In this session you will learn about:

  • Handling family dynamics in a business;
  • Why business owners shouldn’t transition family businesses to their kids;
  • How exit planning will help owners run more profitable businesses;
  • Facilitating discussion in your family to build dynastic and multi-generational wealth; and
  • Top three pieces of advice for an owner contemplating an exit.

About the Guest

Tom Deans, Ph.D. is the author of "Every Family's Business: 12 Common Sense Questions to Protect Your Wealth" and "Willing Wisdom: 7 Questions to Ask Before You Die."

With more than 250,000 copies in circulation, "Every Family's Business" is the best-selling family business book of all-time. His new book, "Willing Wisdom," has already received critical acclaim from "Investment Executive" and other leading trade and literary publications.

His research and thought leadership on the subjects of wealth transfers, preparing heirs and family dynamics has made him an in-demand speaker. Since the release of his first book in 2008, Tom has delivered more than 500 paid speeches in 14 countries. He has also provided advanced training to advisors from some of the world's largest financial institutions, law firms and accounting firms.

Listen here:

You can also get this Podcast by:

Read the Full Transcript Here:

Noah Rosenfarb: Hello everyone. It’s Noah Rosenfarb, here today with a great guest, Dr. Tom Deans. He’s the author of "Every Family's Business" and "Willing Wisdom," an award-winning speaker, someone that has not only great stories to share from the families he’s interacted with but also a depth of personal experience in family business. I’m really excited to have you on today. Thank you for joining us.

Tom Deans: Noah, the pleasure’s mine. I hope your audience finds this interesting.

Noah Rosenfarb: Yeah, I’m sure they will. So maybe you could start by talking to me about your experience in the family business. What did that look like? How was it shaped? I know from reading about you there were three generations of your family that had sold their business, so tell me a little bit about that.

Tom Deans: That’s right, Noah. In fact, I was born into a family business, as was my father, as was my grandfather. We’re a multi-generational family of business founders and that’s kind of interesting because in the family space, most people define themselves as second, third, fourth or fifth generation businesses. Our experience is actually quite the opposite. In fact, that’s really the genesis of the book. I joined my father’s business at the tender age of 37, quite late in the world of family businesses where most children will often go to college or they may spend one or two or three years outside the family business and then join the family business in their mid or late 20s and then crumble along for, you know, a 25, 30-year career.

In my particular circumstance, I joined quite late. I was the CEO of our family business - it was a manufacturing company - we had plants in Canada and the United States, sales offices around the world, and I was CEO for eight years. I joined in 1999 and then sold that business along with my father’s interest in 2007. Then I stayed six months working for the new owners. In fact, I’d like to tell you my audiences why I’m giving the speech that I served a six-month sentence for a crime I didn’t commit. It was a brutal experience, as it is for many business owners. In fact, it occurred to me it’s probably one of the major reasons why business owners don’t get on with the business of prepping their business for sale and pulling the trigger and actually exiting.

So having worked for six months with the new owners, we both decided it was probably best that I go home. Business families, presidents, owners, we’re terrible at taking direction. Entrepreneurs have their own ideas, so when someone buys your business and you’re now no longer the number one - you’re just kind of two with an asterisk mark beside your name - it’s a really tricky and for many people awkward arrangement, so six months was as long as I could handle, they could handle. I went home. I spent two weeks golfing - that was really boring - and sat down and found myself one morning packing away my laptop and 15 hours later I had penned 15,000 words of what became Every Family’s Business, which has gone on to sell over 300,000 copies and become the bestselling family business book of all time.

No one is more surprised than my English professor in college. In fact, he’s probably rolling over in his grave, because I’m quite frankly not a writer. But I did have a message and my editor, who took the manuscript, looked at it and said, "This is appalling. You can’t write. But there is something about this message that strikes me as different," and we stuck at this thing. I wrote the first draft in 30 days. My editor had it for 30 days, the printer had it for 30 days, and then 120 days later the truck was backing up and dropped off this stack of books, self-published, and I thought, "Wow." I don’t know if you know what 5,000 copies of a book looks like in a garage but I have to tell you, it’s not pretty.

I cracked open the first case. I grabbed five copies and I took it over to my parents’ place, sold them the copies - no discount for families - and came back and I still stared at just an enormous pile of books and I thought, "This is insane. What have I done," then proceeded to give a whole bunch of free talks. There wasn’t a Rotary club, an Elks club, an optimist club, a service club anywhere on the planet that was safe from me. I’d speak anywhere, anytime for free and did that for about a year and really honed the message. Then one day, in my audience there was a lawyer and he said, "That was a very disturbing message that you just shared. It’s so disturbing and different I’m wondering, what do you charge for your speaking?" At that point, I’ve always spoken pro bono and I said, well, why don’t you just buy a copy of my book for everyone of your clients and I’ll speak for free."

I did that. There were 150 business owners in the room and I delivered my talk and what I didn’t know was that I tripped over, I stumbled into a business model that would then, I would then go on and give 500 paid speeches in 14 countries delivering this really different message to business owners. Maybe you want to talk a little bit about that because that’s really what I think your audience is interested. What makes Every Family’s Business message so profoundly different than the traditional literature that speaks to the business owner who has created a business, created value, but is feeling really stuck and confused as to how they’re going to monetize their life’s work?

Noah Rosenfarb: Yeah. Obviously, I'd like you to share that with us and also some of the questions that you’ve formulated as a way to develop your own thesis around your family business. Before we get there, tell me about your own personal exit and, you know, coming from a family of entrepreneurs and not only entrepreneurs as you described it, basically every generation being a first generation entrepreneur in creating their own business, creating their own success, how did you exit? Was that a planned exit over time? Do you think you did an effective job and what was your learning experience that came out of that experience?

Tom Deans: Well, I’ll tell you, the big lesson learned for me was I was actually purchasing my father’s business and I was doing that using traditional lending. In fact, what makes our family a little bit interesting is I was actually purchasing shares in the business prior to joining as an employee and after buying shares for a number of years, my father then put me on the board of directors, and then he hired me. Think about it. In our family, we do absolutely everything backward according to the literature. I was a shareholder first, a director second, and an employee third. That is very untypical of a family business where employment is typically the first step, but I think what we’re acutely aware of in our family narrative, looking back over generations, is that we’ve never confused the income that we generate from our employment with the equity that we built in these businesses. In family businesses, that is probably the one area that gets muddled up the most.

In other words, children often will work in their parents’ businesses and they will be underpaid, right? The mythology is that every kid who works in their parents’ business is overpaid. Well, I’ll tell you, I’ve met more underpaid second generations working in their parents’ businesses and the proposition is - this is what they hear from their parents - don’t worry about your compensation because one day all this will be yours. You know, that one day can be a really long time away and there is a lot of frustrated second gens working for below the value they’re creating and it creates a lot of resentment and a lot of tension in the family and in the business.

I just never had to deal with that. I was always paid commensurate for what a president should be paid, for the number of employees and locations that we had. We used third party salary surveys to generate a number that was defensible to our lenders and to our employees. I had a huge head start when I joined this business because of the family culture and the way that we approach these family businesses. These businesses are not our legacies so you know, in your question you articulated exactly what was done five generations of founders, operators, and sellers. We involve our children in our business. We just don’t gift our business to our kids. If they don’t want to buy it, then we sell them and we pass wealth to the next generation.

We really work on trying to give our children the space to be the people that they are meant to be, so it’s highly unlikely - we have a significant shoe manufacturing company headquartered here in Canada and even the unborn children in that family are destined to be shoemakers. They’ve been at it so long that they believe that this is all that they will ever be. It’s a story and a narrative that I’m trying to change. I’m trying to give families a perspective that they can be so much more or something completely different than their parents. It’s a refreshing and new perspective and one that gets business owners out of a real pickle and that is, I’ve invited my kids into the business. Now, how the hell do I sell a business that my children are deriving a living from?

The book and the questions that you’ve alluded to that are in the book Every Family Business, that’s what it does. It helps a family find the exit in a way that pays homage to the relationship and to the importance of protecting the equities and retained earnings in that business.

Noah Rosenfarb: So you say the core message of the book is as you’ve described so far that the equity in one’s family-owned business doesn’t have to be passed as equity. It could be passed as liquid wealth, you know, don’t be married to the idea that the business is right for everyone in your family.

Tom Deans: That’s exactly it. In other words, if your kids don’t want to risk capital to buy the business, heads-up business owners. Your kids don’t love the business. Kids who are willing to risk something of themselves - not just their wealth but their energy, their ideas, their creativity, their best earning years - if they’re not willing to risk those things, they just don’t love the business. Now, the paradox is that this is incredibly powerful and important information for the business founder to collect. He or she’s asking their kids whether or not they want to buy the business and the kids say, "You know, like our job, like the pay, but don’t like the risk. We don’t want this business."

That is really important information. If the business owner then turns to, say, a group of senior managers and says, "Do you want to buy the business," and the senior managers say, "No," and then he goes, "Well, I’m kind of left with competitors, strategic buyers, and there’s not much interest there. Let me turn to a private equity firm. Then he says, "Do you guys want to buy the business," and they say, "No." Where do you think, Noah, that business is in its life cycle?

Noah Rosenfarb: It’s going down the drain there.

Tom Deans: It’s past its freshness date. The whole point about exit planning, succession planning, transition planning, whatever you want to call it, selling your business, is that it’s estate planning. Everyone has described that process as something that you do kind of five minutes before you want to exit and the reality is that it’s something that has to be done as part of the operations of the business from the very first day you incorporate. The very best business minds incorporate their exit into every single decision that they make, so it’s not one hour of time spent on estate planning or preparing my business for sale. It’s an hour that I’m not going to spend in my business creating wealth, increasing sales, improving operations. It’s not one robbing from the other. It’s the same thing.

In fact, I would go further and say that the business owner that spends an hour on their exit plan will run vastly more profitable businesses today, because they know what buyers want so they run very different businesses, vastly different.

Noah Rosenfarb: Yeah. When I am approached by business owners looking for my advice in counseling them through an exit. What I often say is that it’s the best ROI you could get on anything. If you plan an exit in advance and you take the time to understand who your buyers might be and what they’d be looking for and then, you know, typically it’s going to result in a change in the profitability of your company while you continue to own it, but then you’re going to get a multiple of that profit on an exit. There’s really nothing that I think compares in terms of where owners can spend their time and reap their reward in terms of value.

Tom Deans: Well, you know Noah there’s a small - very, very short - story that I can share to illustrate that point. About six months prior to us finalizing the sale of our business, I was traveling with one of our best salesmen to the great state of Missouri, and we stopped at a Starbucks. I ordered a small dark roast coffee and it was like a buck 75, maybe two bucks, and my sales guy orders a Grande Supremo. This thing came, it had fruit and whipped cream. The thing was like eight bucks. I knew, because we were in the middle of our negotiations and we were shooting for a ten multiple EBITDA, and you know what I tell my audiences. Do you know what I was watching that guy do, my sales guy do? I was watching him eat and drink an $80 cup of coffee because that’s what that coffee was going to yank out of my wallet when we sold the ten-multiple.

Now, I tell business owners, "Think about your entire operation. Think of maintenance cost. All the different things that you would do knowing that it’s not a dollar saved. It’s ten. I’ll tell you, business owners will think and look at their business on the expense side in a profoundly different way.

Noah Rosenfarb: Yeah, that’s for sure. So take me back to Every Family’s Business and the message that you’ve created and the talks that you’ve just given. What would you say are the key points that you’d like our audience to take away and maybe influence them to go on to your website and buy your book?

Tom Deans: Well, I think let’s start with the first book, which was Every Family’s Business. That’s really a book on the transition of a family business. My big message there is that it’s giving the business owner permission to take care of themselves first. We know from study after study that the most trusted adviser in the United States, it’s the attorney. In Canada it’s the accountant. It’s pretty interesting, the difference. Then it’s reverse. Number two in the US is the accountant and number two in Canada is the attorney. But in both cases, if you were the accountant or the attorney and your business on a client says they want to sell and does sell, what happens to the file?

Noah Rosenfarb: They’re going to lose the fees, typically.

Tom Deans: You’re done. We have business owners in both countries turning to trusted advisers from two professions that largely take instruction but they’re in a position of proffering strategic or tactical advice. What they hear is, "Well, I’m the accountant so if you’re a hammer, everything looks like a nail." What you say is, "No, don’t sell this business. You’ve got your son working in the business. Why don’t we do an estate freeze where we can, you know, this is really tax-efficient. We can get some common shares into the hands of your kids. They’ll be able to grow shares. It’ll be an awesome tax maneuver."

You see how all of the sudden of the conversation switches away from, "What should I do," to, "How can we save tax," and it all sounds very plausible and the right thing to do. Of course, what is overlooked is whether or not that child is prepared to run that business, are they passionate about that business, do they have the skills, or will that child take that business and nuke on the family’s largest assets. The plan is always that mom and dad will step out of the operations of the business while the second generation takes over the management, the operations of the business, and draw salary until the day they die.

What’s different now, Noah, is that we have business owners for the first generation living vastly longer than their own parents so this idea that you’re going to hand over the operation of the business at 65 and then kind of die at 72 or 73, which is a typical mortality rate for men, so there will be like a five to seven year gap where you’ll be drawing salary but not leading the business and then on death the business equity would transfer via gifting. Well, what happens now is of course business owners are living longer. They’re still kind of semi-retiring at 65, some a little bit later in their early 70s handing the business over, but now they have a heart attack, they get a stent and they live 25 more years like the business owners isn’t dying.

So now we have business owners who still have voting control who are in their 90s, their kids are in their 70s, their grandchildren are in the operations of the business. You have three generations alive and working in the business, working shoulder to shoulder to shoulder. Two generations was a full contact sport. Three is just off the map. The complexity - complex is just the best word to describe it. The family dynamics become complicated, the financial arrangements and promises and expectations of three generations are often not in alignment and really set the stage for a business that’s going to wobble.

Every Family’s Business is dealing with the transition of business. The second book is really a response to my audiences who have great difficulty with the thesis of the first book. Whereas the first book is saying don’t gift your business, gift your wealth, it took I think - not very long, certainly in the first couple of paid speeches for audience members to say, "You know, great theory, Tom, but I’ve got a business that’s worth $10 million. I’ve only got two kids. Are you suggesting that I leave $5 million for each of my kids? That’s too much money. I have a real problem with that. I’ve got some real issues with if they have a divorce."

All of a sudden, I was having to explain or at least provide some insights on that second question, "How much is enough? When do you tell your children about what they’ll inherit, if anything?" That’s what the second book really offers, and again that’s been based on my own family experience. I’ve been attending family meetings since the time I was five, being born into a business-owning family. We just had a lot of transparency around the subject of money. What the book Willing Wisdom does is it offers seven questions to start conversations in the family, not just about writing a will but relying on your beneficiaries to inform the writing of that will. In other words, I’m trying to recast what a will is. It’s not a document that simply divides asset on death. It’s a document that I think can bring families together and both parties can learn and collaborate and figure out what the true purpose of that wealth will be, not just in the future when someone is dead but today while someone is alive.

This idea of writing a collaborative will the really interesting part of this book, a collaborative will - writing it and then not holding the will secret but sharing it with your intended beneficiaries. One hundred twenty five million American adults - wrap your mind around that number - 125 million American adults have no wills, not bad wills, not ill-conceived wills, just nothing. I’ll tell you, these aren’t just uneducated people or people without means. These are academics. These are lawyers. These are talented people who have worked and saved and then make no effort, have no confidence in the next generation - be it their family, their community or their friends - to take their wealth and continue their work, because no one knows what it is that was important. For the 125 million Americans that do have wills, it’s roughly 50%, most of those people will find out in a cold austere lawyer’s office what they’re going to get, after a parent has died.

That just, culturally it strikes me as being odd because we know that the great dynastic families, the ones who are able to continue their wealth from generation to generation have this uncanny ability to talk openly, frequently and honestly about money. It’s not taboo. It’s culturally a part of their family, it’s like breathing for the uber-wealthy. This is what they do. I’m trying to extent that talent and that ability to make within reach for the average Canadian and American family. I think everyone is capable of these conversations and I think that’s where the real value of this book lies, starting conversations in the family so that wealth can be made and protected, and to do that collaboratively. That’s a little bit of summary for both books.

Noah Rosenfarb: So tell me if the message is to encourage families to be open and communicate and do it frequently, you know, it certainly resonates with me. It’s a message that I try and give to my clients. What would be your recommendations for families to get started? Maybe you could take a couple of either case studies or use a family with adult children, toddler children or use a family with maybe teenage children and how would you recommend they get started having these discussions?

Tom Deans: Well, I think for a lot of families where this idea of communication feels awkward, I would really recommend that they reach out to an adviser for some help. Really, what I’m envisioning is a family meeting that’s facilitated by a trusted adviser. By the way Noah, that’s not me. I’m a speaker and an author so I don’t do any family business consulting or family consulting whatsoever. Quite frankly, the best persons to hold those meetings are the people that you have a relationship already. In reverse, I talk to and train a lot of advisers and encourage them to take their top ten clients and to invite themselves to be that facilitator, to actively go out and solicit this role of confidante, consigliere. There are European phrases that describe the role that I’m explaining, this role where some adviser takes a lead role in managing just not their clients’ wealth but takes a multi-generational approach to this.

We know that 95% of inherited money will move to a new adviser, primarily because the kids, they don’t even know who their parents’ advisers are. They have no relationship. No one has ever made an effort of bringing the generations together and having this cross-generational conversation about what money can accomplish not over 20 years but over 200 years. That is a conversation that has to happen, especially because we have a generation that has generated more wealth than any other generation in the history of the planet. It’s called the baby boomers, born after 1946, and the first boomers started to turn 65 in 2011. Everyday 10,000 people turn 65 in the US. It’s a staggering number. The urgency that I’m trying to create around this subject is an uphill battle. People continue to want to treat their will in a secret way.

I had a really interesting call from a business owner - a business owner’s kid actually - so both parents had died recently and did what so many business owners do and that is they left equal number of shares in the family business to the three kids. Only one kid was in the business. What happened is that the two kids that were outside the business had quit their jobs and joined the family business not because they’re really excited about this business and it’s a pretty kind of mundane business. It’s a distribution business. So now we have three equal partners. The two that have joined have joined largely because they want to be able to have a front row seat and see what’s going on financially in the business. They want to make sure there’s no malfeasance and that the son in the business isn’t going to abscond with some kind of special bonus or dividend.

What was described to me was really quite dysfunctional and the concern that one of the siblings has is that the business will in fact fail in less than a year, so the trajectory that they were on when the parents were alive was very different than the path that they’re heading on now. It’s very alarming but very typical in a family business space where parents want to treat their kids fairly. It feels so right that they treat each kid equally, and of course when I see the business owners when they actually are alive, I ask them, "Are you in business with your brothers and sisters?" Of course, the answer is almost always no. I ask them why they think it would be an amazing idea to put their own kids in business together. Of course, there’s usually silence, and for advisers who are listening in on this call that’s usually where the great stuff is. That’s usually those awkward moments filled with silence is where the business owner is having to reconcile the reality with this kind of what I call a fantasy idea of what a business transition looks like.

For the business owner who views their business as their legacy, I offer a very challenging message. What I’m saying, in fact, is quite the opposite. The legacy is not the business. The legacy is the family. One only needs to read Niall Ferguson’s book The Ascent of Money - this is a great book - Schumpeter’s book written in 1942, Capitalism, Socialism, and Democracy, lots of great books that have clearly, clearly documented just how frail corporations are and how temporary, and the failure rate. Of the 100 largest firms in America in the year 1900, Noah, only 16 were still in business in the year 2000 according to Fortune Magazine.

Businesses don’t last and yet no one wants to talk about this. In fact, everyone wants to consult and write and think that the job of an entrepreneur and business leader is to keep fixing the business and building them to last, Built to Last. I mean, how many copies of that book were sold because it’s absent of this emotional idea that a business owner’s job is to build a business to last? Quite frankly, I don’t get it. It doesn’t wind up with my own personal narrative, right? I already told you that I come from five generations of business founders, operators and sellers. We start them, we run them, we sell them. We sell them before they hit their freshness date.

If you look at the history of commerce, that’s what the dynastic families have done. They’ve found a way to find the end of their business before the end finds them. It’s not easy. In fact, we can turn it into an emotional thing like most business owners do, or you can look at business as something that you’re passionate about. The very fine line between emotion and passion in many entrepreneurs especially ones who have built successful businesses, lose sight of that emotion. They let their passion develop into emotion and of course the end result is devastating, particularly if you look at bankruptcies that have befallen some of the biggest and best corporations.

In fact, if I was giving my message, the very message that I’m sharing with your listeners today, to Wall Street 2002 and talk about how Lehman Brothers one day won’t exist. If I were to suggest in 2002 that one day the greatest investment bank in the history of civilization, the most successful by any measure, will one day no longer exist, they would have laughed me off the podium, driven me LaGuardia and not paid my speaker’s fee. It would have been an outrageous, audacious idea and yet here we are, 691 billion dollar failure, the biggest failure in the history of mankind and I ask my audience to name that company and most can’t, because our cultural bias, our cultural slant is that we do not talk about business failure. We don’t want to think about it. We don’t want to acknowledge it. We sure as heck don’t want to study it and understand. What we want to do is think and read about the entrepreneur who came over from Italy with ten dollars in his pocket and built the billion-dollar company.

We love success. We love reading about success. We don’t like starting with the end in mind. Business failures or business exits as a way, as a thought process to grow businesses and that’s what both these books are trying to do.

Noah Rosenfarb: Walk me through some of your, like top three pieces of advice that you’d have for an owner that’s listening that’s contemplating their own exit and they’re wondering, you know, where should they get started? What are some of the bits of advice you’d have? Maybe give me a top three list.

Tom Deans: Top three list would be, for the business owner, very simply, one, you start at the end - we’ll start with what I just suggested - start at the end in mind. You’ve just been hit by a bus. How’s your business doing now? What does it look like? Where do the shares go? Do you have a shareholder agreement? Do the sharers do what they typically do? Do they roll to your surviving spouse? Does she have a key to your office? Has she ever chaired a board meeting? Does she know your suppliers, your customers? I mean, really, what does it look like? You’ve left the planet.

Some business owners, quite frankly when I do this - not a lot but some - will answer the question this way: When I’m gone, I don’t care. It’s actually an honest answer. It’s kind of an interesting answer but really, what those people are saying is that their family is just not all that important or they’re running their business because they get a charge out of it, they like making money, they think that the business is their legacy and that’s kind of their answer.

My first piece of advice would be, you really think about what your business looks like when you’re not here, and how can you prep that business? How can you get your will, your shareholder agreement so that they say the same thing? Often, we have shareholder agreements that say "minority shareholders will have first right’s refusal on the shares if something would happen to the controlling shareholder", and then they have a will that says, "My shares will transfer to my surviving spouse". You have two documents that say two completely different things, and that’s often as a result of a company having one attorney and then, you know, an individual having a personal attorney for real estate and other personal matters. So they have two documents written by two different attorneys that say two different things that create enormous complexity and cost and chaos when a business owner is either incapacitated or dead. So the first one is, just get your house in order and start with the end in mind.

Second tip for the business owner is, understand your business isn’t your legacy. Just kind of get over that and understand what your business is. It’s the same thing that it was the very first day that you left that safe job, went to the bank, borrowed money, took risk, to start something. Were you thinking about building legacy then or were you really thinking about making money? Most business owners laugh at that point and they confess. The reason they took risk is they wanted to make money. It’s only 20, 30, 40 years down the road after they’ve made money that they start to import and ascribe all sorts of other intangible and soft criteria to their business - it’s my community, it’s my family, it’s my friends, all these other things - and part of my message to these business owners is, you’re only saying that because you’re successful.

If your business wobbles and it gets kicked to special loans or goes into creditor protection, there is no line on that balance sheet that says love, family, protection and some kind of number to find that. You cannot monetize those things. It’s wonderful, it’s nice that you’ve built the business that you feel kind of represent these communities, but it’s not. It just simply isn’t. Your business is not your legacy. Your business is an instrument of wealth creation, full stop. It makes money or it loses money. Noah, you know this. Businesses don’t go sideways, not even with malfeasance could you manipulate and engineer a balance sheet to be exactly the same from one year to the next. They’re moving. These businesses are organic. They’re alive. In fact, a lawyer will tell you they actually are a person. In the eyes of the law, corporation is a person. It has a birth and an incorporation date. It has a life. You operate it. Like every living thing, Noah, what does it have at the end?

Noah Rosenfarb: Unfortunately, a death.

Tom Deans: It does have a death. Now, what do we think about death? We think about the sale of a business as a kind of the high water mark of failure. Who sells businesses? Our popular culture says you only sell a business when it’s failing, when it’s wobbling. I mean, why would you sell a business that’s growing and turning it lots of income and growing and it’s full of optimism? Most people don’t. We sold our business in February 2007 at a terrific multiple about fifteen minutes before the capital markets went crazy, before all sorts of businesses in our space were destroyed. We sold at an amazing time at an amazing price under favorable terms, and I’m walking with the largest employer in our town and I’m walking down our main street and I’m coming out of our local bank and an acquaintance stops me and he says - and obviously, I read the newspaper we’re on the front page, you know, reporting the story The Sale of our Business - and the very first question out of his mouth is, "Are you going to be okay?"

The presumption in that question is, something must have been wrong. You must have been under duress. Something must have been broken. We don’t sell businesses that are running great. You sell them when they’re broken. I thought, "I have to write this book." I’ll bet you, there are millions of business owners who feel like the sale of a business is some kind of public declaration of their failure, when in fact what I’m trying to do is shift the discussion and say, "No. This is the high water mark. This is the moment of perfection when you’ve taken your entire life’s work and energy and monetized it." It’s for the sake of a number? No. So that you create wealth so that you can move on to the next phase, the most exciting phase of a business owner’s life, and that is where they deploy their social and intellectual capital, backed by their financial capital to achieve something of significance.

Boy, I’ll tell you. When a business owner hears that, it’s often for the very, very first time. It’s an amazing moment to see a world of opportunity and to shift the cultural yard mark and say, "Oh my gosh, there are other things out there for business owners to contemplate." This sale is not the failure. It is the moment of perfection.

Noah Rosenfarb: That’s a great message. Maybe before we have to end our podcast, you could share a couple of stories that you think will be valuable for our listeners, maybe something someone did right or something someone did wrong and what the lessons were that came out of it for you.

Tom Deans: One of the questions I get from my audiences is, "I don’t want to not just sell it for the highest price. I want to make sure that the people who buy my business are really going to pay homage to the people, the culture," and it’s a huge distraction. My message to those folks is, look - business is about control. Right now, Mr. business owner, you’ve got it. You risked your capital and you’ve got voting control. It’s yours. That’s one of the great things about business ownership. You get to make decisions because you took the risk.

I think so many business owners will make not as good a decision as they could thinking that buyers of their business will kind of take care of people or continue values or legacies, compensation plans or commitments to charities - I mean, I could go on and on and on about how business owners obsess about the new owners replicating their, in effect, their dream of what the business ought to be, and it’s really naive. The business owner should really focus on getting the best price. When I say best price, I mean the best price at a moment in time. In fact, this is my second point. I’ve spoken to a business owner this morning, in fact, who read the book, was very excited about the message in Every Family’s Business, wanted to sell but not right now because he thought that he’d miss the peak of his enterprise value. My message to this gentleman was, I asked him a question. I said, "Have you ever bought and sold a stock on the public markets and sold it at a loss or sold it for, you know, you missed the peak?" He said, "All the time." I said, "What’s your family business?" It’s one stock. It’s no different. That it’s a privately held, closely traded, narrowly traded business does not mean it’s not a stock. It’s a stock.

The likelihood of you selling that business at its absolute peak value is beside the point. The point is if now is a good time for you to take some chips off the table to monetize your business at a fair price, given market circumstances where your business is in its life cycle, then do your deal and feel good about it. Don’t obsess about not getting the top price. I’ll tell you, some of the saddest stories and emails I’ve ever had where people who missed the peak of their value or their business and didn’t exit and then ground that stock to zero. They rode that pony right into the ground, because they missed the top. I’ll tell you, that’s just the saddest thing because the business founder loses his relationship with his kids, if they’re working in the business, because there’s often a lot of blame as to why the business failed. There are broken relationships, broken financial dreams, broken retirement plans and that is sad, when in fact had the family just picked a good price, if the kid didn’t want to buy the business, it would have just simply been sold to someone else.

So my last point would be, just do the best deal you can. The best deal will be the one that a family business can work on collaboratively. If the kids, if they’re not passionate to be owners then they can maybe be good employees, or they leave the family business altogether and they take their inheritance - the second book - and then go off and do something that they’re really switched on about and talented. That’s where they’ll find their success, so giving kids space to succeed and become the people they were meant to be. Those are the messages in both books.

Noah Rosenfarb: Terrific. Anything else you’d like to leave with our audience before we say goodbye for today?

Tom Deans: I have to say, Noah, both books are conversational. Both books are written as stories. The first book is two guys on a plane flying to Barbados, a young guy who’s in a family business, an old guy - a founder - and the whole book, zips long. It’s about an hour and a half read. It’s zips long and they get into the scotch on the plane and they confess and share what worked and largely what didn’t work in their family businesses and confessed. Everyone who reads this book finds himself in the stories that are told and I think that’s really what I’m trying to do is have people kind of step out of their own skin and see just how common the themes are across family businesses whether you’re big or small or manufacturing or retail or finance. The themes are amazingly consistent.

The second book is not two guys on a plane but this this time it’s three people in a bar in Las Vegas. One is an estate-planning attorney who does wills for the movie stars. He’s always a guy in the media. He’s a speaker. Another speaker who’s rather conventional and the other person in the bar is a psychotherapist and has done lots of work with families with significant wealth. The third person is a thinly disguised version of me so he’s a speaker. The three have this conversation about why the heck 125 million people in America don’t have wills and what it’s going to take to get people to understand what a will is beyond just a document that divides money and real estate. How can we get Americans and Canadians switched on to this idea that the greatest conversation of their life is just waiting around the corner, and it’s not when you’re 92 years old lying in bed and a lawyer is called hurriedly to your bedside to do a will. That’s not what we’re talking about.

We’re talking about a family sitting on a back deck around a barbeque talking about the most obvious and predictable thing in life and that’s our own death, and to be able to do that and start that conversation and give advisers the tools, the questions to get those conversations started, quite frankly, Noah, for me that’s a good day in the office.

Noah Rosenfarb: Yeah, that’s great. For our listeners who would like to read your book, what’s the best way for them to reach out and find it?

Tom Deans: The quickest and fastest and most cost-effective way of purchasing the book is right off the website. Books ship the same day they’re ordered. There’s bulk pricing for advisers who want to buy in bulk and hand it to their clients. The websites are the titles of the books, so is the first book, that’s how to transfer a business, and the second book is and that’s how to transfer wealth. I would read them in that order as well, Every Family’s Business first, Willing Wisdom second.

Noah Rosenfarb: Terrific. Well, thanks so much for joining us today. Thanks to our listeners. A reminder to everyone listening, if you could rate us on iTunes, we’d greatly appreciate it, give us your feedback. Also, I have an offer for our listeners. I have a new book coming out called Exit Healthy, Wealthy and Wise. If any of you would like a pre-press copy, I’d be happy to send it to you if you’d agree to write a review on Amazon when it’s finally published, so if you’d like to take me up on that offer just send me an email Check Divestopedia if you need a link to that. Thanks so much for joining us today and we hope you join us next time.