Latest / Success Story with Scott Clary / Lessons - Billion-Dollar Acquisition Blueprint | Milton "Todd" Ault III - Chairman of Ault and Company, Inc.

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Lessons - Billion-Dollar Acquisition Blueprint | Milton "Todd" Ault III - Chairman of Ault and Company, Inc. · Success Story with Scott Clary

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