How Eddie Wilson Made Over $1 Billion Investing Outside Of The Stock Market | 704

MORI 704 | $1 Billion Investment

 

Which investments could you imagine that would pay you over $1 Billion? That’s what business owner and Chris Miles’ mentor, Eddie Wilson, figured out over the last 20 years. In this episode, Eddie will discuss what he did to scale businesses to sell for hundreds of millions of dollars. As well as the secret savings vehicle he learned from his grandfather and “rich dad” who were both bank owners. Tune in to find out what that was.

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How Eddie Wilson Made Over $1 Billion Investing Outside Of The Stock Market

Our show is for you, those of you who work hard for your money. You want your money to start working harder for you right now. You want that freedom and cashflow today, not 30 or 40 billion years from now, so you can live that life that you love with those that you love. It’s not about getting rich. It’s about creating a rich life because as you are blessed financially, you can create a greater capacity to bless the lives of others. That’s exactly what we’re here to do.

Thank you for allowing me to create a ripple effect for you. You’ve been reading and sharing these episodes. It’s helped us so much. Thank you for letting this ripple effect go through you and ultimately across the world. Go to our website, MoneyRipples.com. There are lots of great things on there, tools and educational pieces, even that Passive Income Calculator that you can take to figure out how much passive income you can create in the next twelve months. Do that now.

I brought on a special guest, someone who’s a mentor of mine and whom I respect much. It is an incredible opportunity to have him on our show. You can get the brilliance out of him here. His name is Eddie Wilson. He’s a businessman and known as the King of Exits. He’s owned over 125 companies and even exited 85 of them successfully. He’s got a current private equity firm and a mastermind group. I know he runs with us as well and has ownership in many different companies.

Ultimately, the thing I know that’s amazing about him is that 1) He cares. He’s a guy that has a heart and is very much a servant’s heart, which I know is big with our culture, but 2) He’s incredible. You’ll find that out here as you see the wealth of experience that he’s had in helping grow and expand businesses. The big focus we’re having here is about how that affects whether you have a business and even if you don’t have a business, what’s going on in the world right now, especially, since he has a banking background. What’s going on in the world that might be affecting your life, especially financially right now? Eddie, welcome to our show.

Thank you so much. It’s a privilege to be on here. This show is on my top 3 or 4 show list I binge all the time. It’s a privilege to be on here.

I appreciate that. I know every once in a while I see you click like on Facebook or Instagram, and we always appreciate the following. Give us more of your backstory because your story is fascinating about how quickly and fast it evolved.

I graduated from Ohio State University as a Broadcast Major and Marketing. I went into TV and radio and was able to sell a television show to Fox. That prompted a lot of cash that I had to start investing. I’m a third-generation real estate investor. Immediately, in my twenties, when I had this chunk of cash, my dad pushed me to follow what I’ve been taught for generations, which is to put it into cashflowing and hard assets that will continue to appreciate over time.

In my twenties, I got started in real estate investing, then quickly started looking for additional opportunities to generate what I call active cash. I started creating businesses and buying companies that will produce a lot of active capital, and then I take that active capital and put it into passive investments, primarily real estate. I have a third bucket, which is a place where I use a lot of my passive income to fund additional items that are long-term generating wealth strategies, something like you do with infinite banking. All of that ultimately funds my nonprofit and foundation. It is this big circle, but over the past twenty years now, we have been investing heavily, buying and selling businesses, putting it into real estate, and letting all that work for me.

I love that you have passive, active, and generational. Those three things you have going for, which is what we teach here. Most people are trying to get the passive going, but beyond that wolf building that you might have as well, what do you see as opportunities right now? I know a lot of people are scared to put money in banks, especially now there are starting to be some bank failures once again, which is no surprise because we knew that was going to happen at some point. What are you seeing as opportunities for yourself?

For me, that active bucket, which is all the non-W-2 income that I have coming from these companies that I buy and reorganize or reperform, I feel like it’s an all-time high for an opportunity in the private equity space. It’s one of the most dynamic times in history for private equity because you have about $1.1 trillion sitting on the sideline liquid through private equity firms that are ready to gobble up these assets.

MORI 704 | $1 Billion Investment
$1 Billion Investment: Having an active bucket gives an all-time high opportunity in the private equity space.

However, it’s like a whale trying to eat a minnow. They got to eat 1,000 of them to get full. For guys that do it like I do where we’re willing to buy a smaller asset, maybe a non-performing asset, we can grow that fish up and end up serving it to the whale. For us, I play in a little bit smaller space and sometimes distress space to serve those up.

Between Baby Boomers going off the scene with no one to pass their business on, there are a lot of roll-up strategies right now. Also, you’ve got massive corporate divestiture. Companies like Google and others that have huge holdings sitting on the shelves, if they have assets that are underperforming, they’re trying to clean up their balance sheets, especially this time of the year through the end of this year.

There are lots of opportunities to buy off of corporations that have shelved entities that don’t generate capital or cashflow. There’s always a prime opportunity when there’s recessive activity going on in the marketplace. I’m a huge real estate guy. I didn’t go crazy when everybody else was going crazy over the last year or two because I felt like we were at the peak of the market. I bought deals that made sense, but I’ve got a lot of dry powder and I’m doubling down on real estate, especially in the multifamily space because a lot of people bought the peak of the market. They got into value add type plays, and now they can’t get their long-term financing structured.

They’re trying to come up with cash to get their long-term financing structured in buying some pretty amazing distress deals on the multifamily space. Those are the opportunities that I’m looking at right now. The one stat that I talk about all the time is in every downturn, I’ve been able to double my net worth. With intention, my CFO is constantly tweaking to make sure that we get there again to put as much capital aside as I can to continue to grow, but I plan on doubling my net worth as we come out of this recessive activity that’s going on in our economy today.

There are lots of arguments, “Are we in a recession or not?” because of job growth and all of that unemployment. However, in the market, we still have high demand. It’s tough to find financing. There’s a lot of recessive activity when you look at the economics of investing, which makes it very tight for people to find opportunities, and people that have thin opportunities are having to unload them. For me, it’s a perfect time to feed.

At the economics of investing, there’s a lot of recessive activity that makes it very tight for people to find opportunities. It’s the perfect time to feed. Click To Tweet

From an outside perspective, someone could look at your preferences or where you’re aiming right now and say, “You’re running towards where everybody’s running away from like private equity.” You’re running towards companies where right now people are like, “I can’t trust any company because what if they’re not liquid or solvent? What if they fail?” You’re running towards real estate when people are saying, “Apartments are over. There are no good deals out there right now.” I talked to a guy that is an infinite banker and he is like, “I cashed out all my chips in 2019. I’m not buying anything. Real estate sucks.” I’m like, “There’s still plenty of opportunity,” but he’s like, “No, I won’t hear it.”

There are many guys that have that type of mentality. That’s what’s creating the opportunity for us.

When everybody’s fleeing, you run toward it. A lot of these people range, some of them are business owners, some of them aren’t, but they’re looking at getting in. What would you give advice to them?

Number one, if you’re brand new, find somebody that’s sophisticated and go with them. Now is the time to grab or lock an arm with somebody that already knows the path and doesn’t walk the path alone. The other thing too is to make sure that you have enough liquidity to withstand whatever trauma you might go through in a time like this. I am buying private equity deals. We closed on thirteen companies last year. We exited three, and we plan to buy another 8 to 10 this year.

However, I look for distressed capital businesses and distressed people businesses. I don’t buy distressed products or services. When I see distressed capital, for me, it’s an exciting time because I have the wherewithal to reperform those and put the capital in that’s needed. If you do not have the capital and the dry powder, then you don’t want to go to war.

Sometimes reperforming these businesses is like going to war. It’s difficult. You’re changing and you may lose for a while for the chance to reperform it. The same thing goes with real estate. Have enough capital to reperform the asset. Don’t take slim deals. If you don’t have cash on the sideline, then don’t take a chance. Even myself, I’m looking at a lot of warehouse space and commercial real estate, which I don’t do a ton of it.

I’ve done some in the hospitality space. What I’m looking for are guys that I know are long-term operators that have operated through economic downturns but are still standing on top that understand the market and numbers. I’ll jump into their deals as many deals as I’m a GP on and an LP on other deals when I feel like I may not quite understand exactly how to reperform it.

You’re doing a lot like what I or even some of our clients are doing where you’re going to partnerships or syndications. Those guys have gone through multiple recessions. They know the business like the back of their hand. Those are the people you’re more trusting with. If you’re going to partner with anybody, you trust them versus any Joe Schmoe off the street.

Syndicators that have been through at least the downturn in ‘08 or ‘09 understand the liquidity requirements in order to keep their assets solvent. I saw a deal. It was an amazing deal. It was on a brand new Class A hotel building out of San Antonio, Texas. It was a beautiful deal, and the numbers looked amazing.

MORI 704 | $1 Billion Investment
$1 Billion Investment: Syndicators that have been through at least the downturn in ‘08 or ‘09 understand the liquidity requirements in order to keep their assets solvent.

We went all the way down to it and started looking at who was on the deal with them and who are the partnerships. Most of the guys had never been in hospitality before. Even though the numbers looked amazing, I walked away from them. It could have been a 20% to 25% rate of return plus a lot of depreciation that would’ve helped me out, but I couldn’t get comfortable with the operators. You have to care about the operators.

It’s funny because I had a deal very similar where one of my clients said, “What do you think of this? This looks good. The numbers look great.” Their proforma look was nice and pretty, but when I looked at their experience, it’s like, “None of these guys have invested in this kind of asset class before. Why would I trust my money with them? I don’t want to be their Guinea pig.”

It’s dangerous.

You also have an interesting background. I know you mentioned that your grandfather owned a bank. He was the bank president, and you learned some things from him. What are some key financial principles you learned from him?

My family is in the banking industry. I learned a lot of great principles through family conversations and things like that. I had a best friend in high school whose father also was a bank president. It’s interesting. I felt like I grew up around it and at least grew up understanding it. Whether I was listening or not, you got it through osmosis. The one principle that I learned that I still follow is the concept of infinite banking. I know that it is a huge thing that you and your team do.

It’s interesting because infinite banking was the lifeblood of the ability to lend capital to banks during slim times. I was talking to my friend’s dad who passed a few years ago. He said that over 75% of the people in his bank had vice president titles or more because he was taking out policies on them and was using these whole-life policies to essentially increase the lending ability of that bank. I know that my family has done some of those similar things.

In slim times, infinite banking is the lifeblood of the ability to lend capital to banks. Click To Tweet

That’s where I learned about infinite banking by listening to his father talk about that. I know that my family’s been involved in it as well. Even during the downturn in 2008 through 2010, my friend’s father had way more liquidity and ability to lend during the downturn than a lot of other small regional banks because he was backed by whole life policies that he could continue to extend those loans and make money even when the other banks were suffering because of all of the crackdowns, especially with the Dodd-Frank regulations. I learned a lot of that through osmosis. As I look at that active, passive, and then generational, for me, it also becomes very cyclical.

I’m always letting my passive create more whole-life infinite policies for me. I establish how much I can put into my infinite policies or my whole life policies based on the passive that I know are going to be generated so I don’t have to worry about where’s that capital going to come from next year. It’s coming from passive income. I have this steady increasing trajectory on that, but then I can take the capital that’s sitting in there and begin to lend it as well. It’s making money.

One thing that I love to do is sustain my nonprofit and the entire budget of my nonprofit is created by lending off of my whole life policy. I create the budget for my foundation. Its annual operating budget comes out of a whole life policy that gets extended at the beginning of the year, and then I pay that entire policy off that year, and then we go back at it again. There is some great vehicle for finance, and I learned that through conversations around banking.

Why do you think banks like it? You addressed it already, but for example, I know there’s one video. It was a reaction video with Dave Ramsey talking to an insurance agent. He’s ripping into him. The insurance agent even brought up the fact. He said, “Why do banks own so much?” Dave Ramsey’s response was, “That’s because they’re stupid and some salesman convinced them to buy otherwise.” Do you think the bankers are that stupid? Apparently, dumber than Dave Ramsey, I’m guessing.

Dave is interesting because I feel like it’s such clickbait anymore. He is trying to keep his ratings up. We got all the stuff that’s going on with the banks. The thing that he came out of today is trying to irritate or get followship because he said, “Leverage is horrible. This is what I’ve been telling you. What does leverage have to do with right now? You are not being able to get your cash out of a bank because they’re not ensuring deposit.” It’s like, “What are you talking about?”

That was about leverage. They were investing.

It’s not apples to apples, but I think it’s clickbait or his marketing team’s doing stuff like that because most of it is illogical. The reason banks do that is because they control their own destiny. In the majority of small, local, and regional banks, their lifeblood is not off of their deposits that are sitting in the bank that they get to essentially earn some yield off of, but these whole life policies that they hold onto, especially if they’re seasoned and they can continue to use them, they use them as capital for lending.

If, on average, they’re making 4% to 6% on those policies and those policies are sitting there yielding, it gives them way more control and liquidity for lending. Also, the regulations are a whole lot less when they’re lending from a policy versus lending federally regulated capital. For a bank that has massive holdings and whole life, it gives them a whole lot more control and stability.

How do you see that playing in your own life, even beyond using that to fund nonprofits and things like that?

It’s the exact same thing. As I was looking, I have a private equity firm. We have 14 or 15 assets. Most of our capital today is sitting in a small regional bank. I was like the support local. Every time I need loans, it’s a whole lot easier. I know the bank president. I grew up in an environment where my family was involved in small local banks. I have a level of comfortability. Do I have some holdings in JP Morgan, Chase, and Wells Fargo? I do. In the end, I love to support these local banks. You get a whole lot more customer service and relationships there. With my CFO and my business partner, the immediate call was, “Should we be moving the capital from this small regional bank in case we have a run on our bank into bigger banks?”

I said, “To me, the hedge to that is I have enough sitting in my whole life policy that if I have to float us for 3, 4, or 5 months with liquidity, I could do that.” That capital’s always going to be there. It’s protected. It’s one more measure of protection that I don’t have to worry about and rely on the banks. I essentially am and have my own bank if I need to. To some degree, I am already in many other areas. That capital is always available to me. It doesn’t matter if there’s a run on our small local, regional bank or not. It would suck, but in the end, I have this measure of whole life backing that I could turn to for liquidity if I needed to.

Tell us more about what you’re up to. What are you passionate about in your current place?

Buying and selling businesses is super exciting, but I could have retired in my mid-twenties. I did, then got bored and decided I would keep going after it. In 2019, we sold 76 assets for around $1.2 billion. I was about to ride off into the sunset and work on my nonprofit and all the stuff I have going on. Our nonprofit is called Impact Others. It is primarily four things. It’s feeding centers and orphanages as well as educational centers for children in third world countries. We also do clean water projects and build sustainable companies when certain communities need more work and opportunity. We do a lot of that. The more that I travel the world, the more need there is.

Sitting here at 43 years old, it seems silly to sit there, retire and think about not working anymore when I enjoy work. Why not do it again? We created the private equity firm again about a year and a half ago. The intention is to be able to give more to the foundation and the nonprofit Impact Others. We’ve got 26 feeding centers and orphanages around the world. We feed about 4,000 kids. It was like, “Can we do 8,000 or 10,000? Why can’t we do 50 clean water projects and wells this year? Why can’t we start twenty businesses overseas?”

I’m in a place in life where I’m able to do that. My family is taken care of for a few generations. It’s like, “Why not go impact the world in some greater way?” We doubled down about a year and a half ago, and that’s what I’m passionate about. Everything I’m doing now in real estate and private equity is to be able to generate more income for the foundation. That is the emphasis of everything we’re doing well.

If people wanted to learn more about that nonprofit, where would they go?

They could go to ImpactOthers.com. You can see all of the projects we have going on and lots of amazing works going on around the world. They can also look at @ImpactOthers on social media like Instagram, Facebook, or any of the social media platforms that they use.

You’ve got Instagram, @EddieWilsonOfficial. I follow that one too. I appreciate your time. It’s very generous of you and great stuff that we can all learn. It’s good to know your perspective on what you’re seeing as an opportunity right now. In a world that’s starting to contract in fear, it’s good to know that you’re charging ahead with faith rather than that fear. It’s good to see that.

Thank you so much.

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That’s my invitation to you. You can definitely live in fear, but fear usually comes from ignorance. It’s about having the right people around you, the right support, and knowing how to take advantage of those opportunities that allow you to be able to have that level of faith. I recommend checking out Eddie’s stuff. He’s got lots of great things, especially if you’re a business owner. There are lots of great little short video tips you can get from his Instagram or TikTok videos.

What I recommend you is that it’s always about who you surround yourselves with, who you learn from, and elevating those conversations, yourself, and your situation with it as well. This doesn’t work unless you guys work. You got to do the work and put in the actual things by letting that faith become action. Go and make it a prosperous week. We’ll see you later.

 

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About Eddie Wilson

MORI 704 | $1 Billion InvestmentEddie Wilson is a businessman who is known as the “King of Exits.” He has owned over 125 companies and exited over 85 of them successfully. His current private equity firm, Collective Influence, has significant holdings, as well. Of those holdings, the PE firm owns – Think Realty, American Association of Private Lenders, Apticode, Fitcon, Mana Health, Tax Free Crypto, Because Coffee and around 20 other companies.

Eddie is also known for creating an operating system that manages the growth of his companies systematically allowing him the greatest odds for success. His operating system is known as the Empire Operating System.

With all of his success in his 40s he has turned his efforts to faith based and humanitarian non-profit activities such as – Christian Media International and Impact Others.