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Chapter 94: Everything is About Interests

Chapter 94 Everything is about profit

After the meeting, Ernst went to Robert Egger's office.

As soon as you enter, the rich aroma of coffee fills the air, and the MGM CEO is personally brewing coffee.

"You've really offended those Wall Street guys this time." Robert Iger poured Ernst a glass, and the two sat down on the sofa in the reception area. "And you've snatched food from their jaws twice in a row."

The first time was Google, and the second time was MGM.

Google is alright, after all, expanding the entire concept of the Internet is something Wall Street wants to see.

Comic-GM's acquisition of shares clearly tricked Wall Street; they acquired Wall Street's shares one day, and then Playboy's show suddenly appeared.

Although MGM is not a publicly traded company, its market value is already on the rise, and the only question is how high it can go.

At this point, if you don't take advantage of MGM's other shareholders and instead try to fleece Wall Street, you'll offend some people.

Ernst chuckled, twirling the unlit cigar between his fingers. "You know MGM's shareholding structure. Apart from Wall Street, no one can come up with that many shares."

Before Ernst's deal with Wall Street, he held 40% of MGM's shares, and MGM had an employee stock ownership plan of about 18%.

Of the remaining 40% of the shares, half are held by Wall Street, and the remaining 20% ​​are distributed among nearly a hundred small shareholders.

These people have benefited from MGM's development over the years, and their families or previous generations have made significant contributions to MGM, resulting in equity rewards, such as the shares Ernst inherited.

Over the years, some people have sold off their MGM shares, resulting in a highly dispersed ownership structure for MGM.

Ernst placed his cigar on the edge of the crystal ashtray. "But don't worry, these hyenas' sense of smell always leads them toward profit."

"As long as I can bring these hyenas a continuous stream of benefits, they would even smile and say that it tastes good, even if I made them eat excrement."

Both MGM and Google need to go public, and it can't be too late.

Whether it's the internet or the media industry, the easiest and fastest way to achieve rapid development is through mergers and acquisitions, but mergers and acquisitions require money.

Once a company goes public, Wall Street has plenty of ways to profit from its stock.

This is the rule of the game in America, what a financial-dominated system is, everything must serve financial services.

Wall Street controls the issuance, sale, and rating of corporate stocks. A good company may not have trouble selling its stock, but how to obtain a higher price-to-earnings ratio depends on Wall Street's opinion.

To go public quickly and cash out a large amount of money, you have to feed those people on Wall Street.

Just like Google in its previous life, it was already highly profitable before its IPO and was never short of money.

But what happened in the end? It still went public early under the persuasion of Wall Street. Google even held a Dutch auction before the IPO, which was obviously meant to disgust Wall Street.

Going public requires selecting underwriters, setting a price, and allocating a portion of the shares for underwriting.

This portion of stock isn't given to Google based on the share price after the IPO. Instead, a price is set before the IPO, and the stock is given to the underwriters. After the IPO, the profits or losses of this portion of stock have nothing to do with Google.

Just like with bank mortgage loans, will Wall Street value your property according to the normal value of the collateral?

Obviously it is impossible.

Therefore, the price of a company's stock after listing is always higher than the underwriting price, and the difference between the two prices is pocketed by Wall Street.

But as Ernst said, as long as he has projects that Wall Street envies and can bring profits to Wall Street, they will eat shit while it's hot.

So even though Google developed a Dutch auction solution that disgusted Wall Street, these financial giants still raved about Google.

They can only reap greater benefits if Google's value continues to soar.

Therefore, even if MGM and Google are in good financial condition, it is simply impossible for them to delay going public until they become larger.

Having offended Wall Street, Ernst will find it impossible to raise funds for any other companies in the future; he will only face suppression.

The technology industry requires huge investments, and Ernst cannot possibly use his own money to develop it; this is simply unrealistic.

To gain greater profits and more control, Ernst needed to acquire as many shares as possible before the IPO.

Just like MGM, when a company goes public, Ernst's shareholding will be diluted.

What about management? Even though MGM has an employee stock ownership plan, this is a result of MGM's decades-long decision not to go public.

People like Robert Iger will definitely be given equity rewards, rather than just dividend rights like employee stock pools.

This is the rule, and it applies to all times and places; it must be followed.

Even ancient emperors were no exception; they were granted fiefdoms, titles, and positions. Otherwise, who would be willing to work with you?

In addition to these, there are family trusts.

Ernst will definitely set up a family trust with a portion of his stock, so that members of the Arlington and Galfield families can benefit from it and receive a monthly salary.

It wasn't Our Lady of Ernst, but rather the unavoidable circumstances faced by America's wealthy.

In America, whether you're a business tycoon or a celebrity, once you've made a fortune, all sorts of friends and relatives, both acquaintances and strangers, will flock to you.

We often see melodramatic storylines on TV about Hollywood stars being slandered by their families; the essence of it is "if you can't have it, destroy it."

The Garfield family is a small family, but that doesn't mean they don't have relatives and friends.

The Arlington family is another story altogether; there are all sorts of birds in a big forest.

Do you really think that the American billionaires you see in the newspapers who love doing charity, that everyone does charity, are truly passionate about it? That's all bullshit.

There are only a few situations that force them to do this.

The first is tax deduction. In the United States, most donations are tax-deductible, and many charitable donations have tax deductions that exceed the amount of taxes paid.

For example, if a primary school gymnasium in a certain area collapses under the weight of snow, and you own a business in the area, donating $10,000 could potentially result in a tax deduction of $11,000.

Locals benefited, capitalists gained money and fame, but the federal government suffered losses.

The second scenario is that the children are not ambitious and the founder is afraid that his children will squander the family fortune after his death.

Later, the Hilton family, Hugh Hefner, and others donated most of their assets to charity.

It appears that all the money has been donated, but the chairman of the charity is still a family member, and a professional team has been hired to manage it.

On the one hand, it's about avoiding huge inheritance taxes; on the other hand, it's about waiting for capable descendants to emerge.

With a substantial monthly salary, one can use their skills as start-up capital.

The third type is like Ernst, who puts a portion of his money into a charitable foundation. It doesn't amount to much, but it's still an extra source of income. The purpose is to silence family members and prevent future troubles.

In the United States, where wealth distribution is already increasingly unequal, it would be a huge blow to a family member's reputation if they were to make a big fuss in the media every day.

A bad reputation breeds resentment towards the rich, giving corrupt officials even more reason to target you and seize your wealth.

So in America, reputation is still very important, even if it's fabricated. Unless you can reach that level and hide it.

Every family has its own problems, and even the rich get tired of trivial matters.

Just like on Wall Street, everything is about profit.

Blood ties and kinship are things only the poor deserve.