Ep. 121 — Dr. Tom Deans: Sell the Family Business. Even to the Kids.

5 min read

Subscribe: Apple Podcasts · Spotify · YouTube · Amazon Music · iHeartRadio · Pandora · RSS

Episode Summary

The story you tell yourself goes like this: you’ll build it, the kids will join, you’ll gift it to them, and your name will live on. Dr. Tom Deans has sold over a million copies of a book arguing that story is the most expensive lie in family business. Tom ran the third generation of his family’s manufacturing business, sold it at a 10x EBITDA all-cash deal in February 2007, and walked out for the third time in three generations without ever transferring a business intergenerationally. His message: every family business should sell at market rate, every time, even to the kids. Not because love is missing. Because love tends to survive a sale and almost never survives a gift. Tom and I got into why founders confuse their business with their legacy, why silence is the great destroyer of family wealth, how to run a real family meeting (agenda, facilitator, rotating chair) instead of a founder sucking the oxygen out of the room, and why no clever tax move can rescue a business handed to someone who won’t risk capital to run it.

Watch on YouTube

## Top 10 Takeaways
  1. Your legacy is your family, not your business. Nobody in the room can name the founder of Coca-Cola.
  2. Founders confuse control (which makes money operating) with succession (which requires letting go).
  3. Founders living into their 90s leave kids in their 60s still waiting for permission, let alone to buy in.
  4. Gift the business and you teach your kids to wait. Sell it and you teach them to risk capital.
  5. If your kids have to buy back value they helped build, you’re working against your own economic interest.
  6. Hand your kids cash, not shares. Watch which ones return it for stock. That’s your real successor.
  7. The cleverest tax move can’t save a business handed to someone who won’t risk capital to run it.
  8. Silence is the great destroyer of family business wealth. People fill voids with worse stories than the truth.
  9. Real family meetings have agendas, facilitators, and rotating chairs. Not founders sucking the oxygen out.
  10. The greatest gift you give your kids is freedom to be authentic, not a seat in the business you built.

Sound Bites

“The day that we sold our business, to this day was the best day of my life.” (@TBD) — Dr. Tom Deans

“I get more phone calls from elderly women whose business owner husbands have pre-deceased them, and you know what they tell me? They want to bring their husband back from the dead and kill them themselves.” (@TBD) — Dr. Tom Deans

“Silence is the great destroyer of family business wealth. It’s not families that talk about their plans. It’s families that leave people guessing because of the secrecy around the transition of family wealth.” (@TBD) — Dr. Tom Deans

“The most clever tax maneuver in the world is not smart enough to diminish the risk of transitioning a business into the hands of someone who doesn’t wanna risk capital.” (@TBD) — Dr. Tom Deans

“The greatest gift any business owner can give their children is the freedom and the flexibility and the resources to grow up and be the people they were meant to be, to be authentic and not some version of the business owner themselves.” (@TBD) — Dr. Tom Deans

About This Episode

Dr. Tom Deans is the author of Every Family’s Business, named by the New York Times as one of the top 10 books for business owners, with over a million copies sold. After a banking career, he joined his family’s plastics manufacturing business at 37, ran it as CEO for eight years, and sold it to a strategic buyer in February 2007. He went on to write a sequel, Willing Wisdom, on the questions families need to ask about wills, wealth, and aging. Tom has delivered over 1,000 paid keynotes in 25 countries and brings a contrarian message to family business succession: every business has a freshness date, and the greatest gift a founder can give their family is a clean sale, not a gifted operating business.

Resources Mentioned

  • Every Family’s Business by Dr. Tom Deans — Tom’s first book, the 12 questions every family business owner should ask. — everyfamiliesbusiness.com
  • Willing Wisdom by Dr. Tom Deans — Tom’s sequel on wills, wealth transition, and the seven questions families need to ask.
  • GEXP Collaborative — Ryan’s prior firm, with guides on internal exit options, external exit options, and how to value a business.

Connections

Phase + Module:

Milestones:

Concepts referenced:

Graph View