructuring,” Scott explained, his voice picking up a bit. “We had all the skills and experience to do a uniquely good job with that service, and the markets had a major need for those skills. We became de facto one of the pioneers in that industry.”
In the next decade, the firm grew and expanded, not only in the United States, but overseas as well. Still, it was a relatively small player. “In the late 1990s, we wondered if we should align ourselves with a commercial bank because that’s what everyone in our space was doing at the time, but we decided it wasn’t appropriate for us.”
In the recession that followed 9/11, the company’s corporate finance business struggled, whereas its financial restructuring business took off . The firm expanded to London and into Europe.
“We realized we needed to become more specialized, more industry‐focused, working not only in M&A, but also capital raising, financial restructuring, and business valuations. By the end of the first decade of the new century, we had become a leading independent financial advisory firm.”
What does that mean exactly?
“We do M&A, capital raising, financial restructuring, and what we call financial advisory services, which is basically our old business valuation product line. Now we focus on a dozen core industry groups, and we have developed a much higher profile as experts in what we do.”
While we were talking, another person entered the room. Scott stood up to introduce a serious‐looking gentleman with wire‐rimmed glasses, craggy features, and a deep voice.“This is Bob Hotz, co‐chairman and senior managing director of the firm.” Bob pulled up a seat next to Scott.
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Numerous theories have been advanced as to the nature of the morbid disturbance producing eczema. Some authorities declare the appearance of the disease to be due to the presence of a toxic principle contained in potatoes, viz., solanin. It might be objected that this chemical principle only exists during germination while potatoes that have not undergone germination produce the disease. Further, the symptoms of poisoning by solanin differ from those of this form of eczema, among which loss of appetite, for instance, or stupefaction, or narcosis is never observable.
According to other writers eczema is due to the action of the lower alcohols contained in the refuse pulp, but again these properties exist in brewers’ and distillers’ grains, the consumption of which produces no bad results. Similar objections might be made regarding the suggested action of the acids of fermentation (lactic, butyric, and acetic acids, etc.).
Johne blames the salts of potassium, which, however, can only act as digestive irritants, and Zürn suggests mycosic inflammation.
Whatever the toxic principle, its effects are most marked in animals undergoing fattening, and are rarely found in working oxen, still more rarely in milch cows. In the last named the injurious principle appears to be eliminated in the milk, and this theory is supported by the fact that the liquid has purgative properties; the calves which consume it suffer from diarrhœa, which ceases when the feeding is altered.
Finally, it has been proved that different animals show different degrees of susceptibility to the action of potato pulp.
The symptoms do not appear until after two or three weeks’ feeding on the potato pulp. Then the animals walk stiffly, rise with difficulty, and display redness, swelling and sensitiveness of the limbs. When the œdematous infiltration and reddening have become distinctly marked there appear, not only between the claws, as in foot-and-mouth disease, but over the entire limb and principally near the folds of skin about the joints, numerous closely-packed small papules, which in one or two days become transformed into vesicles through exudation below the epidermis.
This marks the eczematous phase properly so called. The vesicles then become ruptured, the exuded matter glues the hairs together,
dries, and forms crusts, which have a peculiar and distinctive odour.
The disease may extend towards the hocks, the knees, the stifle, the armpit, etc. In the folds of skin surrounding the joints deep cracks form, and sometimes become secondarily infected, thus leading to the development of lymphangitis.
General symptoms, such as fever, loss of appetite and constipation, always follow; they are afterwards succeeded by diarrhœa and progressive weakness, ending in death.
The disease is easily curable if seen in its earlier stages, but after all signs of the first attack have disappeared, the condition may return five or six times in a year if potato pulp is again given. Recovery is always very difficult in aged or enfeebled patients.
The mortality varies greatly; formerly it was as high as 20 per cent., but at the present time it is much lower.
Diagnosis. Provided the history of the case is borne in mind, the diagnosis is always easy.
The prognosis is not grave if the disease is treated early.
Treatment. This consists first of all in altering the diet and reducing the quantity of potato pulp, or, better still, in discontinuing it entirely. The food should consist of good hay, bran, oatmeal gruel, pollard, etc. Internally, diuretics are given to assist in the elimination of the toxic products.
This treatment arrests the course of the disease. Suitable local treatment will remove the existing lesions. It is precisely similar in character to that of acute eczema, but it must be borne in mind that it can only prove effective if the primary cause be removed.
IMPETIGO IN THE PIG.
The term impetigo is used to describe a disease characterised by an eruption of papules, the discharge from which forms yellowish crusts, which when dry are of a grey or brown colour. The point of origin of the eruption is unknown, but the crusts rapidly become infected on contact with the air, and the bodily lesions may end in suppuration. The disease is not frequent nowadays except in sucking pigs and in large or badly-kept piggeries.
Symptoms. The eruption usually appears between the ages of two and three months, and is accompanied from the first by moderate pruritus. The papules rupture after two or three days and discharge a lemon-coloured liquid, which is distributed over the surface, dries rapidly, and causes the bristles to stick together at the roots. The crusts formed in this way remain adherent to the skin, though their surface becomes cracked. They increase in thickness, cover the head and part of the body, particularly the belly and the inner surface of the thighs, and if removed, an operation of some difficulty, leave exposed a bleeding, sanious, or purulent wound. The animals lose condition and appetite, cease to grow, seem as though attacked with rachitis, and may die if the general conditions of their maintenance are not improved.
The diagnosis is not difficult, but the prognosis depends on how long the disease has existed and the bodily condition of the patients.
The treatment consists entirely in improving the hygienic conditions and the feeding. The patients must be repeatedly washed or bathed and carefully disinfected, and they must have better food.
The crusts should be softened before the animals are washed, so that bleeding may be avoided and the affected areas not be transformed into suppurating wounds. By applying oil or some fatty matter to the crusts it is possible to cleanse the parts with bran water. If considered necessary, this cleansing can be followed by dressing with boric or weak creolin solution. Open-air life and good food soon relieve the principal symptoms.
ACNE IN SHEEP.
Acne, that is to say, localised inflammation of the sebaceous glands and hair follicles, sometimes occurs in sheep apart from any parasitic invasion. The eruption is particularly seen after shearing, and it is probable that, as in the horse, irritation produced by the machine, and possibly by accidental infection, constitute the principal determining causes.
Symptoms. The disease is indicated by the appearance of cutaneous pustules, which are only slightly painful on pressure and
which involve the entire thickness of the skin. The dermis is hardly congested, and no constitutional disturbance occurs.
Acne lesions may be more or less confluent, and may attain the size of a small hazel-nut.
The diagnosis presents no difficulty. Puncture or incision reveals the fact that the abscesses are filled with white sebaceous material and are quite free from parasites.
The prognosis is not grave. Recovery occurs spontaneously in a few weeks.
Treatment. Liquid emollient applications and the opening of the small follicular abscesses appear to represent the only means of hastening recovery.
FAGOPYRISM (BUCKWHEAT POISONING).
Fagopyrism is a disease of toxic origin in sheep, and is due to eating buckwheat (Polygonum fagopyrum).
The disease has also been entitled erysipelatous or gangrenous dermatitis, according to its form and gravity.
Causation. The cause is extremely simple, viz., the consumption of buckwheat and other food pertaining to a like species, such as Polygonum persicaria. The green plant and the straw give the same results, but the action of light and air are also necessary for the production of the disease, a fact which is somewhat difficult to explain.
According to German writers the disease occurs more frequently in white sheep and lambs than in those in which the skin is of a very dark colour.
Symptoms. When the sheep are fed in folds, with the green plant in summer or with the straw in winter, nothing unusual is seen, the herds being, to all appearance, in perfect health. On their being set at liberty, however, the first symptoms appear, perhaps in less than an hour. Some animals become restless, make peculiar movements of the head, and soon display intense congestion of the parts free of wool, together with redness and swelling of the ears, eyelids, face, throat, etc. The condition develops with extreme rapidity, the
animals being immediately afflicted with pruritus over the affected regions. If they are not removed to the quiet and warmth of the fold the symptoms increase and papules appear, which may be transformed into vesicles and bullæ. In the fold, on the other hand, all the symptoms rapidly disappear.
The disease rarely assumes an erysipelatous form, but respiratory and cerebral symptoms, together with fever and vertigo, are not exceptional.
Treatment. The feeding on buckwheat should at once be discontinued, and the patients should be kept in the fold until the toxic principles have been eliminated, that is, for a month or more.
Bicarbonate of soda may be added to the drinking water. The local lesions about the head must be kept clean and dressed with antiseptic astringent lotions.
CHAPTER II.
PHTHIRIASIS.
The term phthiriasis is applied to infestation of the skin with lice. Causation. These diseases are due to the presence of various parasites which live by destroying the epidermic scales, or by piercing the superficial layers of the skin. They are of a greyishyellow colour, and belong to the genera Hæmatopinus and Trichodectes.
The Hæmatopinus forms have pointed heads, and are equipped for penetrating the skin by suction. The Trichodectes have a large flat head constructed for masticating.
F . 245. Hæmatopinus eurysternus of the ox, magnified 20 diameters. (After Neumann.)
The ox harbour s two forms of Hæmat opinus and one of Trichod ectes, the Hæmat opinus euryster nus and tenuiros trus, and the Trichod ectes scalaris. The sheep
F . 246. Hæmatopinus of the calf, magnified 20
diameters. (After Neumann.) suffers from Trichodectes sphærocephalus and a Melophagus, the goat from the Hæmatopinus stenops and the Trichodectes climax, and the pig from the Hæmatopinus urius.
The symptoms are, with trifling variations, the same in all domestic animals, the principal being rubbing and itching. The animals scratch, bite and attempt to rub against hard objects, even abrading the skin when this is thin and the irritation is severe.
The parasites may, however, remain localised, and it rarely happens that they are present in any considerable number in all parts of the body.
F . 247. Sheep louse (Trichocephalus sphærocephalus). a, Female; b, antenna; c, d, dorsal and side view of leg. Enlarged. (After Osborn, 1896; Bul. No. 5, Div. Entomology, Dept. Agr.)
In the ox they are principally found in the depression at the back of the base of the horns, and in the upper margin of the neck and the back. In the absence of treatment phthiriasis may become generalised over the entire surface of the body.
The trichodectes and the melophagus of the sheep choose similar points, but when the wool is long they may be found nearly all over the body.
In the pig the hæmatopinus is found on the neck, in the region of the poll, about the armpits, and round the eyes and ears.
These parasites, whose powers of increase are astonishing, keep the patients in a continual state of irritation, causing them to lose condition and, in the absence of treatment, to die of exhaustion.
The diagnosis is very easy, the parasites being visible to the naked eye.
The prognosis is not grave unless the condition affects a large number of animals in herds. In young animals the prognosis is much graver, for the little creatures rapidly become anæmic and die in a state of exhaustion.
Treatment. When the byre, fold, or piggery is infested the first point is to remove the animals and thoroughly disinfect and cleanse all parts.
F . 248. Sheep foot louse (Hæmatopinus pedalis). a, Adult female; b, ventral view of terminal segment of same, showing brushes; c, terminal segments of male; d, egg. Enlarged. (After Osborn, 1896; Bul. No. 5, Div. Entomology, Dept. Agr.)
After the manure has been cleared out, the walls, mangers, racks, etc., are washed with boiling water, or, better still, potash solution, and disinfected first with vaporised sulphurous acid, then, if necessary, with a washing of caustic lime.
The patients are afterwards clipped, washed with soft soap and dressed with anti-parasitic solutions, such as 1 per cent. tobacco juice, or a mixture of equal parts of benzine and oil or benzine and petroleum, etc., which give excellent results.
A 3 per cent. creolin solution is also a very active anti-parasitic and very easy to use.
All these solutions, however, are more or less poisonous and need to be used with caution, weak solutions only being used at first,
particularly in the case of animals, such as oxen, which are given to licking themselves.
F . 249.—Adult sheep tick (Melophagus ovinus). (a) Tick; (b) puparium. Magnified. (Salmon and Stiles, Annual Report, U.S.A. Dept. of Agriculture, 1897, p. 103.)
SCABIE S— SCAB— MANG E.
The term scabies is given to a group of disease s affectin g man and all domesti c animals . These disease s are produc
ed by two classes of parasites, viz., sarcoptinæ, which live within the epidermis or on the surface of the skin, and demodectes (sing. demodex), which penetrate into the sebaceous glands and hair follicles.
Scabies, though known from the earliest times, has long been confounded with constitutional diseases characterised by cutaneous eruptions. The symptoms shown were formerly regarded as due to the elimination of “humours” which the organism was casting off, for which reason scabies was even treated with internal medicines.
At the present time the cause of the disease is perfectly well understood, as well as the mode of development of the different parasites. The rate at which these parasites develop is almost incredible, a fact which explains the highly contagious character of the disease.
Each species of animal may present several varieties of scabies, caused by different parasites, such as sarcoptes, psoroptes, chorioptes, demodectes, etc.
SCABIES IN SHEEP.
Scabies in sheep usually assumes one of three forms—sarcoptic, psoroptic, or chorioptic scabies. Follicular, or demodectic, mange affects the eyelids, and is very rare. It is produced by the Demodex folliculorum var. ovis.
F . 250.—Trichodectes scalaris of the ox. Magnified 20 diameters. (After Railliet.)
SARCOPTIC SCABIES
This scabies has long been recognised as affecting more especially the head, muzzle, etc. It was mentioned as long ago as the fourteenth century by Jehan de Brie, but, until Delafond’s time, no one recognised that it was caused by an acarus. In 1858 Delafond discovered the parasite in Piedmont sheep.
Causation. Formerly, writers on the subject and shepherds attributed this disease to the wounds and excoriations which sheep receive in passing through brambles, holly, etc., or in rubbing against their racks. The true cause of the disease is the presence under the skin of the Sarcoptes scabiei var. ovis, which passes from sheep to
F . 251.—Sarcoptis, magnified 100 diameters. (After Railliet.)
sheep by direct contact. The animals attempt to rub against everything about them, even against their neighbours. These parasites can be transferred from the goat to the sheep, and vice versâ.
Walraff, Roloff, Delafond, Gerlach and Railliet have described cases of infection in man, but the disease is rarely more than of a temporary character.
Symptoms. This form of scabies affects the head and the parts free from wool.
At first the parasites invade the upper lip and the tissues about the nostrils, sometimes, but more rarely, the eyes and ears. They cause the formation of vesicular papules, accompanied by violent itching. The animal, in rubbing itself, excoriates these papules, which discharge a fluid and soon become covered with yellowish-brown crusts.
The disease afterwards invades the face, forehead, jaws, and entire head. The skin becomes wrinkled and the brownish crusts thicker and more abundant. These are fissured and bleeding, and they give the face the appearance of one vast sore.
The parasite rarely attacks the region of the elbow, the belly, or the inside of the thigh. The disease never advances in parts covered by wool, although in breeds of sheep with thick wool, such as are found in Algeria and Tunis, the sarcoptic form of scabies may become generalised and attack the entire body. The extremities of the limbs, however, are usually attacked after all the head has become involved.
Throughout the course of the disease the patients scratch and rub themselves, thus tearing off the crusts and causing bleeding and the formation of new crusts of a blackish hue. This form of scabies about the head may become complicated with conjunctivitis, the inflammation extending from the extremity of the eyelids to the conjunctiva. This arises from the fact that the membrane is frequently injured by the animal rubbing the parts. Conjunctivitis may be so intense as to lead to purulent ophthalmia and the loss of the eye.
F . 252.—Sarcoptic mange of the sheep, showing the appearance of the head.
Diagnosis. Sarcoptic mange in sheep cannot be mistaken for any other disease on account of its localisation.
Prognosis. The disease is not very dangerous, for it is easy to treat, though if left to itself it might in time become fatal.
Treatment. Preventive treatment consists in isolating diseased animals, cleansing and disinfecting the folds, and preventing the
introduction of diseased animals into healthy flocks.
Curative treatment. When the disease is detected at an early stage anti-psoroptic remedies may be directly employed.
If, however, it is of old standing, the crusts must first be softened and removed by the use of fatty substances, such as vaseline or oil, before any curative treatment can be undertaken.
The crusts can be removed in from twenty-four to forty-eight hours by vigorous washing with soft soap and the application of antiparasitic solutions. The omission to wash the parts causes drugs to lose much of their efficacy.
Helmerich’s ointment, oil of cade, mixtures of oil, benzine and petroleum, and 3 per cent. to 4 per cent. of tobacco juice, are the commonest and most efficacious applications.
A non-poisonous ointment may be made by taking 4 ounces of oil of turpentine, 6 ounces of flowers of sulphur, and 1 lb. of lard. Mix the ingredients at a gentle heat, and rub in well with the hands or with a brush, at the same time breaking the crusts. The simple sulphur ointment may be made of one part of sulphur and four parts of lard; one fourth part of mercurial ointment may be added. Few remedies are so useful as sulphur iodide, and it may well be given a trial on head scab.
In most countries this disease has been made the subject of special legislation.
This is probably the gravest form of mange. It was described by Cato the Censor in 160 B.C., by Virgil, Juvenal, Celsius, Columella, Pliny, Vegetius, etc. In 1787 Abildgaard first showed that psoroptic mange in sheep could be cured by simple external remedies, without internal medications. In 1809 Walz described the causes, nature, seat, and treatment of the disease.
Since then, the parasitic, contagious nature of mange or scabies has been more and more clearly recognised.
Causation. Experience and observation have long shown that the only cause is the presence of the Psoroptes communis (ovis). This
PSOROPTIC MANGE SHEEP SCAB.
disease is much more contagious than that just described. Psoroptic mange or scabies exclusively affects those portions of the body covered by the wool, and may for a long time remain unrecognised.
The parasite is visible to the naked eye, though most inspectors employ the microscope. The adult female is about ¹⁄₄₀ of an inch long and ¹⁄₆₀ of an inch broad; the male is ¹⁄₅₀ of an inch long and ¹⁄₈₀ of an inch broad. The mites are discovered more easily on a dark background, and if a portion of the wool and crusts is placed on black paper and exposed to the sun for a few minutes the parasites will generally be seen crawling about on the paper.
The disease is transmitted directly or indirectly by contact from diseased to healthy animals in the folds, fields, or sheep runs. One diseased sheep may contaminate an entire flock. The disease is extremely contagious, and may appear even within a week after exposure.
The parasites have exceptional vitality. It is generally stated that, kept at a moderate temperature on portions of scab, the adults may live from four to twenty days, but they will occasionally live much longer; cases are on record where they have lived three, four, or even six weeks when separated from sheep; if the atmosphere is dry they will generally die in about fifteen days; but death is often only apparent, for the mites may sometimes be revived by warmth and moisture even after six or eight weeks; the fecundated females are especially tenacious of life.
F . 253. Left-hand figure shows adult male parasite of common sheep scab, dorsal view; right-hand figure, ventral view of same; top figure shows head of female; bottom figure, leg of female. All greatly enlarged. (Salmon and Styles, Annual Report, U.S.A. Bureau of Animal Industry, 1897.)
Experience has shown that in some cases apparently healthy sheep have become infected in places where no sheep have been kept for four, eight, twelve, or even twenty-four months. The conditions underlying this infection are not thoroughly understood. Possibly some of the eggs have retained their vitality a long time and then hatched out; possibly the vitality of the fecundated female has also played a rôle; while it is not at all improbable that an entirely new infection has accidentally been introduced by birds or other animals. Certain authors of high standing scout the idea that birds can introduce an infection of scab, but there is no reason why birds should not do this, and there are some reasons for believing that they do. It has been noticed on the Experiment Station of the United States Bureau of Agriculture, for instance, that crows delight in perching on the backs of scabby sheep and picking at the scab; while so doing it is only natural that small tags of wool would adhere to their feet, and thus scatter scab.
Delafond’s experiments show that psoroptic mange is most troublesome amongst thin, ill-nourished, weakly animals, whilst robust sheep in good condition may be cured simply by attention to cleanliness and abundant feeding.
In America this disease causes extremely heavy pecuniary loss, second only in importance to that produced by hog cholera. It has also interfered very seriously with the export of American sheep.
The course of the disease is affected by the time of year and surrounding conditions. In autumn and winter, when sheep are in continual contact in a moist, warm atmosphere within the folds, the disease makes rapid progress. Young, weak, closely-inbred animals, and those with long, coarse wool, most quickly succumb. Unhealthy surroundings, damp, and bad ventilation favour the disease. Pure or mixed bred merino sheep suffer severely. In summer the animals are generally shorn and live in the open, and the disease then usually diminishes or may even be arrested.
A study of the life history of the scab parasite is necessary in order to determine several important points of practical value, such as the proper time for the second dipping, etc.
The female mite lays about fifteen to twenty-four eggs on the skin, or fastened to the wool near the skin; a six-legged larva is hatched; these larvæ cast their skin and become mature; the mites pair and the females lay their eggs, after which they die. The exact number of days required for each stage varies somewhat, according to the writings of different authors, a fact which is probably to be explained by individual variation, and by the conditions under which the observations and experiments were made. Thus Gerlach, in his wellknown work (1857) estimates about fourteen to fifteen days as the period required for a generation of mites from the time of pairing to the maturity of the next generation. He divides this time as follows: Under ordinary conditions the eggs hatch in three to four days, although two authors allow ten to eleven days for the egg stage; three or four days after birth the six-legged larvæ moult and the fourth pair of legs appears; this fourth pair is always present when the mites are two-thirds the size of the adults; when seven to eight days old the mites are mature and ready to pair; several (three or four) days are allowed for pairing; another generation of eggs may be laid fourteen to fifteen days after the laying of the first generation of eggs. Without
going into all of the other observations on these points, it may be remarked that the eggs may not hatch for six or seven days; the sixlegged larvæ may moult when three to four days old, and become mature; after pairing, a second moult takes place, lasting four to five days; a third moult follows immediately, then eggs are laid and the adults die; in some cases there is a fourth moult, but apparently without any further production of eggs. Accepting Gerlach’s estimate of fifteen days as an average for each generation of ten females and five males, in three months time the sixth generation would appear and consist of about 1,000,000 females and 500,000 males.
F . 254. Adult female parasite of common sheep scab. (Both greatly enlarged.) (Salmon and Stiles, loc. cit.)
Several practical lessons are to be drawn from these figures: Firstly, it is seen that the parasites increase very rapidly, so that if scab is discovered in a flock, the diseased sheep should immediately be isolated; secondly, if new sheep are placed in a flock, they should
either first be dipped, as a precautionary measure, or they should at least be kept separate for several weeks to see whether scab develops; thirdly, since the chances for infection are very great, the entire flock should be treated, even in case scab is found only in one or two animals; fourthly, as dipping is not certain to kill the eggs, the sheep should be dipped a second time, the time being selected between the moment of the hatching of eggs and the moment the next generation of eggs is laid. As eggs may hatch between three and seven, possibly ten or eleven days, and as fourteen to fifteen days are required for the entire cycle, the second dipping should take place after the seventh day, but before the fourteenth day; allowing for individual variation and variation of conditions, the tenth, eleventh, or twelfth day will be the best time to repeat the dipping.
Symptoms. Psoroptic mange attacks the parts covered with wool, so that attention is only drawn to the disease by some slight injury to the fleece, which becomes rough, matted, brittle, and liable to fall.
Scabies commences with intense pruritus. The animals scratch and bite themselves, and tear away the fleece. These symptoms become aggravated when the animals are hot, as, for instance, when travelling. If the sheep have travelled through mud, the fleece becomes matted on the neck, behind the shoulders, and at all points where they are able to scratch themselves with the hind limbs.
When a scabby sheep is touched at a diseased point, the animal shows pleasure by nibbling and moving the head up and down.
At an early stage, if the fleece is divided and the skin examined, little papules may be discovered somewhat less in size than a lentil. They are of a yellowish colour, and are distinctly visible against the reddish colour of the skin. These papules are due to the attacks of the psoroptes.
F . 255. Left top figure, egg of mite which causes common sheep scab; middle top figure, six-legged stage of sheep scab mite; right top figure, young female before moulting for the last time, dorsal view; middle figure, adult male parasite of sarcoptic scabies of man (the corresponding parasite of sheep is very similar), ventral view, × 250 (after Blanchard); left bottom figure, adult female parasite of sarcoptic scabies, dorsal view, × 250 (after Blanchard); right bottom figure, same, ventral view (after Blanchard). All greatly enlarged.
They soon become more numerous and even confluent, break and discharge, become converted into pustules, and cause the formation of crusts. In a few days the diseased points are covered with a
