95% of what is out there in family office structures is flawed.

[23:08]

"Similarly, if you're buying a jet, you know, we had a client, we set the family office as an LLC partnership, bought a $14 million jet on December 15th, used it three times for business, wrote off 100% of it, flew the thing for 5 years, and sold it and made a $4.5 million profit."

[25:15]

"These families didn't do that and one family, an Iowa family, did every single recommendation we made in about 20 years except they were freaked out by South Dakota trusts and Delaware LLCs."

[24:45]

"We advised people to get 10% of their net worth out of the United States into a trust that can never be busted, never has been busted by any government on Earth."

Full transcript

We're going to do a fireside chat now. Uh we're going to invite Thomas Handler up to the stage for a centimillionaire fireside chat. So, he's going to be joining us here in just a second. Uh we'd like to do three to four of these at each one of our events and we'd like to interview people who have had multiple exits um or built up a large platform.

At Beverly Hills, we had someone who built up a $900 million a year egg business. You can see that interview within our membership portal. We also had Marcus Ridgeway who got $4 billion from Blackstone and went public and then got another billion dollars from Blackstone. We interviewed him on stage. We've had probably 60 to 75 of these interviews on stage over time and they're some of the highlights of the whole event.

So, I hope you enjoy uh Tom Handler. Let's welcome him to the stage. All right. So, Tom has been in trust and estate and taxation work for centimillionaires and billionaires for probably close to or over 40 years now. Um I've known Tom for over 15 years. We met at a Napa Valley family office event and ended up sitting next to each other over dinner and he gave me some advice when I was in the first 2 years of starting the business.

Um and he advises families on setting up their their single family office, on navigating regulatory, tax court, trust and estate, multi-generational, global taxation issues. Uh what else would you add about your bio, Tom? Maybe good for people to know about you. Uh part of their protocol includes asset protection, premarital planning, risk management, liability management, which is a really important for high net worth and high income families.

Got it. And I remember something you told me when I first met. You said that uh you learned back in your college days somebody taught you that you start high by aiming high with your ambitions and then you stay high. Like you you achieve that by aiming high to begin with. Can you explain that a little bit and how that that played out in your career?

Yeah, it was really good advice and he said that uh when you position yourself in business or a profession or an organization or an association or anything, if you start low in the market and try to work your way up, that's often a very difficult thing to do. And so, you want to target who you want to work with. You want to start high from the beginning. And for me, there were some clear things that came out of that.

So, when I started uh I'd worked in public accounting for 2 and 1/2 years and law for about a year, and I left very early in the going cuz I found out that one, they quote big firms don't pay bonuses. Two, you're going to get the same raise as the other people everybody else in your class. You just work more hours, bill more hours, originated more clients than about half the partners, published an article, wrote a white paper how to fix their stupid computer system, and put in PCs, which would save a bunch of money. I I wrote at the time I could code in DOS, Fortran, and BASIC.

That's how old I am. And uh one of the things that I had to do is I couldn't afford the caliber of office that I wanted for the client base. And so, I had a nice office, but it wasn't great or award-winning. It wasn't a fantastic building. But I joined one of the most elite, stunningly beautiful business clubs in Chicago because one of my professors was the head securities partner at Kirkland & Ellis, one of the top firms in Chicago.

And he said, "Look, we're going to let in 25 guys under 40 who qualified, whose grandfathers and fathers weren't members. So, this is a chance." It was a big rush party, 100 people. We basically got in despite the fact that nobody in my family graduated college, and we're second-generation Americans. Uh they got over that and let us in.

And so, I'd go to this club, and here's billionaires and CEOs of major companies. Everybody looked like George Harrison with only better-looking, more tan, and far richer. And so, I'd walk in the room with these clients, and everybody was 70 years old. It actually gave me credibility. And we had board meetings there. We had client meetings there.

So, until I could afford top-notch offices competitive with the top five or six firms in town, nobody saw my office other than my good friends who would tell you what an embarrassment it was. Uh but once we could afford it, then we got there. We started off by writing uh I was a private client partnership guy in accounting, and so that was a very hot area because every single deal had to have a tax opinion. And I was good at writing those tax opinions, and that put us on the map because if someone's investing 5 million a deal, who's going to get it?

His financial planner, his investment advisor, his lawyer, his CPA, and of course the rich family. And my my name is on all 90 pages of the opinion, so it's a great way to get you out there. It positions you at a very high level cuz only top firms are typically capable of writing those kinds of opinions. So it was a game-changer.

Awesome. Um and for anyone standing in the back, uh we do have like 20 chairs up here front. So if you prefer to stand, that's great, but if you want to sit, there's there's plenty of chairs here. Um Tom, I remember you telling me a story once, like if I'm not mistaken, I think you like you live in the neighborhood where Home Alone was filmed or near there, but I remember you saying that you got like the smallest broken-down home that you could barely afford in that neighborhood, and then the your neighbors became your clients, and then you ended up like having a nicer home in that neighborhood.

And you've brought up positioning twice already. Is there anything else related to positioning that you've done that's just been very powerful and very effective for building relationships in the family office space that'd be helpful for any investor or founder to hear? Well well, two things. Before I moved, I did all the research on average appreciation per property in all the suburbs in and around Chicago, which ones had the highest appreciation over the last 30 years, which towns had the highest per capita income, average income, housing value, education level.

And for example, in my town the most common title was CEO. Second most common title was CFO. Third most common was managing partner. So two doors away from me the managing partner of Baker McKenzie, next door to me the managing partner of Price Waterhouse. Four doors away, the global PIC of Price Waterhouse. President of Baxter Internationals behind me, the guy who ran the Smith Barney office Chicago was next door.

The guy next door was president of Manny Haney Bank. His wife is the number two venture capitalist got a little bank. They're all in triple lots with mansions and I'm in a little tiny third of a lot with a little tiny house and a one-car garage and after living in the city with 25-ft lots, I thought I was landed gentry, but we were the youngest people living in town not living with our parents and everybody figured that out and we moved I moved in I was 29 years old and we bought this house which today would be about a million eight and people we get invited all these parties and people would say literally, how did you get here? You you live on your own, right?

You don't live with your parents. How did you get here? And this happened several times at cocktail parties and we weren't there a month, we get invited to the McCaskey's Christmas party. They own the Chicago Bears and other stuff. I'm like, why the hell they inviting us? We are nobody.

Turns out he's super intellectual kind of professorial. I talked to him for like an hour at his own party while all the other guests, you know, hang out with each other. It was just a great opportunity and through that group, not only did I get hired by a bunch of those people, the network was invaluable. My first family office was a five and a half billion dollar Japanese family that's now in the 45 billion dollar range.

So, they were top 100 in the world then and they still are today and I met the guy by accident at an ambassador ball with counselor generals and ambassadors and I said, I'm sorry, you know, he's with the Japanese ambassador. I said, I'm sorry, we I was at the Korean ambassador. So, I'm sorry, we haven't met. I'm I'm Tom Handler and he's like, "Oh, Tom Handler of Winnetka?"

I'm like, "Oh, of course." So, they've already done credit checks on me, background checks, taken a video video tour of my home and they know who I am and they haven't met the damn family yet. So, positioning was critically important and the fact that I was in town, we did it cuz of the schools. The their the high school has been rated the number one high school in the country and it's not a private school.

And my kids soared through SMU, DePaul, Vanderbilt, and University of Denver. Well, my one son started with 30 credits. He had a a year done before he started. So, it ended up being a great place to be, though my real estate taxes are so unbelievably high, I just shake my head. And in 2023, Illinois was the highest overall taxing state.

We're typically in top three or four. So, you know, New York, California, New Jersey, Connecticut, Minneapolis. Hawaii's not far off. Yeah. And we're we're the most bankrupt, though. So, to be the highest taxing and the most bankrupt, that takes skill, incompetence, and uh and illegality at a record-setting level.

I found that the uh the best way to build wealth is to combine like proximity to wealth and being around it, uh super intelligence, and then scaling strategies. And I think like Tony Robbins said he made $400 million off of one deal just by being in the right network. And I think what a lot of people overlook is that it's not just oh, well, you knew the right people. It's that by hanging out with those people, you see how they think, you see how they act, you see how they built their business, and then you end up acting more like them almost on accident by being around them, I find.

So, related to scaling strategies, how were you able to grow from just being a you know, you could have been just an independent attorney to having you know, dozens of of people in your law firm and working with hundreds of billionaires and centimillionaires? I mean, what were the scaling strategies that you adopted from those ultra-wealthy clients? So, I think we executed that fairly well. So, we're a little bit like Forrest Gump, right place, right time.

But, I knew going into this most purely tax attorneys or purely trust and estate attorneys don't have much background in the other and have no background in asset protection, marital planning, and similar issues. And they don't have a lot of financial sophistication. I mean, they don't get derivatives and structured products and synthetics and some of the really high-end things that affect these wealthy families on a regular basis. So, I knew early in the going almost all of my initial people were CPA, MBA, or lawyers with masters in tax.

They're all quants. And the higher you go in the market, the higher the net income, the higher the estate, the more important that quantitative orientation is. We're running internal rates of return after tax, Monte Carlo simulations, cuz that's what you need to do. Cuz if you if you make a little mistake with a $10 million family, it costs them 100,000.

You make that mistake with a billion dollar family, I lose my home. So, there's a different level of care warranted, and you've got to do the economics. You know, you come out to well, here's four alternatives, here's the pros, here's the cons. And the patriarch could look at me and go, "Really? I just paid you X, and you're not going to give What would you do if this were your family and your business?"

And that's what people want to hear. And so, I would do this, and here's why. Here's the numbers to back it up. Here's the qualitative factors. This is not a close call. This is close to a no-brainer as I can get.

How's that? And people want to be told the truth. And I learned very early in the going not to blow sunshine at these people. We had lots of We still do. Have hundreds of celebrities, actors, actresses, models, authors, race car drivers, at professional athletes. Three of the top 10 scorers in the history of the NBA are clients.

We have two quarterbacks with nine Super Bowl rings worth over 100 million each, and they're still playing. So, we've got extraordinary people, and everyone doesn't tell these people the truth. Most Most lawyers will never walk by a billionaire, much less get hired. There's only 5 to 6,000 on planet Earth, depending on whose numbers you you believe. I've personally represented over 130, and my firm has represented more.

And I will tell them exactly the truth, whether they want to hear it or not. And people need to know that. Cuz these athletes in particular, the agent won't tell them the truth, the business manager, everyone. It's the only big guy they've got, so they don't want to lose him. They They'd rather shoot their mother than lose this client.

I'm like, "I've been fired by four. I'll be fired again." But, you know, my dad said, "Look in the the every night, and ask yourself, did you live a good today? And if you didn't, fix it and don't ever do it again. And I look these guys in the eye and say, what on earth are you doing?

This This one guy, $7 billion self-made guy, 62 years old, two public companies, the largest public company in space, and he was brilliant and a really good person and kind. And every time you'd call him back, he'd be like, thank you so much for calling me back. And I'm thinking, who the hell doesn't call you back? But anyway, this guy's buying a company and he's got in-house counsel, local counsel, and me.

We're like the tax estate advanced planning lawyers. And he's buying this company and I'm like, what are you doing? He goes, well, we did the due diligence. We're going to buy this manufacturing company. I'm like, you own 140 businesses, none of them have anything to do with manufacturing. You don't have a single person that knows this space.

What are you thinking? Well, I'm going to hire a C-suite. I go, by the time you hire the C-suite, they're going to be a year down the road. How about this? How about you hire the C-suite first, you have them vet the company, make sure you bought the right company, they hit the ground running so that your guys aren't running it into the ground while they learn manufacturing.

How's that sound? He's like, I'm not used to being talked to that way. So, well, you got the wrong lawyer. I go, so sometimes doing that is difficult and people don't want to hear it, but no one tells these athletes and celebrities anything. They just think they walk on water. They want to control you.

And I just make it very clear, you know, the big-time celebrity, they're very well like I like you don't make my top 200 list. So, you're not doing me a favor. I'm doing you a favor. I'm trying to help you here and tell you the truth. And if you don't want the truth, then you should go someplace else cuz I'm old and decrepit.

I don't care. And do I look like I need to work? I don't need to work. I'm working cuz I like what I do. So. Right.

We had a uh recently a client told us um almost no one pushes back on anything they ask for and that's what they appreciate more than almost anything is saying like, no, that is not a smart idea. Like, do not do that. And um I think people are afraid to have an opinion sometimes when they're a service provider at a large company cuz you don't want to lose that client. If you work for Northern Trust, you'll get in trouble, right?

Well, my clients have asked me, please stop telling talking about politics and religion." Which I will never do. So, I take great fun at poking the clients, particularly if I think they vote the wrong way. Uh and it's probably not the brightest strategy. Well, like if you your guy can do better, you should hire him. In the meantime, you're going to get to listen to me, whether you like it or not.

So, you've probably worked on like well over a thousand family office structures, trust and estate structures. Approximately 600 family offices. Okay, great. So, with that volume, what do you see that you think most investors miss and that the people should be paying more attention to? Pro- probably two things come to mind. First, these are complex structures and they're difficult and they require time and attention.

They require almost as much time and attention on the part of the client as it does on ours. And so, it's not really a a destination, it's a journey. These things constantly evolve, you've got to tweak them on an annual basis. Income tax laws change, asset protection laws change, estate laws change. So, you've really got to maximize these and optimize them every year.

And the time you spend that one day a year with your advisors doing it will result in a huge payback. And when I started practice, when I was still an accountant, uh IRS district director left and wrote a book, Everything You Want to Know About the IRS But Were Afraid to Ask. And there's a whole chapter in that book about picking tax advisors. And I thought this is complete nonsense at the time, cuz I didn't know any better.

And he said uh he ranked, you know, from 1 to 13. Here's who you hire as a tax advisor. Number one, tax lawyer. Number two, tax CPA. Number three, tax actuary. You know, all the way down the list.

And uh in that chapter, he's a comment and the comment said, "Whenever you go to a new town, find the most expensive tax attorney you can find and give him a blank check. Cuz if he's even competent, if he doesn't save you three to four times your money in 10 years, he didn't try. That's how compelling this is. It is There are gradations in the law.

There are fixed things. There are things that are unclear. There's a penumbra. There's places you should not go. And knowing where that is a huge deal. And when I tell the client sometimes what these fees are, they're stunned by the magnitude of the fees.

I'm like, "Look, I'm going to be honest with you. This is what it cost. Like the last five billionaire families got double that back in income tax savings alone on the structure. And this isn't an income tax project. This is an estate planning as protection or business planning project. The income tax is the icing on the flipping cake.

That's how compelling it is. And the clients are always focused on what it costs. And I'm like, "It doesn't matter what it cost. Look at where you are. You're sleep better night. You have better asset protection.

Pre-marital planning that actually works. Better income tax, executive comp and benefits. And your estate plan, unlike the gentleman before who said they're half undone." That's exactly right. We've never encountered a billionaire family where we couldn't find at least one egregious flaw, typically several. Why is that?

Cuz it's hard and it's complicated. And you got to work with the team. And you've got to monitor and stay on top of it. And to not do that is just a mistake. Right. Got it.

So, um up till now you've talked about, you know, power of proximity, positioning, having an opinion, like giving clear guidance to the client, not caring too much if you'll lose it over that opinion. Um what else have you learned about serving investors, centimillionaires, and billionaires that um maybe is unique to your position after working with so many of them? Well, I I think what ends up happening is that whenever there's a good transaction out there, and several were mentioned in the earlier, you know, presentation, um there are several ways to do that transaction. And the vast majority of lawyers and accountants and financial planners will just do the transact.

And doing it is better than not doing it. But, doing it at a high level is far more impactful and optimizing that strategy. So, in the basic stuff, you know, your will, your trust, your umbrella policy, your car insurance policy, you want to make sure you have uninsured motors, but it's hard to mess up that foundational level stuff. There's like a checklist of 50 things that every millionaire should at least look at.

Doesn't mean you have to have, but you should look at it and make a decision whether you want it. And when you move up to the next tier, that advanced tier, everyone doing the stuff for the regular millionaires also wants to do that work. They don't do a high enough volume of it to be very good at it, and they don't have the background to be good at it, and they don't work in teams. So, you'll have three estate planners on a project or three tax guys or three corporate guys, and that doesn't work.

You need an advanced planner to run the project, someone who's truly an expert of both tax and estate. There's maybe 35 people like that in the country, if I'm being kind. And then, the team's got to have international tax lawyer, domestic tax lawyer, exact comp benefits or ERISA lawyer, a multi-entity business planner, corporate lawyer, and a trust and estate lawyer. You just need them on the team, and you can't get the right answer for these big families without that team, and that's what nobody does.

The law firms and accounting firms are siloed, and I worked on three of the largest law firms in Chicago when I was a tax guy doing the tax return, including one where my uncle was a partner for 40 years until he passed. And uh there's these anti- uh anti-competitive provisions in over 90% of all firms. It's a huge conflict of interest, and if I reach outside of my tax silo, I lose a ton of money. So, let's say I'm a tax lawyer bringing an estate plan for a business owner.

I should bring in the estate planner and his associates cuz they're better and faster at it than I am, and their rates are lower. And I should bring in my corporate partner because that guy needs a business buyout, a succession plan, an emergency plan, you know, whatever we need to do. And if I do that, at the end of the year, I get 15 20 cents on the dollar. But if I hog it all myself and use my junior tax partner, my senior tax associate, my junior tax and my tax paralegal, my tax law clerk, at the end of the year I might get 60 cents on the dollar.

So in a good economy, nobody does it. In a bad economy, nobody even considers doing it. And to say how bad this is, at one firm that no longer exists, I asked the partners in the family office group, and this is the top family office accounting group in the world in a big eight firm, and they only got 4% of their business from their other partners. To tell you how bad that internal conflict is.

And you can't get there. You can't get the right answer with three estate planners. And that's sort of the biggest flaw in the industry is hoping that you can get there. So to optimize these structures, it not only does it take a team, but you need a pretty advanced attorney. Whatever that attorney costs you, you should pay it.

If I die tomorrow, you find the most expensive guy around. I'll give you a list of who these guys are cuz I've tried to hire them all. Uh you want to go to that person cuz they make a huge difference and the payback will be multiples of that. Multiples. Got it. What's the number one mistake you see uh gen one founders um making when they bring in generation two?

Regarding the structure or just mistakes in general? Well, nepotism in general is kind of a problem. So um it's one thing to have the kids working there and I've made mine stuff Christmas cards and take out garbage and do filing. And my oldest actually did memoranda research and some court appearances. But ultimately, you expose them to the business and then you typically want to get them somewhere else.

So families, family businesses in particular have rules. My rule is three years somewhere else. So my daughter now works for me. My wife was the CFO Craft, now works for me very begrudgingly. She's surly, insubordinate, doesn't listen. So uh I'm going to fire her for the second time.

I fired her 30 years ago because she's a pain in my butt. I said, "Look, we're we're partners at home. We're not really partners in my law firm." Which she can't really make that distinction, but we we met each met each other about 50 years ago. So, I'm I'm managing to hang on to half of my stuff just by the skin of my teeth, but so far, so good.

And uh now I've got a younger son who's got an MBA masters in accounting from Illinois, top program in the world. It was when I was there, it still is today. So, he's a Pricewaterhouse. They had like 18 tax groups. He's in family office private client. I started laughing going, "He probably knows more than his managers."

So, this should be entertaining. But I said, "Look, if you want to become a Pricewaterhouse partner, I'll give you five billionaires with huge accounting needs. I guarantee you'll make partner and I'll support you. But if you want to work with me, we have far better clients. We make We pay almost double what you're now making for your position.

So, let me know if you want to go down that path in the future, but you do whatever you want to do. You don't want to work with me, I get it, but I'd love to work with you. So, if you want to, I'm your huckleberry, and if you don't, I'll support your efforts along the way." Great.

Um I think that's helpful to a lot of people here in the room that have kids that are in college right now. I think it's probably like the average of our members here. Um what is a contrarian view you hold about family offices in terms of how they should be run or structured, anything that goes against maybe what most people read in the monthly white paper that comes out of a private bank? Yeah, two two big things.

Um One relates to the structure itself. And right now, almost 90% of family offices are C corporations, and the balances are S corporations or LLCs taxed as partnerships. And the structure ought to be put in place to do what you need to do initially, and then ultimately, there's a presumption that where you benefit with the C corporation structure down the road, but you may not want to start there cuz you may may want to pass through all the startup expenses, which in the first 3 years, that's when you spend all the money. The legal fee goes down to 5% in the fourth year unless you buy a business or do something.

So, you want the benefit of all those deductions. Similarly, if you're buying a jet, you know, we had a client, we set the family office as an LLC partnership, bought a $14 million jet on December 15th, used it three times for business, wrote off 100% of it, flew the thing for 5 years, and sold it and made a $4.5 million profit. Life is good, right? So, the the benefit of that come into a taxation could be very valuable.

So, most people just start as a C corporation, and that's a mistake. And then secondly, the structure of that C corporation matters, and I'm not going to give this one away cuz this is one of my best proprietary strategies. The vast majority don't understand the asset protection or the importance of control and liability management in those structures. And so, 95% of what's out there are flawed.

And most billionaire families are poorly structured. They're out of date, they're not optimized, they weren't well done to begin with, and most of them need to be gutted, others can be fixed and cleaned up to get them where you want to be. But it's it's uh relatively a mess. And then secondly, I think in general, families fail to appreciate and their advisers fail to appreciate the level of risk to which they're subject across the board.

And I think that's a great commentary on human nature. You know, I could wake up in the morning, fall out of bed and die. I could slip in the shower and die. I can fall down my stairs. I pull out of the driveway, some kids blow in the street, I'm dead. I get to my building, elevator There's nine ways to die before lunch, and if you think like that, you become a garophobic.

So, we all think it's never going to happen to us until it does. And therein lies the problem. So, out of these families we've represented, seven have gone fully bankrupt cuz they didn't listen to us. We advised people to get 10% of their net worth out of the United States into a trust that can never be busted, never has been busted by any government on Earth.

And these are countries, legitimate countries with treaties with the US, typically British Commonwealth with unique sets of laws. There's about 30 and you can rank it from 1 to 30 without any issue on where they are and I'm in the number one jurisdiction. 10% of my assets are parked there. Which means I'm not going to have my lifestyle, but I'm going to have a nice house, a car, and enough money to live if everything goes south on me.

These families didn't do that and one family, an Iowa family, did every single recommendation we made in about 20 years except they were freaked out by South Dakota trusts and Delaware LLCs. I'm like, you know, we're we're not going out of the country. We're from Iowa. I'm like, okay, I understand, but you ought to think about this.

Well, unfortunately, that family was over 700 million and went bankrupt, full bankruptcy. Our biggest family going under was 1.3 billion and 10 years later they're now at about 30 million. They called me and said, "Do you remember us?" I go, "How could I forget you? I lived through that nightmare with you." He goes, "Well, we're coming back, you know, we're at we're at 30 million."

Uh the 700 million dollar family is not coming back. The next was a 520 million dollar family. That company was number one on the Inc. 100 and I just got a call from him about 6 months ago. Same thing. Tom, do you remember me?

I'm like, "Bill, you've got to be kidding me. I we we went through hell together. Of course I remember you." He said, "I'm I'm coming back. I got a new business and I got about 35 mil already and I think I'll make 50 on this one and all that stuff you did, I want it all again." I said, "Are you sure?"

He goes, "Absolutely. I'm coming back." And then the other families were all the smallest was a 50 million AUM. That was a class action and all the others were 100 to 300 mil and all for different reasons, but you want to protect yourself because unfortunately bad things happen to good people. Got it. We're uh we're technically over on time, but I want to ask you two more quick questions.

So, um number one mental model that you find within centimillionaires that every founder and investor here in the room might want to consider, you know, using more often. Like some sort of mental pattern, action pattern you see among your best clients. Yeah, I would say three things. One is very please this people tend to work a lot.

They tend to be very bright and read a lot. And they tend to plan and have written documents. So, when you write down your plan, your business the business plan for the family office, the business plan for the operating companies, the the plan for the kids, what's the estate plan all about? Getting that down helps it inculcate.

So, it's like your automatic pilot is kind of part of who you are. And so, you're work work late and you're thinking, "Gee, I really really don't want to be here. This sucks. This is me in law school. I'm like, "Why am I studying this garbage? Nothing I do is on the bar exam."

Like, "Why do you have to learn all this crap that I have no interest in doing?" And it'd be 1:00 in the morning and my place wasn't air conditioned. I was miserable. I'm like, "Ah, screw this. I'm going to bed." I'd look up and on my roll-top desk I'd have I had a SL Mercedes, you know, a Lamborghini and a Ferrari Matchbox model and then pictures of four mansions I took when I was traveling.

And so, I'd look up and go, "Okay, that's why I'm doing this." I'd put my head back down and read the crap I didn't want to read. So, having that future mindset is the name of the game. And then finally, they are very good with communication. Two parts. The input they get, almost all of these people have a board or a group of friends or fellows in other businesses that they bounce things off of.

And Jack Welch said that was one of his secrets, that he had a sounding board of others he would bounce things off of. And I've seen some of my most successful clients, they'll call every member on the board, have one-on-one conversations, and vet the strategies. And then secondly, when and how do you talk to the family? Okay, communication is critical.

And there's a great quote, like the the greatest myth of communication is the idea that it actually occurred, when in fact it often doesn't. So, I don't know when the time to talk to the kids is. It may not be six, but it's not 60. The third richest man on Earth, I had dinner with him shortly before he died, and he left each of his kids, who were in their 60s, a half million each.

And I said, "Are you sure you want to do this?" He goes, "Ah, it's a it's a half million more than I got." I go, "I realize that, but did your children know that you're in fact you're disinheriting them?" He goes, blah blah blah blah. And I finally backed off before I got fired. So, the bottom line is he gave everything to his foundation.

The kids got They had no idea. They were shell-shocked that they got virtually nothing out of this dad. And so, that communication is critical. The kids need to know what the rules are. And we kind of talked to them in high school and said, "Look, we're not buying you a house. We're not buying you a car.

You're going to live your life. If you don't want to study, don't study. You don't want to work hard, don't work hard. I'll come to your trailer and I'll bring dinner and a bottle of wine. It'll be great." And they look at me like, "Really, Dad?

Come on." I go, "No, really. You make your own choices. You saw your mom and I, we killed ourselves. That's how we got here. This wasn't easy.

Most people can't get here. So, we're proud of what we did, but we killed ourselves. So, you live the life you want. I don't care. And we'll support you whatever that is." It's like uh Shaq talking to his kids.

He says, "I'm rich. You're not rich. Like, I'm the one who's rich here, right?" So, um last thing uh real quick, um for investors here looking to acquire a company, they have to develop a relationship, or a founder here looking to do a deal with a publicly traded company, or a family office, what have you learned works for closing the transaction, building the relationship?

What is the difference maker of somebody engaging you besides proximity and positioning, which you're obviously good at? What else do you do to to follow up and close that deal and get the contract signed? This is relatively common sense, but it's not done a lot. So, as an accountant, I did what's called an acquisition audit, where you go through a company that you're about to buy.

You go through the books. And I know my job. My job is to knock the price down. Find out everything they messed up, where the reserves aren't right, the accounting was bad, they slipped up on something. That's the job. My job is to get that price down.

Then as a lawyer, this I did a variance same same job. Variance analysis, I'm going to look at all their documents and go, "There's no minute from this. They didn't approve this. This required bank consent. They didn't get it. This required investor consent.

They didn't get it. The board missed this meeting. This guy, you know." So, I'm going to write this long 15-page memo of all the junk I found to make them look bad, and that's the way to knock down the price. So, the strategy is the flip of that. Before you go to market, start a road show or start talking to people, clean up the stuff.

Bring someone in who knows what they're doing. One of my clients from Winnetka, a neighbor, hired me. It turned out to be become my tennis doubles partner. He He played tennis for uh what some American University in Washington, D.C. Top-notch player, and as were his brothers. And uh the the heck was I going with that?

I totally lost my train of thought. Oh, so what So, from day one, this company had done an ESOP LBO and taken company number one public. They're now on company number two in the same industry. They had one store. And I didn't even know what I do. We're just social friends and tennis buddies.

And he's like, "I'm going to take this company. I'm going to go to venture capital." And I go, "You're going to go to venture capital with one company?" I said, "First off, you're going to lose your company. They're going to put in benchmarks. They're going to take it from you.

You're going to lose your IP. The concept's gone." So, who the hell "Well, our lawyers We've used this firm for 40 years." I go, "Your lawyers don't know what they're talking about. This is not what you do." He goes, "Well, what do you do?"

I go, "I'm a lawyer." I said, "Talk to these three guys that talked to you. They'll tell you the same thing. This is a giant mistake." So, he backed off, and we did private raises, two sets of them. Two venture firms came in.

Uh one, Haggerty Peterson. Bill Haggerty's now the senator from Tennessee. He was the ambassador to Japan. He ran Sununu and McCormick's fund before his own. And then um William Blair in Chicago, and their guy was a Harvard MBA lawyer, a board member. And they only had enough to have a board seat, but couldn't control the company.

So, the goal was keep control of the company and from day one he had independent public CPA audits from the day the company started. He had an outside board from day one that were compensated. He called the board on every major decision and all the documents were buttoned up. So, when they went through that review, people came in and said, "This is run better than most public companies."

They got a premium on the purchase price. So, that preparation and doing that stuff, if you want a serious exit either with a big company or a merger, reverse merger into a public company, get acquired by a public company or some big player in your industry, the cleaner it is, the better it is. Nobody wants to inherit a mess. They don't want to spend the first year cleaning it up.

So, that time and effort you put in to fixing it will pay back in dividends. Awesome. Great. Let's give Tom a big round of applause. Thank you. Thank you.