“Your client base will make us big enough that corporate clients will be interested in us. We are currently in negotiations with some large pension funds to manage their business. Once we have enough ‘big boy’ money to manage, we can use our size to affect the market,” Ms. LaPointe shared.
Price manipulation was illegal. But Grace knew that if you got big enough, such manipulation was easily hidden from any regulatory body. It had become clear that justice wasn’t handed out equally anymore. It was all about who you knew or if you had money behind you.
“I thought you said your company has a laser-like focus on making money for its clients,” David interrupted.
Ms. LaPointe looked confused at his remark.
“Don’t worry, I’ll explain it to him before the meeting,” Grace said to relieve the tension that threatened to arise.
David gave her a grateful look for covering for him.
Ms. LaPointe clearly felt that she had made her case, and having done so, also made it clear that she didn’t have the patience to sit through dessert. Mr. Trevin looked disappointed when he heard he would be missing one of Delmonico’s signature dishes, baked Alaska.
Once they left, Grace fully expected to hear David and Brook loudly protest selling the business to Morgan Fletcher. Grace was more than leaning that way herself now because she had a real problem with financial predators. Several examples of such predations immediately jumped to her mind, including hedge fund manipulations, bitcoin activities, and other stock maneuverings.
Probably the most famous example had occurred over forty years ago when Grace was just starting out in the business world. The Hunt brothers failed in their attempt to corner the silver market. Nowadays, the markets had automatic brakes to prevent wild fluctuations in prices. Those brakes, however, seemed to be triggered more readily if the fluctuations were caused by the ‘average Joe’ investor as opposed to large corporate ones.
As she thought about it, Grace realized she had already decided to vote against the proposed sale. She had also started formulating plans for the time she knew was coming when Morgan Fletcher switched gears from friendly purchase to hostile takeover. Even though she held the majority of shares, she knew that back-channel dealings were a tried-and-true method of wresting the practical ownership of a company from even a majority shareholder.
Grace worried that Ms. LaPointe might have the right political connections to have a regulatory investigation launched against Holistic Wealth Management. The worst-case scenario was an order precluding them from trading stocks or securities until the investigation was settled.
In the old days, that was unthinkable. But recently, the government had shown they had little or no interest in playing fairly.
With her thoughts gathered, Grace finally asked the big question.
“What do you think?”
“That woman is evil. We can’t let her buy our company,” Brook said.
“It might be easier since we don’t have the connections and war chest to fight her,” Phyllis offered as an alternative perspective.
David sat there quietly, thinking. Finally, Grace asked his opinion.
“What if we turned this on its ear and bought them?” he asked. “I mean, I had a valid question. Isn’t handling huge corporate funds a different business from handling the funds of individual clients?”
“Yes,” Grace admitted.
“And what will happen to those clients when Morgan Fletcher switches their focus? If I remember correctly, it was my contact list that was used to find potential clients. How am I going to look them in the eye and explain how we sold them out to this bunch?” David asked.
It had been many years since Grace had been rendered speechless.
She could see that Phyllis couldn’t get her mind wrapped around what he’d just said. Grace’s PA had a brilliant business mind, but she quickly dismissed outside-the-box ideas when they were presented. That was why she was Grace’s PA and not managing one of her business units.
“What would we have to do to pull this off?” Brook asked.
That was what Grace loved about young people. They hadn’t had the stuffing knocked out of them yet and still believed they could do anything.
“The first step is to get out of here and back to the office,” Grace decided.
◊◊◊
David shared what he’d learned in the pre-meeting with his former management team on the trip back to the office. Grace could have kicked herself when she heard their primary complaints because she knew better.
When you tried to grow a company quickly, especially one made up of pieces of other companies, sometimes upper management assumed a little too much. They were used to the processes and methods within their previous organization. What it came down to, from an organizational and communications standpoint, was that the acquiring organization invariably was used to doing things a certain way. But the acquired ones had their own procedures in place.
What the people taking over sometimes forgot was that their way was not always the best. But what always happened was that the acquired peoples’ ways were pushed aside because the merger was fitting them into the acquiring company, not the other way around.
Grace’s mistake was that she patterned everything after her former company, L Brands. While it was a multimillion-dollar company that was wildly successful, it was mainly a retail-focused business. Grace had tried to fit wealth management and all the peripheral businesses into that model.
The disconnect occurred because all of David’s former people had bought into the idea that Grace would automatically know how to grow their business into a nationwide going concern. Of course, everyone assumed her existing model was the right one to use, based on her record.
Instead of pointing out its potential shortcomings with respect to the new businesses, they’d simply sucked it up and tried to make it work. But it was now obvious to Grace that that hadn’t happened.
Over time, the frustration had grown.
Grace knew what she had to do: she needed to mend fences and listen to those people. After all, she had no clue how to run a PR company, as just one example.
David assured her that no one would jump ship just yet, but if the problem wasn’t addressed, he wouldn’t blame them if they did.
◊◊◊
Grace called everyone together and shared what they’d learned at lunch. She purposely didn’t reveal what David had asked because she found that if she wanted them to completely buy into the plan, they had to feel that they were a part of creating it.
They quickly came to the conclusion that they wanted to reject Morgan Fletcher’s offer. Not wanting to waste time, since they had a board meeting in an hour, she then shared David’s idea.
“Where will we get the money?” Jack asked to bring up the real sticking point to taking over Morgan Fletcher.
“There are several ways to raise the capital to do this. The bottom line, though, is that we’ll need that capital, which means we will need investors,” Ava said.
“Actually, we can do it most easily with a seed investor with serious resources,” Phyllis added.
“How much are we talking about?” Kent asked.
“Not as much as you might think,” Grace said after a moment’s contemplation. “I would bet that once word gets out to Morgan Fletcher’s current stockholders about the change in course, they might lose confidence in the current management. They might support our takeover bid if we can show how our model will serve clients better.”
“Bottom-line it. At a minimum, how much are we talking?” Rob asked.
Grace quoted a considerably large number, which left most in the room looking defeated.
“I might know someone,” David said.
“Why doesn’t that surprise me?” Grace asked.
“So, this is doable?” Rob pressed.
“If David has a guy who’ll buy in for the seed amount, then yes,” Grace assured everyone. “The most important thing at this point is David and perhaps myself approaching his investor. However, nearly as important is to keep a very tight rein on all information about what we’re thinking about doing.