America's No. 1 financial conglomerate

Chapter 656 The Tentacles of the Family

At 339 North Oak Park Avenue in Chicago stands a Victorian building that has stood quietly through the ages.

Built in the late 19th century, this mansion, with its typical Gothic Revival facade, exquisite wooden carved columns and diamond-shaped windows, has become a unique landscape in the Oak Park neighborhood, carrying historical memories.

Compared to the modernly renovated mansions in the surrounding area, the main structure of this building appears somewhat old, the reliefs on the walls are somewhat mottled from the erosion of wind and rain, and moss occasionally appears among the dark slate tiles on the roof.

But every Chicagoan understands the value of this building.

Because it is the birthplace of Ernest Miller Hemingway, one of the greatest writers in American history.

The house was built in 1890 by Hemingway's maternal grandparents, and Hemingway spent his childhood here.

It's only three stories high and the interior space isn't very large, but Jim Terrill could still feel its historical significance.

Many of the furnishings look particularly old, clearly preserving the original furnishings of the Hemingway family.

"I'd always heard that this old house was bought by a mysterious buyer, but I never imagined it was Mr. Garfield who bought it." Jim Terrill, CEO of AXA Consulting, sat on the antique velvet sofa, seemingly quite at ease.

Ernst leaned back on the opposite sofa, his left arm casually draped over the back of the armrest, looking relaxed and at ease. "You might be mistaken. When this old house was bought, I was still a playboy who spent his days indulging in pleasure."

"Of course, it's the same now," Ernst emphasized.

Jim Teler then realized that this globally renowned billionaire had only risen to fame in the last two years.

This old house was rumored to have been bought five years ago.

Seeing his confusion, Ernst shrugged. "She's my fiancée; she's the owner of this building."

Jim Trill had never met Ernst's fiancée, but he had heard of her; she was the eldest daughter of the Kennedy family.

The powerful alliance between politics and tycoons is all too common in America.

"I heard you met with Robert yesterday," Jim Terrill said, pressed for time and unable to spare Ernst any pleasantries.

“That’s right.” Ernst nodded, making no attempt to hide anything from him. “Robert Grafton wants a billion dollars. I think Arthur Andersen is insane.”

"But you're not losing out." Jim Terrill frowned slightly, not thinking that buying AXA for a billion dollars was a losing deal.

He commissioned a professional financial team to conduct an assessment, and based on AXA's current business scale, customer resources and growth potential, if it achieves an IPO, its market value could reach at least four billion US dollars.

Ernst's acquisition of this top-two global consulting firm, and even the number one firm in many niche consulting areas, for a billion dollars was undoubtedly a steal.

Ernst did not respond directly to his words. Instead, he leaned forward slightly, looked firmly at Jim, and said, word by word, "What I want is AXA's core team and customer resources, not an empty shell company."

What is the most valuable asset of a consulting firm?

It's never the office space, equipment, or brand, but rather the employees who possess professional knowledge, industry experience, and high-quality customer resources.

Especially for top-tier institutions like AXA Consulting, their core competitiveness lies in a team of partners composed of industry elites and their long-standing global corporate clients.

If we can't retain these key talents, even if we acquire AXA's shell, it will be meaningless.

If you don't feed them, who will risk their lives for you?

These people can start their own businesses at any time, taking away most of the customer resources and leaving the acquiring party with nothing.

This also expresses his meaning that he is not a stingy boss.

His desire for AXA was a strategic move, not a means to make money.

Why not give the billion dollars to AXA's employees?

Sure enough, after Ernst finished speaking, much of the subtle wariness in Jim Terrill's eyes disappeared.

"Times are changing. Just like in 1989, none of us expected that AXA Consulting would reach its current scale in ten years. It wouldn't be an exaggeration to call it the world's number one." He paused deliberately, looked at Ernst, and continued, "Nobody knows whether another AXA will rise in ten years, and what our situation will be like."

Is this because they don't want me to get involved, or are they waiting for a higher price to sell?

Ernst didn't know.

However, he was determined to acquire AXA.

The consulting firm’s global network, expertise, and client resources are a perfect fit for his business strategy and a key element for the Garfield family to further expand its influence and achieve its strategic goals.

"As far as I know, the International Chamber of Commerce's arbitration ruling may be unfavorable to you. Andersen is demanding $100 billion in damages, which is no small sum."

Terriel's lips twitched, and a hint of helplessness and resentment flashed in his eyes.

The $100 billion penalty is utter nonsense; it's just a despicable tactic by ACE Credit Suisse to buy time.

As the litigation continues to drag on, AXA's cash flow has gradually become tight.

To pay for high legal fees and litigation-related expenses, the company had to cut back on public relations spending and market expansion budgets.

Especially in recent months, PwC and Deloitte have been secretly poaching some of their teams, and three partners in the Munich office even jumped ship with the Mercedes project.

It's not just external; even Arthur Andersen is taking advantage of its current ability to intervene in AXA's business by establishing a new consulting department and signing three large consulting projects in London and Frankfurt, clearly trying to steal AXA's business.

That's not the most important thing. According to the 1989 spin-off agreement, AXA is still required to pay Arthur Andersen Global $200 million in profit sharing every year.

In addition, 15% of the annual revenue must be paid to Arthur Andersen as trademark usage fees.

AXA is now bleeding from within, with Arthur Andersen sucking its blood, and surrounded by wolves on the outside.

What the outside world sees is AXA Consulting's revenue growth rate of over 22% annually for the past three years, and they envy its continued strong growth momentum.

But only Jim and the company's core management knew that behind these impressive figures lay a continued decline in the company's growth momentum.

AXA Consulting's quarterly revenue growth rate has declined for four consecutive quarters. If no effective measures are taken to break the deadlock, the company's prospects will be bleak.

Their only way out now is to completely separate from Arthur Andersen.

Despite the difficult situation, Jim still wants AXA to become a truly independent and self-operating company.

He didn't want AXA to fall into the clutches of other capital giants right after escaping the wolf den of Arthur Andersen.

He was willing to meet with Ernst not because he wanted Anson to sell himself to him.

On the one hand, it's because of Ernst's wealth and influence; taking this opportunity to become familiar with him and build a good relationship with him would benefit AXA's future development.

On the other hand, since Arthur Andersen was willing to concede to Ernst and agree to sell AXA's related interests, Jim also wanted to take this opportunity to test whether it was possible for AXA to raise funds and buy itself out through Ernst.

At the very least, the price couldn't possibly be as outrageous as $100 billion.

To his surprise, Arthur Andersen's offer to Ernst was only one billion dollars.

Furthermore, Ernst was quite dissatisfied, indicating that the price was still negotiable.

If this offer were AXA's ransom, AXA would agree without hesitation; it's far too low.

But precisely because it was too low, he knew that it was impossible for An Sheng to buy himself through the other party.

This price suggests that either Ernst had something on Andersen, or Ernst had paid a huge price.

"How about 10%?" The hope was slim, but Jim Terrill still wanted to try: "AXA would buy itself and transfer 10% of its shares to Mr. Garfield free of charge."

Ernst smiled, pressed the lighter, and the cigar glowed a little red, giving it a bit of a Godfather vibe.

He leaned back, took a couple of puffs of his cigar, and then sat up straight, asking, "Do you think what I care about is that 10% of the shares?"

Jim Terrill knew that the other party definitely didn't care. They had already made it very clear from the beginning that the acquisition of AXA was more about strategic value.

"But you need to understand, AXA isn't something I can decide on my own; it's the partnership committee."

"Everyone wants AXA to become completely independent." Jim Terrill emphasized the last few words.

Ernst didn't reply, but instead pushed a document on the table in front of the other person.

Jim Teler opened the thick folder, and the title on the first page was particularly eye-catching: "Preliminary Framework for AXA Consulting's Equity Plan".

This document details the equity distribution plan after Ernst's acquisition of AXA. The existing shareholders and partners of AXA Consulting will jointly hold 70% of the shares of the new AXA, and the company will retain completely independent operating rights.

Apart from the position of CFO, all other personnel appointments and dismissals, as well as business decision-making powers, will be decided independently by AXA's existing management team.

What appealed to him even more was the explicit commitment in the document that, after the acquisition was completed, Ernst would inject $5 million in special funds into AXA for business expansion and retention of key personnel, helping AXA stabilize its internal situation and cope with external competition.

Jim looked up and stared at Ernst in disbelief.

Isn't this offer a bit too good?

It was so good that he couldn't believe his eyes.

With only a 30% stake, AXA was willing to pay 1 billion US dollars to Arthur Andersen for the acquisition, plus an additional 500 million US dollars in development funds. The total value of these two investments has already exceeded the market valuation of AXA's 30% stake itself.

Moreover, Ernst must have paid other, unknown, enormous costs in order to persuade Andersen to agree to the sale.

Such conditions are beyond generous; he never even dared to dream of them before he came.

"Keep watching," Ernst said, as if he understood his gaze.

It's not that he doesn't want more shares, but that he can't have them.

To persuade AXA's partner committee, money is the only way.

The reason the other party wants complete independence is simply because of huge interests.

If he wants to subdue AXA, he must share most of the profits.

Fortunately, his acquisition of AXA was not for profit; for him, the core purpose was to realize his strategic plan.

Therefore, making concessions on equity and operational rights is a necessary price to pay for achieving long-term goals.

He remembered that after An Sheng and Andersen broke up in his previous life, An Sheng had the power to offer him very good terms, but An Sheng refused without even thinking about it.

If he wants to retain these talents, he must reveal his true intentions directly.

Jim Terrill understood what Ernst wanted: absolute control of AXA.

The document clearly states that AXA will go public, with dual-class shares (A and B shares).

All AXA partners must hold a proportionate share of Class B stock in addition to their common stock holdings, and must sign a concerted action agreement with the Garfield family office.

On the surface, this arrangement is intended to ensure that after AXA goes public, management can control company decisions through a relatively small shareholding in Class B shares, thus avoiding interference from external capital.

But in reality, it was to hide Ernst, the true mastermind behind it all, and also to allow AXA to develop better.

If the outside world knew that AXA was controlled by the Garfield family, how could these giants dare to entrust their consulting business to AXA again? They would most likely terminate their cooperation with AXA out of concern.

By designing AB shares and concerted action agreements, Ernst can achieve its strategic layout over AXA without exposing its own control.

"But what's the point of independent operation then?" Jim Terrill said in a deep voice. "Won't you just be able to do whatever you want then?"

Ernst's demeanor changed, becoming somewhat condescending, and he said softly, "Actually, you understand what I mean, but you're still hesitating."

Jim Teler fell silent; he knew perfectly well what was going on.

Everything Ernst did was for the Garfield family.

What kind of families need to classify consulting firms as strategically important?

They are those who possess a century of history and stand at the pinnacle of power.

The Garfield family wasn't, but Ernst's ambition was.

Similarly, if he could submit to the Garfield family, there would be no issue of concerted action or independent operation.

He will stand firmly behind Ernst, with An Sheng by his side.

"The promise I can give you is to make the Terrill family a prominent and prestigious family in America," Ernst's voice came again.

"As for whether you believe it or not, only time will tell."

"I need to think about it and consult with the partners' committee," Terrill replied after some thought.

Give me three days, and I will give you a definite answer.