Listen to the Succession Stories podcast:
Laurie Barkman and Chris Chaney talk transition planning for business owners.
Many owners do not yet have robust transition plans in place. It feels complicated because of blurred lines between personal identity, finances, and the company.
Answering what personal success means to you is a way to start separating these lines and avoiding larger problems down the road.
If you haven’t yet started planning your business transition, you may find this episode of Succession Stories helpful.
Listen in to learn more about:
- Ownership Mentality
- Blurred Lines Between Work and Personal Life
- Building Financial Buffers
- Successful and Fulfilling Second Chapters
- Why Culture is Key to a Successful Transition for Owners
- How Value Acceleration and Exit Planning Maximizes Your Options
Show Links:
Let’s accelerate your business value. Visit SmallDotBig.com to get your complimentary ValueBuilder Score and work with Laurie Barkman to discover where to invest your time for the biggest return.
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Read the episode transcript:
Laurie Barkman:
Welcome to Succession Stories, insights for next generation entrepreneurs. I’m Laurie Barkman. I’ve spent my career bringing an entrepreneurial approach to mature companies struggling with change as an outside executive of a third generation, 120 year old company, I was part of a long-term succession plan.
Now I work with entrepreneurs, privately held companies, and family businesses to develop innovations that create enterprise value and transition plans to achieve their long-term goals. On this podcast, listen in as I talk with entrepreneurs who are driving innovation and culture change. I speak with owners who successfully transitioned their company and others who experienced disappointment along the way.
Guests also include experts in multi-generational businesses and entrepreneurship. If you are a next generation entrepreneur looking for inspiration to grow and thrive, or an owner who can’t figure out the best way to transition their closely held company, this podcast is for you.
Laurie Barkman:
In this episode, I spoke with Chris Chaney, Vice President at Fort Pitt Capital an investment advisory firm based in Pennsylvania and Florida. The focus of our discussion was transition planning. Surprisingly, many business owners in their 60’s do not have robust transition plans in place. It can feel complicated because many owners face blurred lines between their personal identity, finances, and their company. Answering what personal success means to you is a way to start separating these lines and avoiding larger problems down the road. If you haven’t yet started planning your business transition, I think you’ll find this episode helpful. And I’d love for you to share it, to help others find the content. I appreciate you. Thanks for listening.
Laurie Barkman:
Let’s Re-build your business growth strategy together. Visit SmallDotBig.com to get your complimentary ValueBuilder Score and discover where to invest your time for the biggest return.
Laurie Barkman:
Chris, welcome to Succession Stories. You’re an expert in succession and exit planning, and you’re a wealth management advisor. You’ve been a wealth management advisor for years and years, and I’m really looking forward to talking with you about how you prepare business owners for the eventual transition of their business. So let’s start with you. So welcome. If you can tell us briefly about Fort Pitt Capital Group and share your background.
Chris Chaney:
Oh, delighted. Laurie, thank you so much for having me. I got to tell you, I love what you’re doing with Succession Stories. Closely held businesses are the backbone of our country. And while they’re often recognized as the cornerstones in our community, they fly under the radar for most media. So I love what you’re doing. You’re bringing light to this vital part of our culture.
Laurie Barkman
Well, thank you.
Chris Chaney:
Fort Pitt Capital Group is a planning based money management firm. We were founded in 1995. We’re one of the only money managers in the area. We manage about $3.5 billion dollars with clients in almost every state in the union. And we have a couple of clients overseas. So Fort Pitt’s been very dedicated to working with business owners and helping them to maximize the value of their businesses and more importantly, help them to achieve the financial success that allows them to not only realize, as a business owner, not only to realize the goals of their business, but just as importantly, maybe more importantly, that the goals they have for their own lives. And as you noted, I’m a financial advisor with Fort Pitt Capital Group. I’ve been here for now 13 years after working in quite a number of places, banks, trust departments, that sort of thing, beginning all the way back in 1986. So I have been a financial advisor for a quite a while.
Laurie Barkman:
Yeah. And I’m curious to know if you have any family business history in your background.
Chris Chaney:
Quite a bit. In fact, my grandfather owned a dry cleaning business up in Sandusky, Ohio. His son, my uncle, was a serial entrepreneur, eventually became Mayor up there and quite a long success story. His sons are both continuing that legacy, both own businesses, very successful businesses. It’s been a challenge of course, in this environment, but very successful. Closer to home, my sister has had a thriving business that she owned started, oh gosh, we’re going on three decades. So quite a bit of experience and exposure to a closely held businesses.
Laurie Barkman:
Yeah, that’s fantastic. So you personally work with business owners on plans to help them and transition their company. What do you find most challenging about that? What do you enjoy the most about that?
Chris Chaney:
I’ll focus on what I enjoy the most first and then talk about the challenges, I think. Ownership mentality. That’s the thing I love the most. There is a qualitative difference in the way owners think comport themselves, how they see life. In my experience, and I saw this a long time ago, actually working in various trust departments or whatnot. You always look for somebody who had an ownership mentality, the can-do person who was going to find a way to get it done, who took ownership of the client of the customer of the project. And I would compare that or see a contrast between what I would call a paycheck taker. So a paycheck taker obviously is somebody who, you know, they do a good job, but pretty much whenever their time clock ends, they punch out, they leave. The task may be done. It may not be done, but they’re going to go.
Chris Chaney:
They do a great job. They would probably be the backbone of most companies, but at the same time, it’s the owners, the ownership that really makes the huge difference. So I would always find that one or two individuals who would take that extra step who have that ownership mentality. Now that became more evident because I’ve worked from the very beginning with owners, and you can see a completely different disposition and demeanor when it came to how they approach life, the challenges that they undertook, their willingness to invest themselves. That’s probably one of the biggest things that I noticed is a huge difference between ownership and the paid check taking mentality. If you’ve got an owner they’re willing, they want to invest themselves in what they’re doing. They see it very much as a part of themselves. They understand sacrifice. They’re willing to do the grunt work that it takes to make their vision a reality.
Chris Chaney:
They’re very solution-oriented, they’re problem solver solvers. I love that quote. There’s an old saying that “Every interaction is an opportunity.” It’s an opportunity to win or it’s an opportunity to learn. And that’s kind of how, in my experience, successful business owners take their approach to life. They’re makers, they’re doers, they’re builders and they’re givers. They’re the people who, whether behind the scenes, or in front of it, really are making a huge difference. And they genuinely care about their customers, their employees, their community. Most of them are the lifeblood of their community. So I really love working with owners. But the challenge, of course, is that these are the people who are often willing to do what is needed to get things done. So everybody lines up to ask them to get things done. In my experience, the biggest challenge, and this is the second part of your question, is that most business owners are pulled in every possible direction.
Chris Chaney:
Again, they’re the doers. So when people need something done, they come to them. And oftentimes for owners, because they have such a close identification with their projects, their tasks, their endeavors, there’s no dividing line between their work and their personal life. I call owners firefighters because they’re constantly putting out fires. It is extremely difficult to be able to carve out time for them to address the important, because they’re so busy running after one urgent issue after another. And it becomes a real challenge. So probably the biggest challenge I have is that they’re constantly absorbed with the urgent, and they just don’t have enough time for the important.
Laurie Barkman:
They’re constantly pulled in every direction. Yeah. I can see that. What happens then over time, and we’ll talk about this in a second more deeply is they’re not really working on the big issues that they need to. It’s easy to put them aside and work on the what’s urgent and important, and put aside what’s important, not urgent, right?
Chris Chaney:
It’s exactly right. Yeah. As I said, they’re putting out fires, constantly putting out fires. I love that old story. Everybody’s familiar with it. The big rock story. The professor asked the students, how many rocks can you fit in here? They put in the big rocks. They say, do you have more room? They continually put in more and more rocks that gets smaller and smaller over time. The professor asked the students, what is the lesson learned? And they said, well, there’s always more room. And the professor answers, no, that’s not the case. It’s put the big rocks in first. But what oftentimes happens because they’re so focused on the urgent that they forget the big rocks. So my job is to help them identify the big rocks and make sure those are being addressed first.
Laurie Barkman:
Yeah. That makes a lot of sense. And I also love how you described the ownership mentality. I think we probably can, I know I can, I can picture people that I’ve worked with that were not owners, but they own their process. They owned the outcomes and they had that great quality about them. So if you are truly invested in the business and you have the equity, it surely makes a difference. All right. So let’s transition now to problems. It’s so helpful. I think on this show, people have given me feedback that they really do learn from others’ experiences. And because you’ve probably worked with thousands of companies at this point in your career where you’ve seen, you’ve probably seen it all, I’m guessing. And how do you try to help business owners? What problems, what are the biggest problems that you’re trying to help them avoid?
Chris Chaney:
So let’s kind of go back to the notion that they’re firefighters are they’re focused on the urgent. Another way I like to put it is they’re usually their company’s best employee. They they’re the ones who will do everything it takes to get the job done. And they exhaust themselves in the process. It goes along with putting out the fires. So one of the things I help them do is there are three key elements in every planning process that we need to address. They need to be coordinated. They need to be aligned if we want to make sure that this is a success for the owner, they’re so focused on their business success. They forget that there are two other elements to that three-legged stool. So there’s the success of the business and that’s where they’re completely absorbed. And as I said, the dividing line between personal and business is so blurred for them that the business tends to suck up or absorb all of their energy and attention.
Chris Chaney:
And if they’re growing that business, just maintaining it can take a tremendous amount of effort to grow. It takes even more effort beyond that. And then the more employees that you have, the more that you find yourself managing relationships that often feel like they’re not necessarily advancing the cause of the business, but you need to reduce that friction. If you’re going to be able to continue to be efficient. What some people might call babysitting, but you basically have to make sure that these different personalities, all of whom are essential to your success are working together for a common cause. They’re all rowing in the same direction. But as I said, there are two other legs to the three-legged stool. So you’ve got the financial aspect a lot of times, and this is just a truism, almost every business owner, their business is 70-80-90% of their financial wealth.
Chris Chaney:
It’s all tied up in one venture. I remember talking to one business owner and I said, okay. He was very comfortable with his business. He knew it inside and out. He was involved in it when you’re directly involved and you can take action. You feel like you’ve got more control now to some degree, that’s a little illusory. You may not actually have as much control as you like. For instance, whether or not your business happens to be successful or what the public needs at the moment, whether you’ve got the wind at your back or the wind in your face economically. Those are largely beyond your control. But the fact that you have some ability to interact with it, to exercise some control to make decisions gives you that feeling of control. But I remember looking at him just saying it was a good friend of mine who pointed this out to me years ago.
Chris Chaney:
He said, so if I told you that you were to take all of your money and put it into one extremely small illiquid stock, would you feel comfortable? Would you feel like you weren’t taking too much risk? This is a very illiquid stock. It’s very subject to the whims and the vagaries of the local economy. Would you do that? When I was like, no. He’s like, but that’s what you’ve done. You may feel like you’ve got control because you’re day to day involved. So one of the first things I do is I said, let’s take a look at your business. This may well be the most successful investment you ever have, but I’ve got to make sure that all the elements of your financial picture are working together for you. So that if we do encounter a change in your financial fortunes or the fortunes of the business, which again, may largely be beyond your control that you’re protected and your family’s protected.
Chris Chaney:
And more importantly, it reduces the stress that you’re going to experience when we go through that. So we’re going through this period of COVID. We have these tremendous stresses on the businesses. Most of whom are just trying to get liquidity and make sure they’ve got adequate cash reserves. Part of my job is to make sure as much as possible that we’re building those financial buffers in place. If we can take that pressure off of the business owner, then we will have one less stress, which allows them to focus more freely and more productively on the challenges of the business. So I take a look at their whole financial plan. But then you’ve got the third element of that, the third leg of the stool, the personal element. And that’s the part that gets pushed almost always to the back. That’s the last thing that they pay attention to.
Chris Chaney:
And yet that’s the long-term driver. Ultimately, if I can help them to identify and define what does personal success mean for me that we can start to, again, not only alleviate some of the stress that they’re experiencing, but actually make them more productive and give them what to me is extremely important. The business will live on, but hopefully they’ll outlive simply their working career. They’ll have an opportunity to enjoy time with their family, to be able to do other things that are important to them as well. Whether they retain the business in the family or they end up selling it, whatever may happen to the business, and that we do want that to move on in a very successful transition. At the same time, that business owner’s life will move beyond, will have aspects that go beyond the business. We want to make sure that all of that’s working together. When it’s not working together, it interferes tremendously with the operations of the business.
Chris Chaney:
So to the degree that the owner is able to start to identify personal issues, we can help them not only maintain a certain amount of detachment and freedom, which allows them to exercise their creativity more effectively, but just as importantly, make sure they have a second chapter that’s really successful and fulfilling. Most business owners don’t. I love that you had a podcast recently with a business owner multi-generational who sold out and regretted it. That is so common. Business owners are so identified with their business and they don’t realize the layers of meaning that their involvement with that business provides them. And when they have sold it, they’re bereft. It’s like I used to be this. Now I’m not that anymore. Most business owners, for instance, aren’t necessarily that enamored with lots of hobbies. In fact, what they find at some point in their life is I enjoy my business more than my hobbies.
Chris Chaney:
So a lot of my business owners aren’t necessarily what I would call avid golfers they are not necessarily going out eating at a lot of restaurants. They’re not involved in tons of activities because they love what they do with their business. But when you, once you’ve moved beyond that, how do we write a second chapter that’s really successful? That gives them new life. What I often find too is once we’ve identified that they come back to their business. As I said, with a certain amount of detachment that lists them really exercise their strengths and they find they almost get a second lease on life. So it’s, if you can address all three elements of that stool, all three legs of that stool, and align them so they’re all working together. You will absolutely maximize not only the enjoyment and the value and some opportunities for success, but oftentimes the value of the business. It’s a win.
Laurie Barkman:
I totally agree. And I love the visual of a stool because if one leg falls short, the stool falls over and I can understand that they put themselves last, they’re putting their business first. They’re putting their clients first. They are certainly motivated on the financial side to keep things going. And especially now in this economy, it’s so difficult. A lot of privately held companies are struggling to keep the doors open. And I was curious to ask, are most of your clients Gen One, or they, are you dealing with a lot of Gen Two, Gen Three and so on?
Chris Chaney:
All right. What a great question. I would say the plurality is Gen One, not the majority, but the plurality, the largest concentration. We do have quite a few Gen Two, not a lot of Gen Three, which isn’t surprising because generally the rate of transmission to the third generation is extremely low. I had one family that I worked with in central Pennsylvania that was on their eighth generation. And I just looked at them in awe. Whatever you’re doing, you’re doing it brilliantly. In fact, I remember meeting in their conference room in the basement. I can’t call it a basement. It was a huge office complex and they have portraits of their great, great, great grandfather. I don’t know who mine is! They’ve got a portrait. They’ve got portraits of these eight generations. It’s amazing to me.
Laurie Barkman:
I’d love to have them on the show.
Chris Chaney:
I will reach out to them and see if we can arrange that. They’re fantastic.
Laurie Barkman:
That would be fantastic. That is so unusual. Yeah. I think sixth generation is the furthest I’ve had on the show so far, and it is fascinating to go so far back. I just wanted to kind of go back to something you said regarding the problems that business owners face. It was really interesting to hear you talk about the personal side and what success means to business owners, whether or not they’re first generation second, et cetera. They are so tied in with the identity of the business. And I’m curious in your experience, if you have encountered where emotions and ego play a role to the detriment of the owner, where those things get in the way of a successful business transition.
Chris Chaney:
I would say it’s the rare exception where it does not in some way negatively affect the transition. In other words, it’s extremely common. You have to have a really strong ego to be successful in business. You have to. Oftentimes I’ll talk to folks who don’t necessarily understand what that means from the inside. But imagine this, if you think that you’re the right person to run a business, you have got to have at some point, a deep belief and conviction in yourself and your vision. Or you could not have survived to this point. The same thing is true of a fighter pilot, a quarterback, somebody who wants to be President. In all cases, they have to believe that they’re the right person for the job that takes a tremendously strong ego. And oftentimes they’re the most successful person in their orbit.
Chris Chaney:
What that means is it’s oftentimes difficult for them to hear somebody who might challenge or correct or question how they do things. That becomes a huge issue when you’re handing off your business, your baby. So as we’ve talked about the business and their identity is very closely linked. The business is their baby. And in a lot of cases, maybe the most important relationship in their life. And it is extremely difficult for them to pass that along, without trying to have their hands on it. It’s hard for them to take their hands off. It’s difficult for them to conceive of a different way of doing things. And yet if you’re turning things over, that’s exactly what you have to do is let somebody else have a different vision, bring a different flavor, or approach to it than they would have. And so it can become very difficult.
Chris Chaney:
It’s not just that, but they become so entrenched, especially successful business owners become so entrenched in their employees’ lives. That I’ve seen a lot of cases where you might have a business sale. The business owner might have a two year earn-out. They’re going to be working there for a while just to make sure that they retain the relationships that there’s a smooth transition. And the employees continually come back to the original owner rather than the new owner. And it proves disruptive. It’s difficult for the succeeding owner to let go. They value those relationships. They value their expertise. They’ve put their entire life into it. It’s extremely difficult for them to let go and it can become very disruptive. So it’s important to make sure that you have a shared culture. That you have this conversation upfront that things are going to be done differently. By the way, the same exact thing is true, whether you’re handing it off to a family member or to a buyer, especially if it’s a family member. Because as a parent, it’s also difficult to get out of the parenting role and to allow your child to fly as it were.
Chris Chaney:
In fact, oftentimes that comes with an entirely different set of issues, we, we generally have some recommendations about the best way to transition. But it’s really important to make sure that when you do have a buyout or you have a new owner, that there is a shared culture, as much as possible. Culture is key to a successful transition. It will eliminate or minimize most of the friction that that otherwise will arise. But I’ve also seen plenty of times where as they go into the actual final stages of the sale, that the business owner will find an excuse to destroy the sale. They can’t let go. They can’t let go. Even though this is the best thing for them, it’s the best thing for the company. Especially because as we kind of touched on before, you’ve got business owners, who’ve never contemplated a transition. It’s just not part of their makeup. It’s not a part of their DNA they’re so they’re so focused forward. So focused on opportunity on growing the business on the future, that all of a sudden, the idea of no future tied to that company becomes too difficult for them to contemplate. If we haven’t addressed the personal issue, they are not going to be able to transition and let go, and they’ll find a way to destroy the deal.
Laurie Barkman:
The what’s next part of that, as you said earlier, is so critical because if they can’t see themselves in another situation and other part or phase of their life, they’re stuck.
Chris Chaney:
They are stuck. And what they don’t realize is they’ll kill the business. If the business becomes too owner dependent, and that’s one of the key things when we look at the business leg of the stool is how owner dependent is this. If I can’t reproduce this, if I can’t replicate what you’re doing without you, I won’t be able to get a reasonable sales price. In fact, we work very hard to make sure that processes are documented. Everything is duplicatable, that you have other people who can assume leadership. So you’ve got minimal disruption. The business, the new buyer, wants to minimize risk. And if everything is tied to you, you’ve maximized your risk because it could well go the moment you do. It’s really important that the business owner begins to embrace the idea that they have to move on to a new vision.
Chris Chaney:
And if they don’t have that vision, they won’t be able to do it. They’re so tied in. So I oftentimes will see a business deal that comes to the altar, as it were, and then they walk away. Now they’ll find a different excuse for it. There’ll be a different reason given, but the real reason is the owner didn’t want to let go. And that also points to other issues that have been going on inside the business for a long time. The owner needs to be able to turn over for instance HR, needs to be able to turn over marketing if that’s not what they specialize, needs to be able to turn over operations or technology to other people, and really give them the room to make mistakes, to grow, to develop it, and to pursue their vision as long as they’re aligned with the company’s ultimate mission. Each of those is a mini death for the owner where they have to let go, but it’s essential for the life of the business. Again, if they can’t let go of the business, the business will end with them. And that’s not really what they want. Not really.
Laurie Barkman:
It’s a great question for people who create the company from scratch, the entrepreneur Gen One, but they don’t necessarily have a game plan yet. There were a few people recently that I met two gentlemen, two different companies and coincidentally, they were both like 61-62, and they had not yet put any succession plans in place. And so in this business conversation we were having, they were both like, oh, well, when is too soon to start. And everyone around them was like, oh, wow guys, maybe this is a conversation you should already have started. Is that what you typically see that maybe it’s when people are in their 50’s that start to think about selling their company or transitioning their company? Or is it the trend to kind of wait till you’re in your 60’s? So you can’t really see yourself separating? What trend do you see there, Chris?
Chris Chaney:
It’s a great, great point. And it is a trend because it depends on the individual makeup of the owner. But very typically we do see people pushing off in the 50’s. They’re just starting to encounter the idea that they’re getting tired. That age is catching up to them, that they can’t do this forever. They may also be dealing with some family issues as the family has restructured kids move on. It’s just the spouse and the business owner. So there are lots of little ways that their markers of time make themselves manifest to the owner. But on the other hand, they can still put it off. It’s not unusual for us to actually sit down for the first time with somebody who’s in their 60’s, Baby Boomers. And this is what we’re talking about as the Baby Boom generation is very tied into being productive, to finding meaning in work.
Chris Chaney:
And I would say that in my experience, the trend is very strongly in the 60’s. And to your point, if you’re going to do planning and you want to maximize the value and increase the chances of an optimal outcome, you need to have time. So if somebody suddenly starts to realize, I’m tired, I’m exhausted. I’m dealing with too much stress at work. And they say, Hey, I want to get out in two years. Can you do it? Yes. You’re not going to get maximum value. I need a really about a two to five year window to be able to position the company and maximize those outcomes. But if we’re talking about less than two years, is it possible? It’s possible. What you’re going to do then is just focus on de-risking your business, reducing the risk, which will increase the multiple that you’ll get all by itself.
Chris Chaney:
But obviously at that point, you’re not gonna be able to do the things that can really enhance revenues that can bring in new opportunities that will also increase the multiple. But just reducing risk is huge and that you can do relatively quickly. And in fact, what I’m generally recommending to people who are dealing with COVID, who are now super sensitive to risk, because it’s all in front of them is to say, let’s focus on de-risking at every point we can. Most of these don’t require tremendous amounts of effort. They can be a few meetings. We can get most of this done within the first year. So, but they don’t start having that conversation. You got more than 50% of baby boomers are in their mid-60s right now. This is where the, if you look at the distribution curve for Baby Boomers, we’re passing that midpoint and like it or not, age is catching up with them.
Chris Chaney:
You’ve got almost two thirds of private businesses are held, or there are private businesses and the Baby Boomers are the key part of that. 80 to 90% of their wealth is tied up. And yet they’ve got no way to actually extract it from the business. If any of them plan to transition, they usually imagine that it’s 10 years out. That’s what they imagine. But in your mid-60’s, you’re starting to just, you’re really starting to feel the effects of age. But oftentimes my biggest concern is they haven’t dealt with what we call the five DS — death, divorce, disability, distress, disagreement, all of these will disrupt your business.
Laurie Barkman:
Yeah. And dealing with all of those things. There’s only so long you can put it off. Hopefully they have key man insurance and all those things to protect them from that risk. But I think it’s the business risk that probably like customer concentration and certainly having a transition plan. It’s going to creep out externally. And certainly internally. Because internally people are still, if they’re not saying it out loud, they’re thinking it is, wow, so-and-so is in their sixties. What is their plan? And so the employees are probably thinking it, the customers are probably thinking it. And at some point, if it’s not addressed, that in and of itself becomes a risk because people see that maybe this is a business that’s going to not going to continue. Maybe I want to go work elsewhere, or maybe I want to do business with someone else. And that leads me to the next question, because for owners who have not yet started succession or transition planning, what advice do you have for them?
Chris Chaney:
So typically there’s a series of steps that I recommend. The first thing is that you need to have coming in, somebody like me. I generally recommend a financial advisor who can come in and take a look at the entire financial picture. I’ve had some people say, well, your accountant or your CPA. Well, actually what we need is we need somebody who can take a look at the complete financial picture because before we do estate planning or even business planning, I need to know what the factors are. You mentioned key man insurance. We need to do a valuation on the business. We may need to do a valuation on the business. We may be able to at least do a rough calculation on the value of the business. But insurance is in my mind is sort of filling holes or filling gaps, but I need to know that what’s the magnitude of those gaps is, how much needs to be addressed.
Chris Chaney:
So it’s probably the last thing I want to take a look at once I’ve looked at everything else. The attorney is not necessarily the first thing that I’m going to bring in, because I want to make sure that we again know the entire layout. So once they’re able to do it once we’re able to get a good handle on their entire financial picture, I’ll bring in the attorney in then, and we’ll start to look at the areas that we can very quickly so up. The nice thing is, is that during this time, because everybody’s working remotely, I find attorneys are actually much more accessible. They’re not tied up in meetings. I can very quickly get a hold of them. The response times have been great with the attorneys. So this actually is a pretty good time to be doing that kind of work. It’s a unique, it’s the opportunistic side of what we’re going through. So, but I am usually the first step.
Laurie Barkman:
Yeah. But it sounds like a cross-functional team.
Chris Chaney:
It is.
Laurie Barkman:
And do you find that the business owners already have those relationships or do they seek out new relationships based on expertise?
Chris Chaney:
So great question. They already have a relationship, but it may not be the right relationship. A lot of times, for instance, these business owners grew up with their local attorney who does a great job of just handling the day-to-day functions. But a local attorney who handles the day-to-day functions may not be the right person to do the estate planning that you need, or the business planning. They’ve helped you to do the necessary filings. You’ve grown with them. But I have had absolute disasters when you’ve got a very successful business owner who relies on their lifelong attorney friend collaborator to do their estate plan or to do their business plan. And then all of a sudden, we end up with problems after that person passes away, that sometimes you can’t fix or they entailed great expense and still harm comes to the family. I’ve had plenty of cases where again, I’ve had very few attorneys will say, look most attorneys will say, yeah, I can do that.
Chris Chaney:
But in fact, this is an area where we need specialized expertise. I really need to have somebody who knows what they’re doing. There are issues that if you don’t deal with on a regular basis, you don’t know how to anticipate. And again, in one of these cases, it just happened to be that the design that they put into place severely hampered the family. Ultimately it could not have possibly been what he wanted to do. He actually ended up disinheriting generations of kids because of misunderstandings about things like special needs and whatnot.
Laurie Barkman:
Wow. Yeah. That’s an unfortunate situation.
Chris Chaney:
Very unfortunate.
Laurie Barkman:
I like hearing about the consulting approach and I know you have your CEPA, which is a specialized certificate, and certainly you didn’t need to get it, but it probably in your experience gave you the bigger picture from the Exit Planning Institute, which I I’m familiar with. One of the things I like about them is the discussion about value acceleration because for some companies, the right thing is to continue to grow and to not necessarily exit. And so that’s the part that I sort of fit into, which is on the strategy side and business growth. I like thinking about it as this team of people that are going to work together as advisors to work with the business owner on, on achieving ultimately what their goals are. So I think that’s really important.
Chris Chaney:
That’s exactly right. And to your very point, it’s really critical to bring in people who have expertise in those different areas, especially if you’ve got some, a complex asset like a business, because it is a complex asset. There are tax issues, there are operational issues. There are all sorts of things that you need to do. And as you noted, value acceleration is really focused on maximizing value. Exit planning properly done is going to grow the business. You just, it puts you in the optimal position where you have the opportunity and the ability to exit if you wish. But really it’s the same thing as just again, maximizing the value of the business, making the most of it. So it’s continually operating at optimal levels. And that gives you the freedom to say, no, I want to keep working at it or no, I want to transition this internally. It gives you a lot of options. If you haven’t maximized your value, if you haven’t accelerated that value you’re going to find that your options are very limited and people need to remember that it’s only the minority of businesses that actually get bought out. In the end, they either transition or they close.
Laurie Barkman:
So Chris, final round of questions, some quick hits for you. What book is next on your reading list?
Chris Chaney:
The Fate of Rome. It came out before the pandemic and it is absolutely a fascinating study of how pandemics affected the Roman Empire. I read an article about it. It was absolutely incredible. It’s one of two things. Another one is, basically about –I’ve got one for business owners that I find absolutely fascinating. Just bought it, just arrived. It’s like the Awakened Owner, the idea is trying to walk through life with awareness.
Laurie Barkman:
What’s your favorite movie?
Chris Chaney:
Tombstone! Epic of the West. It’s the Iliad of the West. Beautifully written, beautifully acted. And because I love history, remarkably accurate for a movie.
Laurie Barkman:
How do you spend your time outside of work?
Chris Chaney:
Oh, family. The gym. That’s how I decompress. I love going to the gym. Spent some time at church though. Not much these days because of COVID. But yeah, gym when I can. Family always.
Laurie Barkman:
Great. Do you have a favorite saying or mantra regarding entrepreneurship?
Chris Chaney:
There were two. I kinda mentioned the one before. One of my favorite sayings. I will say actually there were two that I love. One is misattributed to Aristotle. It’s actually Will Durant.
“We are what we repeatedly do. Excellence is not an act, but a habit.”
And the idea is we become…it takes time to master things. And it’s our repeated action that form our dispositions and demeanor. So we are what we repeatedly do. Excellence is not an act, but a habit.
The other one is one I just developed as I grew up:
“Focus on the ball, not the scoreboard.”
Execution is everything. There is a time, I’m a big data person. There was a time when you really have to focus on the scoreboard. The middle of the game is not that– that’s a distraction. Focus on the ball is the only thing you have control over. Focus on the ball. The scoreboard will take care of itself.
Laurie Barkman:
This is a bonus question I’m springing on you here. Did you know that you have the same name as the bass player in Jane’s Addiction?
Chris Chaney:
I did. I had no clue. I had no clue about that until somebody much younger than me – because I never listened to them, I had never heard of them – had pointed that out. Although I typically will get miss called Dick because people still remember way back when the Vice President. I just tell them if I was connected to him, I would probably be a sub assistant ambassador somewhere, but no connection. Yeah. Yeah. I actually was surprised to find that out. Don’t play bass.
Laurie Barkman:
So if people want to get in touch with you, what’s the best way to find you online? So then they don’t find the bass player, Chris Chaney, they find you…Chris Chaney.
Chris Chaney:
Yes. Yes, it’s Fort Pitt Capital www.fortpittcapital.com
Laurie Barkman:
Excellent. Excellent.
Chris Chaney:
Easy to find.
Laurie Barkman:
Well, Chris, thanks so much for being with me today on Succession Stories. I really appreciate you sharing your expertise with us.
Chris Chaney:
Laurie, thank you so much. I really enjoyed it.
Laurie Barkman:
Innovation. Transition. Growth. Easy to say but hard to do. If you’re an entrepreneur facing these challenges, I get it. I work with businesses – from small to big – for strategic planning with your team to achieve your vision. Visit smalldotbig.com to schedule a call with me. I’d love to connect with you.
Be sure to catch the next Succession Stories episode with more insights for next generation entrepreneurs. Thanks for listening!
