Wall Street To Y'all Street

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Today's guest has spent more than three decades advising business owners through one of the most important and emotional decisions of their lives, what happens after they've built something successful?
Doug Greenberg is a wealth advisor and business transition specialist at Pinnacle Wealth Advisory, where he works with founders and business owners who are navigating growth exit strategies, succession planning, and the challenge of turning business success into lasting personal wealth. Doug's perspective is unique because he didn't just study business.
He grew up in one. his family operated 25 retail clothing stores, men and women across Texas, and learned a lot in that industry. And he worked every job in that business, which shaped how he understands founders, their motivations and the difficult decisions they face when it comes time to scale, sell, or step away.
With more than 30 years of experience, Doug helps founders uncover financial blind spots, prepare their companies for transition, and align their personal wealth strategy with what comes next in life. Today we're gonna talk about the psychology of founders, the biggest mistakes business owners make when [00:01:00] preparing to sell, and what really happens after someone exits the company they spent their life building.
Doug, welcome to the show, and thank you for putting up with the technical difficulties there in the beginning. Appreciate it. so I guess before we get into what you're doing now with Pinnacle Wealth and how you help business owners and the succession planning and. Building lasting wealth and all of that.
Maybe talk a little bit about growing up your experiences and what helped shape your perspective, thanks Joe. Thanks for having me. This is, a great setting and, if we don't have, technical difficulties every day, what would life be like?
it was, interesting, growing up with a father that was a partner with his brother and the grandfather in this family business, I didn't know it was different than anything else.
And so as I went to college and got into business and people would talk about, I grew up in family business and I harkened back to those memories and that thought process around what I absorbed without even knowing it. there are big lessons. There were [00:02:00] micro lessons, that I learned about people, about operations, about process, about the customer or client, how important they are.
and knowing that every time we walked into the store, we had to look presentable as kids, He was the front man in terms of the connection with customers and employees. it was a great place to learn business. Yeah, family businesses are very unique. Business is tough in and of itself, and sometimes there's this outside, view that, oh, it's family business.
You don't, you're not really working, you're not really doing. And it's no maybe that's not the case. Anyone who's grown up at a family business, 'cause maybe labor laws don't necessarily apply. and maybe you do. There were none. There were none. And you're wearing so many different hats.
but What are a couple of lessons you think you learned that most CEOs and founders don't understand, not having had that experience. growing up, the malls and a lot of stores were closed on Sunday. So we would a couple times a year do inventory on a Sunday, [00:03:00] counting everything, double counting everything. And then having someone triple count. And going to work on a Sunday wasn't like pulling teeth, right?
Because that's just what you needed to do. there'd be times when, we'd be at dinner and a phone call would come from the store manager , the alarm just went off and, someone threw a brick through the window and took some stuff out of the window.
The phone call comes in, you're at dinner, you talk about it, you hear about it, you learn what's going on, what's next. It's just you. it's a constant. it's never really off, right? No, it's not.
It's not a job. And, from the CEO level, it really never is off. But, going up in mid-level executive and whatnot, there is still that ability to step away and it's someone else's problem. Maybe, but to your point about the dedication of a family business.
when you have your name attached to that business and where we were 25, 26 stores all over the state. We had an importing group that we created outta Southeast Asia with 350 stores across the country. And, there's pride. you are proud when you pull up to one of the stores . As you're walking in, trash, you pick it up. Was, when I'm in seventh, eighth [00:04:00] grade. you are doing whatever it takes to further the goals of the company.
Talk to me a little about some of the mistakes founders make when they start having success so my approach has always been with founders is recognizing that, and they're no different than all of us, right?
they can get very myopic and very focused. and that's a good thing. when you're starting out and you're focused on that product or that service, and you wanna make it right for the marketplace. But as that company grows, that entrepreneur, doesn't have the necessary skills to be able to grow that company.
As you're seeing success, we're having, issues below because an entrepreneur is great at starting the business, has the idea, has that passion, but is not so great with business management. So what I want to be able to do is take a holistic view of what they're doing, and that's from their personal life, their business life.
and [00:05:00] then focus on opening up their blinders a little bit and just getting to see some different mistakes that I see, Look, there's no perfect business being run, but more importantly, the mistakes I see are on the personal side.
So I created this concept, and I have a client up in Dallas who were right in the thick of this. we started their estate planning, basic estate planning. They have three children, a year ago. we finally got that done.
They're now, and I'm helping them with this raise, about a $10 million raise to expand their concept and the valuation of their company, has triple. Now we're at a different level of need for planning and I'll just use the big term estate planning.
And so as that business grows, they don't have the corresponding knowledge about what needs to occur in their private side. To manage this wealth. now they may not care. They may be, I don't care what happens to the money. I don't care what happens to my kids. I don't care. I don't want, I don't mind paying taxes, [00:06:00] but rarely that's the case.
And so by sitting down with them and giving them some thoughts or the future could look like and steps along the way, it gets them to think about it. And it allows them to have some thoughts inside their head before we have those conversations. And so this couple up in Dallas, when we started looking for, the money, we started interviewing about some bankers.
And once we got that in place, I then. We need to have another conversation about the next steps. and you look there, there are a lot, as you well know, there are a lot of estate planning techniques. a lot of 'em are very confusing.
And so I really get that founder or business owner not to think in terms of an attorney I need a trust and I need an no. We just wanna understand what it is you want to do. what do you wanna accomplish? Form follows function. So by downloading that information to me, I'm able to have that conversation with the attorney in [00:07:00] advance to the meeting.
The attorney can ponder, can think, and create some ideas. So when we get together, we're not just on step one, who are you? What do you want? We're on step three and four, thinking about ideas, thinking about plans, thinking about structures to talk about. So our meetings are much more efficient and we just get more done because this couple up in Dallas, they're busy.
They're running a fast growing chain. They're hiring, they're finding locations, they're raising money. they're busy, right? Yeah. And the whole thing about planning that sometimes in estate planning people don't understand is that means you have to sit down and have conversations, right?
About death. About, maybe who in the family could take over, or is it going to be put into a trust? Is it gonna be sold off? What? But being so myopic, like you said at the outset, which is easy to do because all these little fires do it, all these little fires need to be put out.
are those conversations had three months out in this scenario, at this level, six months out, A year out? When do you [00:08:00] suggest people start having these conversations? so for instance, this couple, they were headed, for 10 days to South America and they were concerned, we're gonna be on the same plane.
What happens if, yeah. So that was their focus motivation, right? It could be somebody who fear fear. Yeah. Yeah. Fear, greed. Fear. That was a good, yeah. You're greed, good motivators. they're the top two. and so that starts the process.
if somebody, is beginning to think about transitioning out of the business, in a perfect world, when they start thinking about it, I want a phone call. Because here's why. this is where I think a lot of wealth advisors don't capture this opportunity for a variety of reasons.
when that business owner raises their hand and goes, I'm thinking about, the path to getting this and selling it. It starts off a whole chain of events. and really where I start is, at a very base level is who would buy you. Let's start thinking about who would buy you.[00:09:00]
Let's start in your tight circle, your industry group. You've been in this industry 30 years, all the players, right? Let's put some feelers out. Let's see what we get first place. The second piece is the business ready to sell?
Have you cleaned up the books? Yeah. Do you have all your personal stuff off? Look, we don't need audits, but maybe quality of earnings. Let's get that squared away and done. We'd rather do it ourselves. Yes. One to find problems. Solve those problems and be able to go, into the data room and say, Hey, you've got a quality of earnings or an audit in there.
and that's like the biggest checkbox you could get. These aren't the things you want to come up during due diligence. You want it resolved before the data room is all populated and ready to go. So at a bare minimum, disclosures properly made, but ideally it's fixed. and so we have right.
who's gonna buy it? We're gonna get the business tightened up. Alright. And that could be mean changes of ownership for the next peach, which is the estate plan. Yeah. And then we begin to think about all of [00:10:00] the tax saving opportunities, the abilities to defer, it's a whole.
Playing field of things we can choose from. Give me an example of a painful situation where someone just waited too long to make those steps. there are a lot of those, because it's 95% of really right, because Wow.
Because you, I had this great conversation. a good friend of mine up, up in Washington, he bought a winery and he bought the winery. And, it, it was a great buy. It really was great. A couple months ago. He's I'm ready to sell. I found the market. I know where I am. And I said have you gotten all your data ready?
he's yes, what I did, and he's really smart. he said to me, he said, yes. I started day one, preparing the business for sale. Oh, wow. so as I moved my processes, I got a contract, it went this, wow. I did that. And that is rare. That has to be rare. Super rare. I'm an m and a lawyer.
you go to clients who are like, we wanna sell next week. I'm like, great. How's the data room look, what's the data room? That is amazing. [00:11:00] And so you get a higher valuation, you get a cleaner, quicker exit, right? now here's what I didn't mention before.
When that founder raises their hand, is I have a conversation with them about, where are they in the business cycle? So we've got that business cycle, right? And we're either coming up here, hit a peak, or we're down here, right? Because, we want a good transaction.
We want a fund transaction, we want an easy transaction. We want a high value transaction, and we wanna be in a position to where, we're in this space. Now, if we're here and our industry is contracting, it's slowing, then that conversation is, do we sell here or do we wait for the next cycle?
and founder, what's the cycle look like? Because they've been living it, right? Yeah. and so having that, so if we start way out here, we can see the future and go, okay let's do this here, or we need to wait. Now the thing that ties it all together is I will do a very comprehensive plan [00:12:00] financial.
Okay. So what I'll do, is I will get all their personal information, create a financial plan. How long does that process generally take? I know some are more complicated than others. Yeah. gathering the information takes the longest because once I have the information, three months a month, you can pick a month.
Okay. and I can have it done in a week. I just gotta have the info. Okay. And then we take that business and we do a high and low valuation, just, back of the napkin, load that in and then run. 'cause what I want that founder to see is, we start that process and at the end of the process, you are gonna have X in your hands. In your experience, do the majority, are they disappointed by that number or are they surprised that it's so high? I have had a handful of disappointments, but I knew going in that the data was gonna tell me they were gonna be disappointed because of the issues they were having in the business.
that would hamper evaluation. I've had a couple of founders break down and cry. 'cause the number [00:13:00] was three x then they need, so here's what happens. So we do that process and they go, okay, I'm gonna have three x and we haven't done any estate planning or tax planning now. so we do that.
Maybe it's Forex, but more importantly, that transaction for that founder should not be stressful. That founder doesn't need to be stressed out about, and I make this joke about, the inventory on paperclips when I sell, I don't care. Because I'm getting four x, geez, if I have to give something back and I get three and a half x, right?
Would you say the majority, you look at them and you say, if you want that number, it's going to take one year or two year or three years.
Because if 95% have sloppy books and records and there needs to be some cleanup, that does take time. but bigger changes at the business level, and to have that bleed through and affect earnings and then be able to show it for a couple of quarters, that's a harder task.
Would you say that's was it 50 50? Was it the majority? it's interesting. I don't think, [00:14:00] and again, in my opinion and experience, I don't think founders go, I thought this idea and I need to get 10 million out of it, right? Because they're founders building to solve a pain.
Or a need, and so they're solving to fill it. I don't think that you could look at any of these founders, even in Austin and go, did you expect, A $40 million payout. And they'd be like, no, because you really don't know what's gonna catch fire or not, yeah. and we have to overlay the economy.
There's so much outside of your control in that regard. and that has to be tough in someone in your position because. It's an objective analysis for the most part. Because they're coming to you and their cycle is their cycle, but the business cycle is a completely different thing, the environment.
And so they could have, everything in order and everything's great and everything's humming, but it's just a bad cycle for the industry. And so you're saying, yeah. If you've done this three years ago, it could have been five x, but in this market we're looking at two x.
a couple of things around [00:15:00] that. I had a client, and it's a huge great story, but the one little snippet out of it was in oh six, he wanted to sell his business. And at the time it was worth about 700 million, seven 50 million. Wow. And, he was choosing between two bankers, Goldman Sachs and Morgan Stanley, and he literally flipped a coin to pick.
Between one or the other. and, at this time, both firms were solid and doing great work. And it's, it is a 50 50 choice. He ends up choosing Goldman, and, they fiddled around and they missed the market. Oh. Seven popped up. Now again, that happens.
Yeah. So the valuation went to 400 million. and no different than, all these parallels. No different than you trying to sell your home. Yeah. You're trying to sell your home for 1.5 million and then you wake up next day it's worth a million. You're like, no, I'm not gonna sell it.
I'm gonna fix it up. It doesn't matter. Good luck. Yeah. he did some radical changes in the business. Okay? And [00:16:00] then, he called me one day, and he said, I did it. I said, what did you do? He said, I sold the business. I said, you did? Who'd you use? And he goes, I did it myself.
Really, I negotiated the transaction for cash. Wow. For $1.1 billion. Wow. and so he missed the market. Yeah. we huddled with his exec team
and made some changes. And then, a handful years later, went back and he went to a competitor. Yeah. Struck it up and sold the business. Yeah. I, again, who knows? And so now, he's worth 1.8 billion.
he's on the Forbes honor roll. we were able to do some great things while he was running the business in terms of taxation, in terms of pulling money out, What do you think he did to get that valuation back up higher than it was pre crash? And I think there's some parallels to what we're seeing today in, the global markets.
we had oh 7, 0 8 and when we have dislocations like that, there's a saying in my, in in, in my [00:17:00] world that all correlations go to one meaning risk. When there's risk in the world and people don't wanna own risk, they sell. Alright. And so we have that temporary drop. We saw it in April with the tariffs last year.
We saw it, with the bombing. We don't know how long this is gonna go on market's, hammered. We can't have that. I gotta end it. I gotta have some rhetoric and we bounce back up. I think oil hit one 15. Yes. in trading. Big swings, right?
So I think what we have to realize as investors and owners is that these downdrafts are temporary. and when we understand what caused them, did it affect our business on a first degree level, yes or no? No. but what happened in oh 7, 0 8 was a terrifying experience. But what he went and did, less about, global markets, what he went to do is he had already identified problems in the business.
And a big one was his engineering department was [00:18:00] not at headquarters. It was an offsite location. two hours away by plane. So he's an engineer. So what he did is he went back into the lab, basically moved engineering back to Hope hq, and spent every day in the lab Wow.
Building, creating, and thinking. and that alone Strengthened the business by this time. He had a full C-suite. So they were running the business, the operational day to day. He was still, monitoring, watching involved.
but, they were doing things he couldn't do so he could go do things he wanted to do. And that was a focus. Once we built that C-suite up, the focus was, think about what it is you wanna focus on. And he was like, oh, that's easy. we're gonna move engineering back down to edge quarter.
I'm gonna get into engineering. I got a new engineering guy because we weren't pushing the ball forward. Wow. That's amazing because it seems like such a simple tweak or change and you wouldn't expect [00:19:00] it to have that impact. And that's definitely a case study against remote work, right? It's just like Elon Musk says, you can't call it in, right?
That is astounding because it wasn't just that he got, a little bit of an upside. He completely went into a different bracket because of that. He's attributing it to, bringing that back in house, essentially. You uncover financial blind spots in business. What do you see as the biggest, most common blind spot in the majority of the businesses that you deal with?
they are not focused on, the ramifications of a sale. Meaning whether that's from a tax perspective, a personal perspective, their spouse, their kids, their family. I'll talk about this client who sold for 1.1. I spent a lot of time with him.
I'd go to his town once every couple months, not only to review, but to plan to strategize. We talk about his business, we talk about investments, global markets, and, he has two children. And a lot of our conversations [00:20:00] were around, look, I already have $500 million in the bank because we pulled money out of the business.
And that's a lot of money. and I don't want my kids to be ruined by this amount of money. and the kids eventually found out, when their dad bought a new jet dead giveaway, didn't giveaway. Yeah. that took more than one pilot. he's a pilot. So anyways, and so I think there's a lot of those soft issues that, again, professionals, advisors, either they don't have that experience to have those conversations.
they don't recognize those conversations are incredibly important. and they just don't know to have them. And so having those conversations around the impact of a transaction and how to think about it, I get them articles, I get 'em books, Because if their viewpoint is this and we need to open it up, I may need to use more tools than just.
My persuasion, so I'll send 'em articles, I'll send 'em books, to again open those blinders. and so I think [00:21:00] that's the most important part is they don't really understand the ramifications 'cause they've never done it. No, not only have they probably never done it, maybe it's their first big exit, but it is something that's never addressed. You're talking about the psychology behind it. You're talking about the emotional impact behind it. And I think, they're definitely, lucky to have someone like you who recognizes that. Because I would imagine most wealth advisors don't even address it.
Let's talk about maybe a 5 to 50 million, maybe a $100 MILLION exit. By any measure. That's still A lot of money. just talking about that, what happens to a person emotionally
when they get that exit? what's a common thing that you see? I like to talk about the future with that founder. one of my clients up in Dallas, he is in the process of selling, or attempting to sell he's the CEO of this fast casual restaurant chain.
and we have conversations, okay, here are the three scenarios, right? Someone buys you and fires you, someone buys you and keeps [00:22:00] you, someone buys you and you quit. You wanna do something else, right? so let's talk through each of those, what's the probability, what could happen?
What's, how does that make you feel? What would you do? I want them to be thinking about things post, because guess what? there's gonna be squirrely things happening, right? We may be going down this right path and then we gotta turn left and then right again. and I want those founders to be thinking about all these possibilities.
We won't get 'em all in terms of what's in the mix, but I want them to think about those. Because what it also does is, again, it opens up their mind to different possibilities and one, they might go, oh, I love this one. Let's go do that, that they didn't think about before because they were only focused on, I got a sale, I gotta get this sale done.
I'll worry about what happens after. Now, the other important thing is, we've got a business transaction we're trying to do, we've got a personal side we want to do, and we wanna follow a dual track all the time because [00:23:00] they're related. And so that's where founders slip up is they don't understand the power and the impact of what they can do on their personal side.
So the biggest complaint I get is I cannot believe I have to write this size of a check to the government. Now, it's not about I can't believe I got all that money, but I can't believe I gotta write a $7 million check. That's more money than I've seen in my life and I'm having, when it's too far, you then have to rationalize the 7 million check. But if you can share stories about other founders about what they felt and what they went through, I felt it with them, then that helps with their, understanding of that emotion. And they understand that, I don't wanna feel that, whether it's a $2 million check or a 40 million check or whatever that emotion is, how can I get around it?
Wow, interesting. sticking on the same theme of psychology. How often do you see it [00:24:00] because you're dealing with strong personalities. How often do you see it that a founder's ego will destroy the valuation or maybe destroy the deal completely? Is that ever an issue? yes, it without a doubt.
, If you're getting down to the end and the ego is not in check and the buyer doesn't warm up to that ego, then you're, it's too late. You're probably not going to have, a transaction. I had a client who, was looking to sell their business. We did a search, we interviewed three investment banking firms, specialists in his field.
So we're very focused on our process. and, after he selected the investment banker. I, I drop down to the CC line and just monitor, the traffic. Sure. So that way when the founder goes, Hey, I got a question. I go, I'm up to speed. the investment banker and I speak, behind the client's back.
Because we wanna have high level conversations without having to explain or do or share what, so [00:25:00] this issue came up. He was caustic. he was, a great person, but it just, he was caustic. He was aggressive at times. and it was just his personality. He wasn't mad or mean, it was just how he came off.
Or sometimes I've seen it to where the actual thought of selling or doing a transaction brings that out of people. It's I've known you for years and I've never seen this. Who are you? You wanna say, who are you right now? and fear creeps in. Yes. Uncertainty creeps in.
Nobody likes uncertainty. Yes. Uncomfortableness. And so the banker and I have a frank conversation because we know that we have to put this founder in front of potential suitors. And so we did work, from a, I don't wanna say good cop, bad cop perspective, but we both decided, this is how we're going to express this to the founder.
That here's how we want to project ourselves as we communicate. my piece was pretend like you're an actor. I needed him to be able to put on a face. [00:26:00] The banker came at it from a different way, and we also recognized that meetings couldn't be three hours long.
Okay. So again, we look at the situation and go, how can we have the best success? what's the magic formula for this founder, which is different than the founder before. And so we would have 40, 45 minute hour meetings with potential buyers and then is get them out of the room.
and then we're like, okay, yeah, we have another appointment. we can have another one. But we just didn't want to have that opportunity to where, for whatever reason. We saw that personality come back Now, the great part about that whole transaction is he was selling the business.
And this is also one of the things founders don't do. He was selling the business and they didn't need him to stay at the business. 'cause he had already hired and trained his replacements. That's great. Yeah. so on one hand, the buyers weren't going to be working with that owner.
But [00:27:00] also helpful because of his communication style and his nature If it would've been a much different, conversation or story had he had to stay, then we have to be like, okay, so this is the personalities, right?
you gotta make sure it fits. You're gonna have to live with this person for a year, three years, five years. 'cause decisions are going to be made, or information will need to be procured from him. And so in that instance, you disclose, you say, Hey look sometimes, or how do you handle that?
in that instance, it's such a soft, right? Yeah. I think again, I personally, I like speaking about the future. that banker and I would've had a conversation around how do we communicate his personality to the suitor. Not in the first conversation, but when we begin to winnow it down and we begin to get, offers and we narrow those down then we'll be able to have that conversation a little deeper, more around personalities
preparing those suitors for who they're gonna be talking to. [00:28:00] So that they're not surprised. So if we tell them in advance, then there's less of a shock. I love that you have to do that. it's a tough conversation and I guess it does make sense to wait until you've winded it down and maybe there's a little bit of a relationship that's been built.
Maybe they've seen it a little around the edges, and so they expect to hear it. and maybe it's something they can live with because they're so far under the deal that they know they want to consummate. Do you see a high percentage of founders regret selling their business?
Okay. I don't, there is a lot of conversation around that transaction and about the end of that business. And it's no different than, I have clients that aren't founders that, have been, let's call it civil engineers for 35 years, and they're like, I wanna work a little less. But I still enjoy what I do. All of a sudden they have a consultancy, they're working part-time, they're working with their same clients that they worked with for years and years. They have their own business. They're 60, they can travel and they can work.
Same thing with that founder. The [00:29:00] founder, again, if they're that entrepreneurial founder, they've got other ideas, they have other things they want to do. And so we have a very good conversation around, okay the wire's gonna hit, what are you gonna do? How are you gonna think about it?
How are you gonna talk about it with your kids? what examples do you wanna show to your. Constituents, your family, your employees, about next steps? a case in particular, there was a company, the founder had started this company for, had raised a total of $3 million. And he had developed this system.
And so he built this up, put a network in place, and he was grinding away. And I met him at a founder event. And he says to me, he says, I think now first conversation, the 30 minute conversation, he goes, I think I'm gonna be getting an offer for my business.
And I said, okay. He goes, I think it's gonna be around a hundred million dollars. Okay, now he's raised three, and then he has a valuation of a hundred. I said, what's our timeframe? He's I'm [00:30:00] hearing that I should get this, in four or five days. And I said, do you care about paying taxes?
He goes, I don't wanna pay taxes. So that was right then and there, we literally had a sprint, the following night, we had a dinner, 'cause it was the only time that my tax attorney could meet. The next day he went to Mexico for his family vacation. We went to dinner,
and we just, we hashed it out. and we created a structure that allowed him, he lived in a high tax state that allowed him to not pay tax on the transaction in his state. Which was a 10% savings. That's huge.
Now. we had to create the structure, right? We had to seed it. We wanted to sit as long as possible so it didn't look like Avoidance and then we also created for him, four daughters. So we created a, family foundation with the focus on the four daughters.
And they, being involved in the foundation to learn about [00:31:00] money, to learn about the value of money, to give money away, to provide for others that don't, aren't as lucky as they, a whole incredible learning experience. and that's where we're able to affect that next generation with positive, financial habits, with a positive outlook, with, we are gifted, we should help.
A whole set of values that they can adopt or not, but, that are offered. and I have to tell you, founders who are parents or just, they just light up because they don't know how to teach their kids about wealth. It's nothing you learn unless you grow up with age or you literally have to have gone through it.
You're right. And it's amazing how many stories you see where that step is not taken and that wealth that they work so hard to pass on ruins the next generation or two. and on that, I do a lot of work around [00:32:00] protecting kids. I was 17 when my father passed away and then, filed a lawsuit against his brother.
My uncle, when I was 23, hired a law firm, a probate estate planning law firm. We spent, five years in pretrial discovery. Wow. And then went to court for six weeks. Now story's a little different. My dad's brother, committed fraud on his brother. but that stuck with me in terms of me being at that age, having this situation.
Founders that get a lot of money. Again, it's relative. I wanna make sure that the trusting mechanism for the kids is dialed in. For instance, the client who's worth 1.8 billion, right? We had a rolling trust set up to where kids would get it a little bit at every age, but they would never get control of the massive pot.
They had access to it, but not control. we put situations in almost [00:33:00] every document to where, we wanna make sure those kids can't lose that money as best we can A divorce, a lawsuit, bad investments. We wanna protect them from themselves because we understand that if a 30-year-old all of a sudden has $500 million or 200 million, or a hundred million or 50 million or 20 million, pick the number, doesn't matter.
It could be it's going to impact their life. And they can lose it like that. That it's gonna impact their life. And if they're not trained, it's heavily weighted towards the bad stuff, not the good stuff. And then you also add not only their decisions, but then all the bad actors who come at them, Hey, buddy,
Thank you for sharing that story about your brother and the fraud he committed against your father the lawsuit that you had to entail to unlock or unravel some of that. I can't imagine what that was like. Would you say that's your primary driver for what you're doing now?
Oh, without a doubt. Now, it's not a apples to apples comparison, but, what I realized then what I realized throughout these [00:34:00] years is that we can have a significant impact by using the tools at our disposal. Whether that's, as estate planning, whether it's tax planning, psychological planning, I could go on, have studied and it's the one thing they don't teach you as you are learning of this business, is the soft side.
All about economics, all about financial planning. Fiduciary markets, money making for the client return safety risk. That's the focus, that's the focus. But it's only one part of what you're actually doing if you are good at it, right? Because you can cover that, but not hit the market.
Now keep in mind, some clients that's all they want. They may only want that piece. True. They may not want, the softer help. but from my perspective, I haven't had, a client or somebody who wants to work with me go, yeah, no, I don't wanna [00:35:00] know, how to make the path smoother for my kids after I sell this for four.
Yeah, I don't wanna know that. So where rare do you hear that? I'm sure. So you give the example of, the individual who had $700 million potential sale in, in. The financial crash hit and he made some changes and then exited for 1.1, and then the other example you gave. But What is the most expensive mistake you've seen a founder, commit during an exit?
early on in my career, I, was put in touch with a gentleman who owned manufactured housing sales companies. So he sold the manufactured houses, alright. Now he, he was diversified, so he also owned some, parks as well. 'cause it's a very lucrative cash business.
he was selling his business for, at the time when he came to me, he was selling it for $6 million. He had an offer for six. Now this is another gentleman who was a phenomenal [00:36:00] salesperson, knew this industry in and out, but didn't graduate college and did not understand financials, balance sheet, p and l, all this kinda stuff, right?
It wasn't a strong suit. He didn't have a strong team because he didn't understand the importance of that stuff. So he didn't have a strong team. But that's how I found them. So I grabbed his books, I did my math, and, I, put him in touch with an AM at the time, this amazing business attorney, respected in town.
He had, I bet at this point he was 65 or 70. He had done a ton of incredible deals, just a legend. And I was able to, get connected to him, have a phenomenal conversation with him, to get him to take, this client. I put 'em together We, ended up, doing the deal for 21 million instead of six.
He had a bunch of cash that he wasn't understanding how it should be counted. and it was a third [00:37:00] cash, a third stock, and a third note. Now, the stock and the note were in the company. And I said to him, I said, I don't like this structure. We've got two thirds tied up in the company still.
And what, it's not really an exit. And this, the third you got in cash, you don't get to keep all that. You gotta pay tax. Okay. And so he ended up with a very little amount of cash. It's a cyclical business. they ended up going to zero. they ended up restructuring a note, into, stock.
but he ended up not transacting. He didn't get the other two thirds. Wow. Now, I wasn't strong enough in my conviction. I wasn't pounding the table hard enough, in my opinion. But, it was just a bummer. Sometimes you could pound the table all you want, it's not going to make a difference, right?
there are some people, some clients, at least in my experience, it's just look, if this is a risk, and they're like, ah, it's gonna be fine. and the thing is, as [00:38:00] humans, we are innately overconfident. Yeah. Just, it's plain and simple. I bet this transaction was 25, 26 years ago. about a month ago, my phone rings. and his name pops up. I was like, oh, I hadn't heard from him in years. We've traded back and forth, but, he, I pick up the phone and we start having this phenomenal conversation, and he recounts from 25 years ago the value I provided to him and that he's calling me now because he had a question about that transaction. Somehow I remembered, was able to answer the question, but then his net worth now is a hundred million dollars. Wow. So he kept growing and I said, of course.
I said, do you have it all sorted out for when you're dead? And he laughs. He goes, no. A bunch of kids, it's crazy. and I was like, you know this. He goes, I know. I just don't have the motivation, and I said, okay, I'm gonna call you after the first. [00:39:00] and we've traded messages back and forth because, he needs that estate planning and so I will help him with that estate planning, even though it's pro bono.
I don't charge an hourly rate, but I'll get him dialed in. I'll get him the attorney that he needs. I'll get him, the framework, and then I'll, push back and go to the CC line. and make sure that he gets it all dialed in. I know his kids, I know his ex-wife, right? So there's a lot of familiarity there, because I know that it would be criminal, right? If he what would happen to all the assets and whatnot. So interesting. Do you think he learned from that? Did he say anything about that first transaction and what he lost and it, did it impact him? Maybe he didn't share?
I didn't ask him about that transaction, and how it impacted him. That's a great question for me to come back to him with. but, yeah, I don't know. You hear these stories and in my experience, I meet people who've had stories like that and it never happens [00:40:00] again.
Like they learned, right? There's nothing like learning trial by fire. it's okay, I saw what that yielded and what happened to me. I'm never putting that much on the table again And maybe if I am, there's a parent guarantee or some other collateral that I can go after, right?
There are so many different ways you can structure deals without a doubt. back to family succession. Why do you think so many family succession plans fail? Oh, because they don't have a point person to help them navigate the emotions, the finance, the elephants in the room.
The, he beat me up when I was four and I'm still mad. we all have stories that we could be like, ah I think again, it's them not recognizing, what's in front of 'em and them not recognizing the difficulty of the task in maintaining, everything.
So again, growing up we had, it was my uncle, my dad, they had a sister. my uncle had four kids, my aunt had three, there were two of us. So we had this cousin group that next level of [00:41:00] cousins. And as a family, we did every holiday together. We were raised Jewish, so we did all the Jewish holidays together.
We had friends from the business come, We had 40 people extended families, and we did Thanksgivings where, we'd watch the Cowboy game. So it was a very, and it was very integrated and there were never, again, there might have been, but I never experienced or saw in fighting.
we never saw, I'm mad because of this, or I'm gonna block or my answer is no, because of that, What's interesting is that my father and his brother, my father decided that because my uncle had four kids and he had two, my uncle could take more money outta the business, and that was their way of, it's a really tough situation to think about because there are inequities at a bunch of places.
those kinds of things help. Giving up for the good. I think that, making sure that [00:42:00] you have I'll use the term psychologists on board. That's what it is to help with that. and look, it depends on the size of the business. It depends on the table stakes.
it depends on how many families are in the business. the old story, I think, first generation grows, second generation blows it. No third generation blows it. that second or third generation has to have that same passion. There are very few families who can take it out far.
I read the book on, the Budweiser family. And I think they hit four generations, which was amazing. and what they did and how they parlayed it into bush gardens and everything like that. And then there was just a couple of people who. Made bad decisions became alcoholics, and it destroyed it all.
So you are, succession planning is extremely delicate. There is a tremendous amount, there's math involved, but there's a tremendous amount of psychology involved. Everybody has to be aligned, right? Yeah. And the odds of that happening from one insular family group, it's different. DNA, it's, yeah, exactly. It's different from a company where you're cherry peaking people and [00:43:00] saying, oh, your personality fits our group, and Right.
And your experience as it's accretive, right? But then you have a family and it's ugh. it gets toxic sometimes. especially when personalities get involved. It can no doubt. If you could give every founder a piece of advice before they exit, what would it be? just, yeah, I would say, and this is hard to do, but I'd say just understand what the future looks like.
A lot of business owners, I'll ask them, do you have you done any proformas? No. What's a proforma? Here's what I would love for you to be able to do with your CFO or CPA or whoever you work with is, let's model out three more years of this business or five more years of this business and let's look and see where that falls out.
Once I get 'em thinking about the future like that, and I get 'em to project out, then that's the kickoff to them thinking about planning. Okay. Because, it's when you're going on a vacation. You are gonna to Orlando, you're like, I'm [00:44:00] getting to Orlando, and then I'll figure out what I'm gonna do.
I'm gonna get to Orlando, I'll probably go to Disneyland. I know I'll go there. Some people plan it all out. And so owners or founders are like, okay, I'm gonna get to the sale. No, what your life doesn't, we still got. So if I can get 'em to think past that, whether it's a hot button around their kids planning, whether it's, a sale or what's the process, then I'm able to get 'em to think forward.
What I would give every founder or business owner today, and this goes off our topic a little bit, is, start using AI in your business now. I don't know what the statistics are today on business owner usage. It's very low, but I'll tell you from my experience, and I've adopted ai
Where appropriate. and I started with chat when it first came out, and I've used Gemini and now I'm, using a Claude. And, you should be thinking about where in your business you can [00:45:00] streamline processes and you can begin to use AI because I guarantee you, your competitors looking at it.
And, if you're not using it today, you will be lapped and fall behind. Because I see it. I a hundred percent agree with you. it is probably the most powerful tool. since the word processor or something. It's just, astounding. the crazy thing is we're, it's in its infancy.
It is in its infancy and we're just finding out utilization. There was an article in the Wall Street Journal or the New York Times last week, and they had a chart of what percentage of businesses adopted it and, It was such a low number. I was astounded. And even of the ones who have adopted it, they're still trying to figure out how it can help monetize.
I'd like to close out about your work, what you're doing with Pinnacle, wealth Advisory. You are here in Austin. Are you Austin, are you Texas? Are you, us? What are you focusing on client wise? So I work, I have [00:46:00] clients, outside the US as well. I'll work with founders and owners, all over the states.
I get referrals, all over the states. I love this Austin community. It is an amazing community. it is helpful. It is kind, it is giving first before asking. it's just been a phenomenal community to get involved in. and so my focus is on our ecosystem. So I spend a lot of time with founders.
I spend a lot of time with, startups. most of 'em have raised some money, so they've got some heft behind them. and I spend a lot of time with those founders who, I'm helping them begin to think about opening up their blinders. I went to, Austin Tech Council pre south by Southwest thing last night.
met some founders and some of the fun I have with founders is asking them, have you done any estate planning? And do you have a will? Do you have a partner? And these are founders. They're like, I'm here to talk about my company I'm launching. [00:47:00] What are you talking about? I'm not thinking about three decades down the road.
So do they just have a blank face? They do. I'm saying, do you have a partner? And they're like, I have a partner. Okay, so let me just give you this. You're 50 50. You don't have a agreement, you don't have, it's not papered the right way between you and then your partner dies and you are only a 50%, owner and you can't make decisions.
not to put a cloud on the room, right? No. You gotta think about that. Yeah. so it's Austin, I focus on Austin. I spend, but I have engagements in Dallas. I have engagements, in New York City. so are you industry agnostic or are you pretty across the board?
Do you like to niche down or? That's a great question. I, in my education, in my training, I learned economics, economic selling widgets. That's the thought process around economics. We're selling a widget. and so it doesn't matter if they're selling wine. SaaS, right? They still have revenue, cost of goods, and the same issues for estate planning and succession and exit and doing pretty much [00:48:00] universal.
Now, where we'll niche down is we will, when we're looking for those bankers, we will find investment bankers who are in their space doing deals. Because, and this is really important, for those founders and owners, the value of a banker, bankers trade in information. So if I'm organizing a meeting with a banker and a founder or myself, and I'm gonna run that meeting, and we've signed NDAs, I want the founder, we wanna learn all we can about the sector, about the industry, about the competitors, about the models, about the pricing.
'cause they're all private companies. So we get all this intel. We want to tell the banker all about our company. ' cause the only way a banker gets paid is if they do a transaction. So if I interview three bankers and I pick one, the other two are still out there looking for people, right?
if they bring a buyer, they get paid. that helps a lot in terms of [00:49:00] getting that founder to think about the future. and to, begin to think wider. And so I've developed an incredible network across the country of attorneys, CPAs, tax attorneys, just all down the list because I wanna be able to match up deal sizes, industries, and if I can, personalities.
Because we want everybody to get along towards a common structure or a common goal of, getting it across the line. Successful transaction. So I'll include your LinkedIn, profile, but is there a website, is there a better way to contact you?
Yes, so my website is, pnw advisory.com. And, you can reach me on my LinkedIn, the website's, got a bunch of links I'm always open to having that initial 30 or 45 minute conversation with a founder. there's no obligation, right? it's private, it's confidential, and what typically happens is that founder is gonna learn a lot.
Depending on the path they take, that's [00:50:00] great. If they come back, great. If they don't, that's fine. It's just empowering those founders to be able to make better decisions, around their business, their life, their world. It's easy for me to have a conversation with someone and help them along.
Alright, Doug Greenberg, thank you very much. It was a great conversation. I appreciate your time.