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Ancora’s Fred DiSanto

This dealmaker puts great value in a trusted confidant

July 13, 2018

By: Mark Scott

Fred DiSanto is known as a guy who gets things done when it comes to dealmaking. But the chairman and CEO of Ancora will be the first to tell you that he didn’t do it alone.

“The one thing that excites me about dealmaking, if you want to call it dealmaking — part of it is the chase,” DiSanto says. “Part of it is the opportunity. But the other thing — and Carl Grassi and I do a lot together — is having a great partner and then being able to take that risk.”

For two decades, DiSanto has been doing deals with Grassi, who now serves as chairman of McDonald Hopkins. In 2000, he brought Grassi in to help structure a deal involving RPM’s Tom Sullivan and Jim Karman. The deal — which was a success for everyone — exemplified DiSanto’s commitment to a team approach, a trait that was evident when we spoke with him for this month’s cover story in Smart Business.

DiSanto also credits Grassi for helping out on the deals that have helped him grow Ancora, an employee-owned financial advisory firm, to nearly $7 billion in assets under management.

In this week’s Dealmakers Live, DiSanto talks about his approach to dealmaking, his willingness to take risk and his partnership with Grassi. What follows is a transcript of the above video, edited for readability.

 

The anatomy of a great deal

There was a deal back in 2000. Literally almost right after we sold our business, Maxus Investment Group, to Fifth Third Bank. I got contacted by a wonderful man, George Wasmer. He said, ‘Hey, I’ve got this company. I know the owner. Would you take a look at it with me?’ I said sure. Tom Sullivan, everybody knows Tom Sullivan from RPM. Tom Sullivan and I and George went out and visited this company. It was a distribution business. It had been around since 1957. I love Tom Sullivan because I learned a lot from Tom Sullivan.

We negotiated a price and shook his hand. We were walking out and I said, ‘Tom, that was great. There is one guy I want to get involved in this deal. He’s an attorney and he’s extremely bright. He’s one of the best attorneys I know as it relates to dealmaking structure. I think he might invest.’ And that was Carl Grassi at McDonald Hopkins. We ended up buying the business and Tom brought Jim Karman in as a partner. The business was doing alright and then 2007, 2008 came. It was some trying times. But we weathered the storm and performed extremely well.

Subsequently, Carl and I bought George out and bought Jim Karman out and Tom Sullivan stayed in for a little piece and we ran that business and ended up selling it to Applied Industrial. That was a deal that was a successful deal. But from my perspective, the things that I learned in that deal as it relates to having the right people in the right seats and treating people the right way. We weren’t there day to day, so we had to rely on the management to be successful and we were kind of giving them the guardrails on how to do it. That was a great deal.

Dealmaking is all about risk

The one thing that excites me about dealmaking, if you want to call it dealmaking — part of it’s the chase. Part of it is the opportunity. But the other thing, and Carl Grassi and I do a lot together, is having a great partner and then being able to take that risk. You have to be a risk taker. Carl and I have done a lot. At Ancora, we’ve done a lot. Typically, the projections you put out typically don’t happen every year or in the beginning. You’ve got to have the ability to count on your partner to weather the bad times. To me, it’s weathering those bad times and then creating something that is successful. Being part of something that is successful is what drives me every day. You have to be a risk taker.

Now it’s a calculated risk, but it’s still being a risk taker. You are putting your own capital to work. Typically, Carl and I and the deals that we’ve done outside of Ancora, we’ve used our own capital. You are putting your own capital on the table. Even some of the deals that we’ve done at Ancora, our capital is right next to our investors. We’re not doing anything that our investors aren’t doing. If they are putting money in the deal, we’re putting money in the deal. We’re big believers in that. The other thing is not being passive. We’re not passive investors, we’re active investors. To me, that’s critical. I do believe the probability of success goes up when you’re actively involved in the situation.

Don’t be afraid to walk away

When you’re negotiating a deal, the best thing to have is good people around you. I will tell you, Carl Grassi is much tougher than I am in negotiating a deal. That is a wonderful skill set that he has. I’m probably a little softer on some of the other things that help a deal get going. But having the right people around you — and I’ve been fortunate that Carl and I have a strong relationship — he’s tremendous in structure and in deal points. To a point where you’re not going to blow up a deal, but you can never be afraid to walk away from a deal. Having good advisers, good partners is critical in that negotiating environment while you’re looking at a deal and getting close to closing a deal.