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After breakfast, David had a quick meeting with Grace Davenport and Ron Pennington to get an update on what was happening with the reverse takeover of the wealth management company.
While in New York, they’d met with Morgan Fletcher Investments, who wanted to buy the wealth management company David had started and eventually sold to Grace. When they heard what Morgan Fletcher planned to do—use their client bases to bolster Morgan Fletcher’s enough to start working with institutional clients—they’d backed off on the merger.
It was decided to turn the tables on their adversary and take them over. To do that, they needed someone with deep pockets. David had introduced Grace to Ron, who had the resources to help pull it off. He was also a shrewd businessman. David had heard that the two of them had made significant progress toward the takeover of Morgan Fletcher. This meeting was to bring David up to speed.
“Did you read the Wall Street Journal this morning?” Grace asked.
David looked at Ron, who was staring at him.
“Wait? You’re asking me?” David asked.
Both Ron and Grace chuckled.
“Yes, David. I was asking you,” Grace said.
“I’m betting he didn’t,” Ron said to point out the obvious.
“Rebecca LaPointe was voted out by Morgan Fletcher Investment’s Board of Directors,” Grace shared.
“That’s a good thing, right?” David asked as he remembered their evil CEO.
“You’re asking the wrong question,” Ron said.
David gave them both a confused look.
“What’s the right question?”
“Who replaced her,” Ron suggested.
David’s confusion only got worse.
“Okay. Who replaced Ms. LaPointe?”
“I did,” Ron said with a smile.
“Obviously, I’m missing something. What happened, and what does this mean?” David asked.
“We did some digging and discovered that taking over Morgan Fletcher was going to cost way too much money. Since they’d taken over other wealth management companies, they became paranoid that they might be targeted. That Godfrey Trevin, Ms. LaPointe’s lawyer, is a crafty bastard. He put in place a firewall to prevent hostile takeovers,” Grace said.
“Her mistake was thinking she controlled her board. We met two key members and shared her plans to go after institutional funds once they got big enough. It seems she forgot to run that by the board, or at least a majority of them.
“When they discovered that she planned to change their core business, they called an emergency meeting. I timed a large stock purchase to give me standing as a shareholder. Seems that only shareholders who hold a certain percentage of stock can be considered for the CEO position. When my name was floated, Ms. LaPointe was ousted, and I was in,” Ron enlightened David.
“And?” David asked.
“Merger talks begin Monday. As bad as she was, Ms. LaPointe was correct that in the wealth-management business, size does matter. Our business will nearly quadruple,” Grace said.
“Can we handle the growth?” David asked.
Grace smiled.
“I learned my lesson and mended fences since we last talked. Everyone is on board, and Morgan Fletcher has some bright minds already in place. Ron and I are excited to make this work,” Grace said.
“I promised that I would be involved for the next twenty-four months to appease the Morgan Fletcher board,” Ron explained.
“What happens after two years?” David asked.
“We sell the whole shebang,” Grace said.
“What?!”
“Both Ron and I were retired when we got involved,” Grace reminded him.
“But what about everyone else? All our employees?” David asked.
“They’ll have two years to figure out what they want to do. We also didn’t just spring it on them. The whole company knows the plan and agreed before we moved forward. They can either stay with the new company or get bought out. I’m betting most jump ship and take their golden parachutes,” Ron predicted.
“I won’t go along with this if it hurts the people who helped me build the company. Most of them are good friends, as are many of the customers. I put my name on the line to get this off the ground,” David said.
“We both agree with you,” Ron promised.
“All I need is your commitment to making all this happen. I need your block of shares,” Grace said.
“To own or to vote with?” David asked.
“Vote. This is what we project your payout will be in two years,” Grace said as she handed David a piece of paper.
He opened it and gasped.
“Is that just a number to get me to agree, or is it real?” David asked.
“We hired a company to project what a buyout of the combined companies would be. I’ve used them in the past, and their predictions came in close to actual,” Ron assured him.
“What about everyone else? Will they be okay?” David asked.
“I promise that everyone will receive a substantial payday. And we won’t sell to someone who’ll take advantage of our clients. We’ll do this right,” Grace said.
“Absolutely, you can vote my shares,” David finally agreed.
“We’ll be looking for another project in a couple of years,” Grace said. “You’re looking at some interesting opportunities like predicting people’s buying patterns or preferences using available data sources.”
“I’m testing out a few possibilities with my mom’s real estate business. There’s a term called ‘big data.’ It’s like a giant sandbox of information that can be interrogated on demand to answer questions. It can reveal patterns, trends, and associations, especially relating to human behavior and interactions.
“You can also drill down to the individual,” David said.
“That sounds a bit like Big Brother to me,” Ron worried.
David had read 1984 and understood both the reference and the concern behind it.
“It could be done in a way that you and I can live with if we figure out how to work the equivalent of a moral compass into the system. The NSA got caught spying on American citizens using these techniques not so long ago. It’s not just our government either. That’s why safeguards would need to be in place so the information couldn’t be used in the wrong way,” David said.
“That end of it would have to be ironclad, or you would be open to either lawsuits or the government pressuring you for access to the information you generate,” Ron said.
“The more I hear, the more I would suggest that you don’t build much beyond what you are doing now,” Grace said.
“I agree,” Ron said.
If two titans of industry told you to pass, you passed, David decided.
“I’ve got this VR project …”
David’s grandfather used to say, “Leaders set the momentum. Followers follow the momentum.” If you had these two people willing to listen, you pitched your ideas. His crazy idea for wealth management was a winner, which meant it was time to find the next ‘big idea.’
◊◊◊
Chapter 37
David
The rest of Saturday was taken up with saying goodbye to everyone as they all headed home. Sunday was spent with family. David had kept his word to Coby and bought a five-gallon tank, and he’d let his sister and each of his brothers pick out a fish. It now held a school of neon tetras, guppies, and a goldfish based on the recommendations of the pet-store girl. She assured him they would survive two-year-olds.
The first half of his week was taken up with school and his vodcast. This week, he’d persuaded Percy Wilkes and Todd Davis to be his guests. Duke stole the show when he decided that Todd had to play ball with him. The whole time David interviewed him, Todd found a ball in his lap and had to toss it.
On Wednesday, Jaxson Pettis, USC’s athletic director, asked David to attend a booster dinner in Sacramento at Gabe Francis’s behest. The event was being held at the Crocker Art Museum in the Freedom Hall.