The Growth-Drive Hot Seat

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Hi, this is George Sandman. I am the founder and CEO of Growth Drive, and this is the Business Advisor Hot Seat. In the hot seat, you're going to hear from industry leaders and thought leaders as they share their victories and failures building advisory businesses, helping you and your colleagues, and helping clients get the results they want.

I'm also the author of the Growth Driving Advisor, Proven Strategies for Leading Businesses from Stuck to Best in Class. And in this book, we share a methodology and process for leading clients to growing profits and transferable value. It's available on Amazon and Kindle. And if you like it, please be sure to leave a positive review.

George (00:49)
This week, our guest is my friend Francis Brown, who's a strategic advisor with Brown Advisory. Francis is an attorney by training. He is a wealth advisor by avocation. He is a member of the AM &AA. He is a credentialed exit planner, one of the most knowledgeable and deeply thoughtful guys I know, a good friend, and a great guy. So here we go.

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This episode is brought to you by Growth Drive. Growth Drive is the number one best -selling business advising platform with training, technology, and support you need to get the success you want. Find a way to engagements, expand your reach and impact, and build a thriving advisory business based on delivering client wins. Growth Drive, find out more at growthdrive .com.

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Okay. Well, welcome everyone. And this week, our guest in the hot seat is Francis Brown. Francis Brown is with Brown Advisory in Washington, DC. No relation. And Francis, you and I have known each other for a long time. You want to just give yourself a little introduction. You'd probably do a better job than I do. So Francis Brown, I am a strategic advisor

work with high-net-worth families, clients, particularly business owners on trying to help them manage their wealth and prepare for that next phase, including legacy planning, advanced planning, and particularly for business owners, what they're going to do in anticipation of some future event. Yeah, absolutely. And you're a CBEC, right? A certified business exit.

consultant. Yep. And I think you and I met years ago when you were with a bank actually at the time. I was. And yeah, we've been working together for a long time. We have some great conversations. You're also, you've participated in our growth specialist certification. Thank you. And actually, you're the guy, we might as well, we were just talking before we came on the air.

You are the man who came up with the, are the, you stopped the certification like, well, wait a second. Who in here is a one and who in here is a five? And you want to just share your perspective on what that means? So I was in a room with a bunch of consultants and everybody was getting into the weeds about what they were going to do to help a client solve a problem. And I had to stop to come for conversation and say, okay, I'm a one, maybe a two at best.

And in terms of the level of involvement and helping a business owner identify and then work towards a plan and ultimately solve that particular problem. And most of the folks in the room wanted to be a four, if not a five. And I said, wait, I want to be a one or a two at best. And so I think that helped frame the conversation and it crossed the various ways that the group was looking to work with business owners about, did you want to be a one or

five in this particular area. Yeah, absolutely. And that's something we've picked up. And anyone who's watched our videos or read it, in fact, it made it into my book. Well, one is someone who wants to talk about, typically just talk about exit planning. Two is someone who wants to educate their client about the value of their largest asset, their business. But they just want to educate. They don't want to do anything about it. Fair, right? And then we have our...

When I say not do, you want to godfather the process or sponsor the process, but you're not going to get involved in... You're not going to roll up your sleeves, lift the hood, and start figuring out what's going on inside the business. You believe in collaborative accountability, right? Working with other like-minded advisors. Who would be a three, an architect, a four, the general contractor taking the blueprint and turning it into a building?

and even the fives, which are fractional C-suite execs. I have that about right, right? Well, it's funny you said that. You've refined it from what we came up with that day, but no, I think that's exactly right. And the point being is that it helped everybody focus on really what we're trying to get out of the conference and what we're trying to get out of helping business owners. Yeah, absolutely. And which is something you guys are really, really good at. You have a proven track record of...

of helping them get where they want to go.

You focus on this, on growing profits and value, but from a wealth advisory perspective, which is incredibly powerful and cool. You wanna just talk about the types of things that you help people and families accomplish? Well, I come at it from the perspective of the bulk of wealth managers.

financial advisors are happy to sit back and say, George, when you sell your company, we're happy to invest the funds, give us a call. And I realized that, yeah, that's one way to approach it, but realized through watching a lot of business owners make mistakes, I'll call predictable mistakes, by getting out in front of the curve, so to speak, and helping them saying, here are some of the mistakes that we've seen others make, and we'd like to try and help you avoid those, because

They're predictable, they're avoidable, just takes a little time and energy. From the business owner's perspective, they're so busy working on their business, they don't ever have time to work in it. So the idea being, if we can get to them, and I'll take it outside of that three to five year timeframe, just get to them early enough to be able to say, here are some things that you should think about. I call it getting them transaction ready, getting themselves and their business transaction ready. So it's...

Well, it's wadable that they would want to create an exit plan or some plan that tells them all the steps they need to go through. I found it more useful to just say, hey, here are the things that you want to do before you go to market. So let's get out of that three to five year timeframe. Because most of them, if you say I want to grow my business to 20 million or X million, that's going to take me six years. But then they get that unsolicited phone call. They go from.

a six-year plan to a six-month plan. And so that three to five-year timeframe went out the door immediately. So by changing that to say, hey, let's focus on what you need to do before you go to market, from my perspective, is a better approach. So the idea being, George, before you go to market, let's help you figure out what you need to do individually. How much do you need to get out of this? What are you gonna do post-sale, post-transaction?

And is your business ready? And as you and I have talked about numerous times, a lot of business owners had to market almost like it's retired, like they're going to sell their house. Right. And it ends up that what your business isn't really ready to get the kind of multiples that you want. So whether you're pulling your business back off the market, or you're being told you're just not ready, uh, there's a lot of frustration out there. So by helping you ahead of the curve, so to speak, we can say, here are the things you need to do to make you.

to make it a better transaction, a better process for you. Yeah, and it's better for the people on a personal level and it's, I think, better on a professional level because these transactions are incredibly stressful, right? Very stressful. Well, and as you know, I think the stats say that for every 10 business owners that show up to an investment banker's office,

let's say two to three are actually ready. So there's a significant category who aren't ready. Even the ones who do go to market and are deemed market ready, they may not ultimately end up getting the results that they wanted. So by spending that time ahead of, by helping them ahead of time, it's identifying those obstacles, those issues that potentially derail their process or their transaction.

So the idea is to help them have a better outcome. And so it's ultimately better for them. I think it's ultimately also better for a wealth management firm, because if we can help you have a better outcome on the front end, our interests are aligned. There's a lot of advisor, oh, what's the term?

Bias maybe is the right word in terms of professional bias in terms of what they wanna do. An investment banker, they're there to help you sell your business, which is what you want them for, but they may lose sight of what you really wanna get out of that and it becomes the A or B, how do you prioritize? Our job is to be there, be that little bird on your shoulder, so to speak, to help keep things aligned in terms of what you wanna accomplish out of that transaction.

That's interesting. You're almost like a conscience and a reminder. What's the word? I mean, you're really helping to make sure they keep their eye on the right price. And there's a lot of heartache when guys, when women and men sell their business. There can be a lot of heartache about the process, the price, life after selling the business, all things that need to be thought of. And in fact, can we...

Let's talk about value and communicating value for a second. And it was in a conversation with you that actually, I'll give you a credit for another. So you and I have these conversations and so often you're incredibly intelligent, experienced, et cetera. And which is why we've become such good friends. And you and I have come up with a number of, it was based on one comment that you made that we ended up with the

big pyramid that has the, here's your business, here's your freedom from the business, here's your family, your stakeholders, your employees. That was one conversation and that gets used like crazy out there. The other one though that's close to home was you and I were having a conversation about how to communicate value. How do we help a business owner understand that, sure, you've created an asset that could be worth $20 million.

but you can only monetize 12 million of it. And that's a very important conversation to have, right? I mean, that's at the heart of the services that you provide. Well, a lot of that came, I'll turn that credit back around because one of our original conversations, you said that business owners looking to go to market, they can easily get a sense of the financial viability of the firm, you know, based on traditional methods, but nobody ever really talks about the-

quality of their operation and they won't find out about how poor the quality is until they get through due diligence. And so, yeah, we're not right or not. Yeah to your point, they're not so really needed to focus on both Is there to be able to help them make sure that the business is transferable sustainable and ultimately sellable? Yeah. Yeah, I I'm obviously in deep agreement with that comment and uh and leading them

a positive way to understand it. Listen, just because you can't monetize the value of that business now, let's be aware of it. Let's look it in the eye and then let's start looking at ways that you can do things that you can do about it. And I know that you do not get involved, or correct me if I'm wrong, but you do not get involved with here's what you can do about it, other than to say, here's some resources you might want to consult people, processes, et cetera.

your process helps people connect the dots to understand here's the business value or here's what I have the business that has that relate to my personal goals. And being able to connect those two dots then creates the motivation and the urgency for them to say, okay, here's why I wanna spend the time bringing in senior management, right? They know what intuitive that they need to, but ultimately being able to connect those dots all the way back to their financial viability for their family.

is really significant. And because they're so busy working, it's not always easy for them to see those dots and how they align and how they need to be connected. Absolutely. And, man, I just lost, I just, I had a, you just hit on a point that I has now left my head. But as they're having this, so you, one of the things that you do so well is to

lead what we call the growth conversation, which is, hey, what does this business need to deliver? Where does this story go? Can you comment on that for a sec, how you start these conversations? I think there are a lot of people who know where they want to go, but maybe haven't really

ever find that approach to be able to say, what are we really trying to accomplish here? And that may sound, you know, trite to a certain extent, but until you really understand, is this the problem we're trying to solve? I mean, business owners have got numerous problems, right? And so as a matter of solving problems, they're great ideas. And I think if presented with I can save you $10,000, or I can find you $10,000, most of them are going to focus on, well, let me save the $10,000. So they're interested in solving problems.

So to that extent, if we can help them understand, these are the different kinds of problems you have out there, which one of these do you really wanna solve? Is it a compelling problem? What's the cost of sticking with the status quo? And then being able to align that to all the other dots of how that helps them accomplish their goals and objectives that really creates the urgency for them to wanna do something about it and the motivation.

to be able to stick with making whatever improvements they need to. And the example I was given before was bringing in the senior management team. So why do I need to do that? Well, they know they need to do that. But as they can see that will help them ultimately sell the company and not have to stick around if they don't want to, or just makes the company more valuable. They intuitively know that, but having that sense of urgency makes it real for them. Yeah. It provides the emotional fuel.

And it's interesting because what you're describing is helping them understand that they need to create an immortal business. Business is going to go on to be bigger, better, go on to greater glory, if you will, after they've left, which is sometimes hard as potentially the founder or as the CEO to understand. You need to create something that's going to be better.

leave at some level the accountability stack. It's something we, a conversation we also had during your certification workshop that we now have in each certification workshop, which is for ourselves, let's talk about, do we want to do it? Does anybody in this room think they're going to retire? Or like retire, and stop working completely? And generally speaking, no hands go up, right? I mean, I'm never going to retire and stop doing this stuff.

I am working hard as you may be as well. And as our business owners typically are on working on their own terms, doing the work they love on their own terms, for the amount of time they want to invest. And the name of the game becomes creating options. How do we create options for our clients?

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This episode is brought to you by Growth Drive. Growth Drive is the number one best -selling business advising platform with training, technology, and support you need to get the success you want. Find a way to engagements, expand your reach and impact, and build a thriving advisory business based on delivering client wins. Growth Drive, find out more at growthdrive .com.

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Yeah, I think it is about creating options for them. And a lot of times I don't think business owners have the time to reflect and think about where do they wanna go with this? I won't get this right, but I recall seeing a book years ago that talked about why do people get into business? Why do small business owners start their ventures? And a very small segment of them get into the business, the sole reason of creating an asset based on a rock solid idea and of growing that business.

with the ultimate goal of selling that business. I think a lot get into it for the sole reason of, hey, I'm pretty good at this. I have a technical expertise and I'd rather start my own business than work for somebody else. And I think that's a significant portion of the segment of people who become business owners. And without that drive and motivation to say, I'm doing this for X number of years to hit X price, it's some of it's lifestyle, some of it's just personality, but they're the ones I think we can do a lot for

They're in the business for the sole purpose of being in business, but haven't really thought about the end goal. And as you, if they contemplate those ultimate transition of that business, is it going to family friends or are they going to sell it? A lot of them are pretty indifferent. Yeah. They want to monetize that. But um,

how they think of that in context of their overall family. It's the golden goose that's laying the golden eggs. And is the goose more important than the eggs? And a lot of them hadn't really thought about that. So a lot of those conversations, it's about what problem are we solving? Is it about the business? Is it about something to your family? What are you ultimately trying to do with this? And I think adding value is helping them get context for those conversations. They actually wanna do something about it. Yeah.

It's funny, you remind me that you and I were together at the Business Enterprise Institute, BEI's conference in Denver here in August. And we ran into Ali, who is going to be a guest, Ali Taylor, who's going to be a guest on this show here in a couple of episodes. I interviewed John Brown, that's publishing right now. And Ali works...

You've worked with her in the past, right? Yes. Mm-hmm. And so, Ali Taylor, ladies and gentlemen, is a very specialized psychologist who focuses on business owners and their families, right? And that is going to be a fascinating interview as well. And can you just describe how, so you're a wealth advisor who focuses on the business as an asset and helps them understand their options for their personal and professional goals.

Where does an Allie Taylor fit into this story? And what impact does that have? How do your clients receive this level of attention and advice? Well, if you remember, so you told me you were going to be in Denver and I just happened to be there. And we were having breakfast and you said, oh, let's go upstairs. Well, I found out Allie was speaking. So I said, well, let's go in and see her session. Thanks for the introduction, by the way. You're welcome. I'm still waiting for my

Um, no, the way Ali helps it, I think a lot of advisors know that the question needs to be asked and they sort of, some of them are okay asking it, but do they really want to solve the problem? So to the extent is there something holding a business owner back from growing their business or, or wanting to transition a lot of that'll be self sabotaged from unconscious or subconscious, um, things going on. So Ali's there to actually.

identify and help create a path for that business owner to solve a problem. Whatever is holding them back, preventing them from making that next step. And a lot of them don't know enough about themselves to know what's holding them back. And she's there to be, she comes in to help in those tough situations. I'll never forget a story she told me about a business owner who struggled with transitioning a business to her kids. And whenever the topic came up,

she would break into tears. And the issue that she was struggling with was that she felt it would look poorly upon her if her kids took the business to another level. And ultimately, when she worked through the issue, she was like, well, as a parent, wouldn't you want your kids to be able to do better than you had? Look what you started the business with and look where you're handing it off to them. So it's just natural that they should be able to take it to greater heights than what you've been able to accomplish. And once she thought through all that,

it resolved the majority of the issues and they were able to make some progress and figuring out how to transition the business as opposed to whenever the issue come up, she would break out into tears. So Allie's there to really help business owners and advisors figure out how to, if there's something preventing a business owner from wanting to grow a business and or transition it. Yeah, absolutely. And you'd mentioned self-sabotage, business owners do this.

regularly. I hesitate to say often, but they do this regularly. We'll get them close to a transaction and it's almost like they invent some reason to not do the deal. They change. There are a bunch of examples. You've experienced that firsthand. Well, it's self-sabotaging behaviors of getting into arguments or just doing something that does not seem rational.

You can't figure out why they're doing it. Well, there's a reason why they're doing it. They may not realize it, but Ali's there to help break through that wall to say, okay, here's what's going on and here's how we can work around that wall. Yeah, we're stuck as advisors trying to apply rational thought to an irrational, to an emotional situation. Well, I can speak from my industry. We're, you know, as an attorney, recovering attorney, working in financial services firm, we're all...

left-minded risk mitigation people. And Ali helped me understand that the profile for a business owner, uh, they deal with ambiguity better, they deal with risk better, um, they're, they're personalities that make them successful in running their business or sometimes would prevent them from wanting to engage in process of planning, which, which we're all about, right? Plan, plan, plan.

And they don't have the time or inclination. They deal with ambiguity, their risk profile, all those reasons. Yeah, and then not even getting into, in the wealth management world and the exit world, but the shiny object issue, et cetera. It's interesting because I had Tina Corner-Stoltz of LX Council, who was my guest, and we talked about a lot of her.

licensees, customers, our CEOs, people who've sold their business and they're moving on to their next act, but they want to work, as we were saying, on their own terms. Yeah, so helping understand what can come next, what are your options? And I mentioned creating options earlier. Running your business is not the only thing you can do. But ultimately, it's their business and their decision, right? Yeah. So-

What do you do when clients say, listen, I'm never gonna sell this, Francis.

Do you have-

What do you do in that situation, if anything? Well, I think one of the ways I'm able to build trust with clients is it's not about what I want for them, it's what they want for themselves. And by helping them accomplish their goals and objectives, it's about building trust. And so yes, all things being equals, if well service is professional, would I want them to sell it and invest a ton of money with us? Absolutely. But we can get there.

different ways, because if it's a matter of helping that family put a plan in place, it's ultimately going to transition it to the kids. Not only do you have the first generation being happy about the result, having a successful outcome, you have the second generation happy about the outcome. Yeah. Well, it's really about trying to find the right solution. And as a, one of the practice areas that I dabbled in had to spend time in was with ERISA and so it drafted and

served drafted ESOP documents, had served as council and trustees, a very particular about putting an ESOP in the right spot, right? So a lot of people would say, don't do ESOP. So I think it's a matter of an ESOP is the right tool in the right spot. So again, transitioning to the family in the right spot, in the right situation. So yes, how do we find a way to say yes for you to be able to not sell this business and transition it to the kids? It ultimately may not work.

But it's a matter of being able to say, okay, let's figure out how we can find yes, get to yes. And if we can't, then we can look at other alternatives. But if that's what they really want, it's like, well, one, why is that what you want? Because the kids may not want that. They were like, dad, you know, we listened to you come home or mom, we listened to you come home and moan and complain about being a small business owner for years. So why is, why in the world would I want to take over this business and have that life of misery?

And which reminds me of a story of a client we had, it was 82 years old, had taken the business from his dad, grew it from, oh, I forget what it was like 20 million of revenue to well over 500 million of revenue and would not engage in any transition conversations because he felt his kids were slackers. Right. So he gave their 50s. They're thinking about retirement.

And he won't transfer the business to him because they won't put in the hours like he did and he's doing well. They're like, well, dad, we don't want to put in the hours that you put in because we didn't have much of a dad and we don't want to do that to our kids. Yeah. Dad's saying, yeah, I'd really like to transition to my kids, but they haven't earned it yet. And the kids are like, no, thank you. We, we'd much rather have you sell the company and we can go do our own thing. So I think for a lot of good reasons, most people want to transition the company to their kids.

but it's probably not gonna work out. Then they think employees, and then it kind of is the last drop to say, okay, now we'll look at selling it to a third party. I had another situation working with a client where he had promised to give the business or promised to give 30% of the business to his son. Well, when the company was less than 10 million in value, that was okay. Now that it was valued at 100 million, totally changed the dynamic of

what the family had to deal with. So in that instance, dad had to go back to son and say, I need you to release me from my promise of giving you 30% of the company. So we had to figure out how could we make it up, how could dad make it up to some, and we're able to get there. But ultimately he wanted to give that business to his kid. He wanted it to be a multi-generational business, multi-family business, but wasn't able to get there. So.

It's not about saying, no, let's sell. It's about how do we find a way to yes, and then when that doesn't work, we look at other alternatives. Sure, and I love that because you're respecting, you're absolutely right. You're respecting, it's your business, it's your life, and we're here to help you. Yeah. Yeah, and things work out. There's a reason you're as successful as you are. So, very cool. When we talk about, you mentioned bringing in a senior leadership team. I want to shift gears a little bit.

Do you do any work, shame on me for not knowing this, but do you do any work on helping to create accountability and comp plans for those senior leaders? We, yeah, we do, depending on the circumstance. Well, you know, I think about being a trusted advisor, there's an area we'll have subject matter expertise and there's an area where I don't.

but it's a matter of saying, well, let us help you figure out what are the questions that you need to be asking yourself, and that you need to be asking those around you so that we can ultimately find the right resource. So yeah, we'll have those conversations, but more probably it's about bringing in the right technical matter, subject matter expert at the right time. Yeah, absolutely. With every aspect of the business, right? And not getting, and I like what you've just described because you're doing it on your terms, what a lot of you...

we see happen regularly, not that we're overstated, but regularly as people getting pulled into the weeds, not so much in your profession, but more so in people saying, well, listen, I know how to fix that. And they just roll up their sleeves and start fixing it. And that is a place we recommend that folks don't go. Well, and I think I learned this from you. It's a matter of, again, what are we really trying to accomplish here?

If you don't spend the time really looking at the problem from multiple angles, you may not be working on the right problem. That's exactly right. Questions, questions, right? What do we really, and that's what the growth, one of the things that the growth conversation, which is our shorthand for this initial deep discovery that I believe every advisor should undertake with their client to really understand

where does this need to go? And not accepting the first, if somebody says, I want to grow my business, my profits from 5 million to 10 million, we really need to understand why that's the case. What do you think that's going to do for you? Do you understand the cost that this will have in time, in emotion, in capital? Just get deep, deep into that conversation, which I know you do. And yeah, and it's asking...

a thousand good questions. Well, I'm digging at it because you'll get some BS answers and you really say, well, is that really right? Is that really what's going on there? And it may take a while to get to the truth, but the business owner, again, that's that subconscious sabotaging where I think this is what I want to accomplish, but are unwilling to admit that there's something else going on. Yeah. It's-

It's such a fascinating business owners are fascinating to work with. And I think, you know, a lot of what we've just discussed touches on why these are so intellectually challenging and rewarding cases. I was just thinking of a case where when I asked, I pushed back on a business owner and he said, you're right, that's not the reason. And I go, what's the reason? Because my kids aren't capable of running the company. I want you to tell them. I'm like, what?

Are you serious? Yeah, so I ended up having the conversation with the kids that dad wanted to sell the business because they didn't think that they were gonna be able to run it. And how did that impact them, which opened up a whole nother can of worms. But he was at least willing to admit that there was another reason behind his thinking. Well, and thank God he shared that with you because if we think about how that could play out, he was lucky to have you.

So, well, Francis, it's hard to believe we've been chatting for half an hour already. And yeah, this is how our conversations go, right? You know what, if I could, in closing, I ask this of each of our guests, is there one thing, thought, admonition, one thing that you

that either your colleagues, business advisors, or CEOs should do or know when they're thinking about growing and monetizing the value of their business.

Oh, yeah, you'd ask that question and a lot of thoughts run through my head. I think to the one if there's one thing, it's really. Not jumping to solutions with business owners, it's really having that in-depth conversation about what are we really trying to accomplish? I feel like we're, you know, beating the dead horse here. But the reason I think it's so important is because.

Once you find out what the problem is, then you can take an opportunity to look at what are the other possible solutions that might solve that problem before you get to your solution. And I think that's a critical step. So it's not only finding out what the problem is, the compelling problem, but it's then focusing on what are all the other possible solutions before ultimately getting to what might be your solution. So that you can really help them figure out, okay, am I the right person to help you?

Or is there some other solution out there that would be a better fit for you? Absolutely, it's interesting. That's the, you know, what could we do? And there's a range of the possible, and then what should we do? Which is what makes sense in this situation. And as I'll editorialize, business owners, right, see a subject to change without notice. They can disappear from one place on the map and reappear somewhere else.

the blink of an eye, right? It is not a linear process. It is not a linear process. That's right. Well put. Well put. Well, Francis, thanks, man. I really appreciate you sharing your time with us. And thank you very, very much. Any questions for me before we wrap up? I'm all good. Thank you for the time. Outstanding, Francis. Listen, thank you very much. And ladies and gentlemen, ciao for now.

(36:26)
This is George. Thanks. I hope you like this episode. Please subscribe, like wherever you get your podcasts. And if you have two sex, leave a review. Let's the world know what we're doing and it helps us understand if we're delivering value. So thank you very much and we'll see you next time.