Lessons - Billion-Dollar Acquisition Blueprint | Milton "Todd" Ault III - Chairman of Ault and Company, Inc.

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liabilities and foster sustainable business partnerships is there is there a is there a difference because now you've done these acquisitions and you've been doing them for a while now is there a difference in what you look for in a company that you would acquire in a publicly traded holding company versus something you would acquire in a just in a private acquisition i don't think there's any difference for me other than whether the management the people that run it are honest with you it's it's it's really tricky for if you don't ask the right questions i have this lender that's letting me a lot of money i think they probably let me i don't know 50 million maybe more and they i used to get really irritated with them where they would they would ask my team they would ask me the questions then they would interview my team and ask them the questions then they would come back and ask me new questions then they would interview my team again and ask the same questions and eventually after they asked the same question like six times i would say you know you've asked that question a bunch of times yeah we're going to keep asking it and to see if we get the same answer and if a person knows that they know the model and there's something hidden they need to tell you what the risk of the deal is and an honest person selling you the company would say yeah here's the EBITDA here's the company here's our history but what is it i'm not telling you what is the real problem that could pop up in the business what is the contingent liability and i think it's really hard to find people that want to be honest and not blame others for your problems right i and i say this in the sense that i'm more concerned about the people that are running it than i necessarily because it a business is going to be good or it's going to be bad and you don't know for sure but the people running it are either good or bad and that you need to know you need to know whether they're honest and whether when you acquire them they're going to stay and be honest with you about what's happening or they're going to say hey that was on page 47 i told you that you know there was a contingent liability well i didn't see it right you didn't tell me that you were a week away from losing this contract so i would say people are the number one issue and i used to think that was corny but people are pretty much all that matters now if you got a great product that's great but you need great people you just that really is important i there's one lesson i've learned is that people who are not honest will blame you for their problems even though they already had them and i love that it's really critical that you understand that i i get upset about things but at the end of the day the reason probably we started this conversation off with i work every day at the end of the day i believe everything is my responsibility even if someone else messes it up so that's why probably i have lenders and investors that despite things going wrong know that i'll tell them the truth and i'll get them paid back you know i i try to do things that allow me to shoot my way out of a problem and one thing i don't do is turn my back on someone that's honest with me if there's an honest mistake they're going to stay they're going to work with me and i'm going to work with them but you know the deception part i'm sure you invest a lot of companies and you know that person that blames you for the problem versus takes responsibility for the problem and that's a hard thing to do when you when you acquire a company you need to know what management comes with it the issue is that usually that behavior shows itself far too late it shows it it shows it later on right it doesn't usually show it when everyone's feeling good and everyone realizes they're about to get a check everyone everyone everyone wants to play ball when you're when you're sitting down at the table the first time but you realize six months later it's not by the way we're talking about acquisition or investing but this could be a business partner this could be even if you get a job and you have a city manager and all of a sudden they you realize they're gaslighting you like this is this is just the people you work with make a huge difference it's no different when you acquire a company but i've done it with business partners i have i have people that have like taken a role with me and maybe they left somewhere else and i tell them how they'll get paid and they get paid exactly that way and then they're mad later in complaint of the whole company that they are getting what they used to get at their old job well i didn't make you come more cure and and and and also when you're then complaining to others at the company you really end up being those people end up getting feathered out anyway so eventually they ultimately don't work here uh because they can either they change their attitude or their attitude changes where they work right because they're not happy i just want people to be happy like i quoting Gary v don't you want to be happy because the reality is is that that is the only way that things work out and people um people will make meaning of things they don't like change that's another thing too i i tell people all the time to read that book who moved my cheese because they realize like the people that you know you've seen this with Steve jobs right where he's in a garage and they're all happy and they're all drinking beer together and making a company but ultimately you know my responsibility now i spend almost all my time thinking and structuring the finances of the company as not the same i don't have the luxury of hanging out all night and going to have a beer with people when i got four institutions waiting for a proposal from me and i got confidence i got a meat and it just doesn't so the evolution of that is is the human condition and that's where it's so much easier if a person's unhappy for them to tell you they're unhappy but it's so much harder for a person to tell you they're unhappy it's a strangest thing people tell me all the time i'm intimidating they're afraid to tell me something yet i find that i'm the easiest to talk to and you can say whatever you want to me but don't blame me for your fucking problems like don't blame me for your problems if you accepted the deal like you can't blame me for that and i didn't do anything to you and that's the biggest problem with managing people is they believe there's something's done to them and the best people accept what they've allowed to have happen and they come to someone like me who'd say well if i did that to you and that was my fault i apologize let's let's fix that right so managing people is the hardest thing in the whole world if i say that to anybody if there's anyone who says it's not as foolish yet it's so hard to manage people because everyone has their own problems their personal problems their family problems and then their business life and by the way i'm not it sounds like to me if you watch this podcast you're not gonna want to start a business and you shouldn't you if you're if you're not prepared for what's gonna happen to you you shouldn't start a business because i can tell you people today that our your friend will sue you later if you make a lot of money i i've been sued so many times it's un un godly i got sued by a guy i think it's still going on five years later i got sued guy guy who had a fifty four thousand dollar bill from me and sued me for six point eight million because i terminated him he was a contractor and claimed that i was going to give him a percentage of the company none of it's true and and yet here i am i did not want to be a stipend for lawyers so i basically defend myself in there i do not i do not settle a case ever unless it's gone a long ways for me to understand their claim i am not a stipend for lawyers i just don't sit here and let people sue me and i'm i'm not afraid i'm a battle hardened litigator and i'll litigate if you're gonna try to wrong me or my company i'll litigate and a lot of people are afraid of that they're afraid of lawyers they're afraid of the irs they're afraid of their rights of course we're in a country now where our rights are a little weird but that's a whole different conversation um it's funny by the way i've i've noticed that because that's that's a very i find out a mere a very american thing using uh i've never been i've never been sued by an employee until i've come down to the us or a contractor or anything and now it just seems like people just use it as a as a tool it's like um it's like uh it's like any other business tactic in canada i don't see it as much i see it as more of a if you have been financially wronged in canada you get sued but you let somebody go in the us and i mean it sucks letting people go but this happens when you're building a business suing and having to let people go and firing people terminating whatever it's gonna happen if you build anything significant so yeah it's tough but the the added tough is when they they're a sales rep they don't hit their numbers you terminate and then they come after you for nothing like like literally nothing but they think that for whatever reason you're going to fold in your huge shadow to bank on yourself for supporting today's episode entrepreneurs here's the retirement secret that wall street doesn't want you to know while you are pouring everything into growing your business they want you gambling your future in their 401k casino with no guarantees as a business owner you already take enough risks why gamble with your retirement to it is time to discover the financial strategies smart entrepreneurs are using to protect their wealth bank on yourself is the proven approach that gives business owners what they need most certainty flexibility and control in their retirement unlike traditional retirement accounts bank on 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defend everything because I'm I'm not going to be a stipend for lawyers I made a decision five years ago and I have I have I have three full-time lawyers that work for me general counsel deputy general counsel associate counsel and then two outside law firms one litigation firm and I I just I I don't sue anybody unless they need to be sued I do not usually I am not the progress the aggressor generally I would say 95% or more of the time I am not the person suing I'm the person getting sued and when they sue me I look at the case very seriously and I generally will fight it if I believe if I if we did something wrong we'll try to settle it if we did if we thought we did something wrong but the people that have been with me a long time especially lenders and investors that know me know that I paid everyone back and anyone who stuck with me in any period it's hard I don't know I got to probably put 400,000 disclaimers in this possibility but if you've you're invested directly with me not by my stock in the open market but if you've invested directly with me you put money to work with me you wrote me a trek for a private placement I don't think that there's any five-year cycle where you're down I think there there's big drawdowns I had a lot of people that took the drawdown after 2009 and they participated with me in a private deal that went public open first trade for 3.3 billion and they got all their money back plus a return on their investment so I I generally do not leave a dead body behind if if I feel like I starting something and I owe you money and you put some money at risk with me it didn't go right I try to put you in a deal that helps you make that money so listen am I perfect not even close you know I when you when you look at my background you'll probably say wow you got a lot of stuff in your background and it's true but the only way you kind of get that is to do deals and things go wrong and things go right it's just it's the nature of it it's you don't really see these stories out there maybe Scott you have but like Mark Zuckerberg starts the Facebook in his in his dorm but look at even that resulted in tons of litigation one of his what it was parsing one of his partners one of his roommates that the week will buy all these things you know they it's the nature of business it's just the nature of it and as a public company get a lot of scrutiny for you know there's a lot of keyboard warriors and say a lot of stuff that they don't really know what they're talking but that's the nature of being public and I don't want to dwell on that I feel like I've dwell on no I think it's it's difficult I think that even if you're private you're going to get this stuff happen to you and to your business so I think actually the takeaway is first of all anybody can figure it out and deal with it and survive in spite of it but it's not going to be easy but that's okay because anything worth doing is never going to be easy but I also think it's good to have conversations like this because then it normalizes what's going on in someone's life so someone who doesn't have a mentor could be from maybe not a big city USA who's killing it who's getting their first lawsuit that's super stressful and it shouldn't be that stressful and there's different ways to work through it and maybe don't let lawyers take advantage of you either but the point is this is part of this is part of what we're doing here this is part of business is part of life and be an ethical good person and always do things that you know are right and honest and I think that's how you sleep good at night even if somebody else is trying to take advantage of you it sucks but it's like you have your success story podcast what I would say to people is it's taken me a long time to learn this but I inherently figured out how I got here and that was I would endlessly learn you hear these statements about endlessly learning but like if you if you want to watch every podcast that you put out but person did that made a commitment to say I'm just going to listen and get something I found that I could always get something from every single one of your podcasts which is that if I listen to what the person did I could apply some of that lesson to what was happening with me and you need to constantly be reminded every couple weeks if you're on the journey of entrepreneurship or starting your own company or buying a company you need to remind yourself that this is happening in other places and there are creative ways of getting out of it or working around up to the problem the problems are different but they're all the same you just have to listen to enough people and with your podcast since you're not really being spoken to in the sense that you're paying for it you're able to listen to it there's a lot of free information that can help you and that's probably what's changed for me is I spend a lot more time listening and and learning than I do doing because I can apply it right like I I try to so I'm one of those guys that looks at Edgar as public companies almost every deal that comes out on Edgar I try to read what the transaction was who did the financing what was the investment bank involved how did they raise the money what was the structure of the deal what kind of the EBITDA that they have or cash flow who did that private equity deal why did they do that well that's in my world I need to know that stuff right but I promise you if you're going to start anything you can watch one of your success podcasts or a few of them and go okay I can this person some in something similar you got to absorb that you know you got it if you if you can't afford a mentor you can't have paid for a consultant you can get a consultant right you could you can watch your podcast and and then eventually you will find that answer and then it'll you'll dig more and you'll dig more and you'll go down that rabbit hole and you find yourself learning I that's why I told people all the time it's just it's not it's not overnight you don't just start Facebook and your rich it never never happens like that thanks for tuning in if you found this valuable don't forget to hit that subscribe button so you never miss an episode and if you want to dive deeper into this conversation check out the links in the description to watch the full episode see you in the next one