Michael J. Murray, CFA, CFP®, CAIA: Personalized Counsel for High-End Wealth Management

Craig Castelli (00:06):
Welcome to the Close M&A Podcast with Caber Hill Advisors. I’m your host, Craig Castelli. And today my guest is my good friend, former neighbor for about 12 years and a partner at Altair Advisors, Mike Murray. Altair is a high end wealth management firm that caters to the ultra high net worth set based here in Chicago. Mike was involved in the founding of the firm. So jumping in, take us back to the beginning, Mike. When you guys launched the firm, what was the idea and why’d you think it would work?

Michael Murray (00:35):
Yeah, so we were really … Thanks for having me on. Appreciate that. We were accidental entrepreneurs. I mean, we worked at Arthur Andersen. Enron happened, which the older viewers will remember, and the young ones will probably not. But we were forced to do something. And I was living in London, England at the time, working at Anderson there, helping launch their wealth group in the UK. A client approached us and said, “Hey, if you guys want to start your own business, I’ll be your angel investor.” And we decided, as opposed to going to another one of the big firms, we decided to hang our own shingle and start our own firm. And what was different at the time, this is nearly 25 years ago now. What was different is the wealth world at that time was predominantly organizations creating products. Their advisors were largely sales, distribution for products.

(01:24):
Commissions were a big thing back then, and our approach was very institutional. Just like attorneys are, we react to the fiduciary to clients and putting the client first was sort of a novel thing at the time. Now every advisor sort of talks to the same business today, but back then it was really unique and it’s worked out really well. Our retention rate’s been very high. So putting the client first and providing advice as opposed to products is a really important thing.

Craig Castelli (01:52):
Which has always made sense to me, and it’s kind of surprising how long it took for the fiduciary rule to go into place. The fact that somebody can claim they’re helping you plan for your financial future, yet only recommend products they’re getting commissioned on, always add a little bit of a disconnect to me.

Michael Murray (02:09):
Yeah. And it’s interesting too, is there’s good people at every organization that mean well. But if the structure is designed, the economic compensation structure designed to push certain things, you’re going to have a conflict whether you believe it or not. And by having a structure that isn’t directly tied to the sale of a product or a transaction, just naturally allows for advisors to be advisors and truly look out for their client’s best interest without having to even consider an economic change for them.

Craig Castelli (02:40):
Yeah. And if you’re doing that, you can create a great business and make plenty of money. But to your point, there’s no greater incentive than a commission. And so whether you view yourself as somebody who is really putting your client’s best interest first, you can’t ignore that carrot that’s dangling that says if you sell this product, you’ll find a way to justify why that’s the best product for you. So you guys focus on this very specific subset of families and individuals labeled, at least labeled by me. I don’t know how you guys label it. I’m viewing this as the ultra high net worth set, but tell us a little bit about what this actually means and how you define a good Altair client.

Michael Murray (03:23):
Yeah. So I think ultra high net worth is largely a marketing word that a lot of organizations have used. So there’s no concrete definition, but roughly speaking, I think most will classify it as people with wealth, net worth of 25 million or greater. Someone with 25 million of wealth may only have 15 or 20 million of liquidity because they’re going to have homes and other things involved in that. We don’t really categorize it into ultra high net worth. We’re really looking for clients with at least 10 million of liquidity, which usually translates to net worth of 15 plus. We oversee liquid assets about $10 billion now across roughly 430 families or so. So our typical family is a much higher wealth level, but it’s also fun and exciting to work with clients on the lower end of that and watch them build that wealth up over time.

(04:17):
We resonate particularly well with first generation wealth creators because we’re entrepreneurs ourselves. We built this business from scratch. So we tend to really connect really well with that first generation wealth accumulating generation.
Craig Castelli (04:31):
Yeah, I can see that. It has to be very attractive to land a new billionaire family, but when you can work with somebody to help them grow from 10, 20, 30 million into a nine figure or 10 figure portfolio, that’s way more impactful.

Michael Murray (04:46):
Yeah. Yeah. It’s a lot of fun. And the mindset’s different, right? I mean, those that have rolled the sleeves up and are building the business, they’ve been through all the difficult years and the good years. And then it’s a different mindset for someone at that level.

Craig Castelli (05:03):
From an investment and advisory perspective, what’s the difference between advising those smaller for you clients with maybe 10 to 50 million of liquidity versus those with half a billion or a billion or more?

Michael Murray (05:19):
I think the bigger the numbers get, the complexity tends to go along with it because what happens is there are certainly some, but it’s a lot easier to have 25 or 50 million had no one heard of you versus having 700 or $800 million. You become well known. So there’s much more complexity. You’re pitched more things. People at the higher end tend to have a primary business that they probably still own as part of that process. So there’s more people involved. There’s more complexity with people involved. The other things that when you reach to compare someone’s lifestyle with say 25 million versus 500 million, what two things enter into the mix that they have the optionality for, which create a lot of complexity and wealth, which is yachts, airplanes, more homes. So you end up things like if you end up with three, four, or five homes, you’re probably going to have house managers.

(06:19):
It’s just the complexity increases. So as opposed to having meetings one-on-one with just the client, we’ll be involved a lot with more people in the meetings. Like this morning, for example, I was talking to a client who is on the higher end of the wealth spectrum we’re talking about. And it was with this family office person as well. It’s just there’s more involved in it.

Craig Castelli (06:40):
Yeah. I would imagine there’s got to be an element of saving them from themselves at a certain point too, because they’re pitched every investment opportunity under the sun. They can buy any house they want, they can buy the yachts, but even they probably have their limits at a certain point.

Michael Murray (06:56):
They do. And there’s a lot of what goes on behind the scenes too, is their friend or their friend of a friend is pitching some investment idea. They really don’t want to have the conversation with that person. So we can be a fallback as well. I mean, we create a discipline process, but we’re also sometimes delivering the bad news about, we’re not going to invest and here’s why. Because they don’t want to have those conversations. They want to live their life as opposed to spend half their week just talking to friends and friends and friends about deals that they don’t want to be involved in.

Craig Castelli (07:26):
Right, right. Yeah. I mean, there’s a lot of advantage to the good cop, bad cop approach. And if you guys can willingly play that bad cop role, you do them a huge service.

Michael Murray (07:34):
Yeah, absolutely. Absolutely.

Craig Castelli (07:36):
So thinking about the entrepreneurs that you work with, similar to the entrepreneurs that we work with, regardless of the business size and level of wealth, typically we find below a certain point, if you own a business, there’s a decent chance that something like 80 to 90% of your net worth is tied up in that business. And it can be very lucrative, but concentration of any sort also comes with inherent risk. So how should a business owner who’s in that position be thinking about things?

Michael Murray (08:08):
Yeah. The concentration, my experience has been a lot of the business owners, it’s an extension of their personal checkbook. There’s needs of the business or needs of the family. A lot of family businesses are feeding a lot of households over time because everyone’s involved in some capacity. So what I think about as having the family business be the primary checkbook for distributions for the whole family, I always talk about it. You get to a point of success with the business or a point in your career where you want to think about the next phase or you have accumulated a lot of capital. So by hiring an advisor to help manage the wealth aspect of it, it gives purpose to every dollar. So think of it as you throw it over the business fence into the personal bucket. If it’s not being spent, now there’s a purpose to that dollar.

(08:56):
There’s no question about where it’s going to go. Yeah, we got a strategy. We have a plan. We know exactly what’s going to happen because that’s what I’ve found a lot of apprehension from folks is I understand my business inside and out. I don’t have time to deal with anything outside of the business. So one reason I keep it all in the business is I don’t know what to do with it. That’s what the advisor does. And then once you open up that door about now we’ve got purpose to the dollar that leaves the business, it opens up the opportunity for all these other things that they have to think about, which is the estate planning aspect to it, the family dynamics. What started off as maybe a family business and two kids at home is now two kids and they’re married and they have kids.

(09:37):
So you’ve got three generations involved and communication’s a really important thing. And having someone that can help facilitate that communication and issue spot where we see problems occur with families over time is really important to get to that earlier rather than later.

Craig Castelli (09:54):
Yeah, that makes sense. One of our early questions with any new client is, are you working with a wealth advisor? Who are they? Are they aware of the conversations that we’re having or the process that we’re about to embark on? Selfishly, if we know that they’re working with a good advisor and they’ve had the conversation, they plan properly, we avoid reaching a closing table and all of a sudden they call the advisor and the advisor say, “What are you doing? You can’t afford to sell the business. Your lifestyle won’t support it. You’re going to outlive the money.” But it blows my mind how often these otherwise very sophisticated and successful people are either not working with anybody or working with somebody that they have completely outgrown at this stage of their career.

Michael Murray (10:41):
Yeah, it happens all the time. And I always think about, we have clients inquire all the time about what to do. I always strongly advise them to interact with people like you early because a lot of people think my business is great, I’m running it so well, it’s going to sell easily, but they don’t realize it’s over time been designed to serve the broad family as opposed to an investor. So I always tell them, it’s not like you’re going to decide to sell and it’s going to happen next month. You got to plan ahead of time, talk to people like Craig to think about from an outsider’s perspective, what do we have to shore up and change about the business and the financials to make it more attractive at the end of the day? And that’s not a six-month process. It’s usually a multi-year process.

(11:23):
And then on the other side of that is you’ve probably, in a lot of businesses, you’ve got people in certain roles that are family members that are paid significantly more than the market value that role is, or there’s distributions going out that are supporting households is what’s the minimum size sale you need to feed everyone? And is it structured ahead of time so that the economics get to the right households in the right way? It’s crazy how many times it happens where the matriarch patriarch receives all the proceeds. Then they realize they’ve got to get the son’s household some money, but now it’s already in their estates and now they got an estate tax issue. They’re going to have to do a gifting topic. Well, good plan ahead of time, you can set up the ownership structure ahead of time to where the economics fall the right place to the right people at the right time and really avoid that whole extra layer of concern about estate tax.

Craig Castelli (12:16):
Yeah. And it’s a complex issue, but there are well-defined processes for addressing all of this and you need to do it in advance. You don’t need to do this a decade in advance necessarily, but what I’ve learned from you and specifically from some of the tax attorneys is once you have an LOI in hand, it’s too late. Too late. That establishes a value and the IRS has a credible document that they can point to the value. And so if you want to transfer shares and take advantage of accepted tools like discounts for lack of control and discounts for lack of marketability because you’re transferring a non-control share in a closely held private business, you need to do that in advance to really maximize the value there.

Michael Murray (13:03):
And a lot of people are concerned they conceptually they like the idea of that, but control, especially with founders of businesses is a huge topic. I’ve got where it is today, I don’t want to give up control. But in a lot of those mechanisms, you don’t have to give up control.

Craig Castelli (13:18):
Right.

Michael Murray (13:18):
You’re just giving up sort of future economics and maintaining control. I think once people understand that, they’re much more open to the idea of, “Okay, now I get it. We can do some planning around it. I’m not giving up any control at all in this situation. I’m just giving up future economics and I get more comfortable around it. ” The other one that people, I hear a lot is, “Oh, I’m about to sell this business. I need to give a bunch of money to charity to save tax.” My next question to them is always, what’s your philanthropic intent? Because when you put a dollar into a charitable bucket, which there are many different vehicles you can use for this, it’s going to go to charity, but some view it as it’s a tax saving opportunity only if you really have the philanthropic intent. I have many clients where they funded philanthropic vehicles as a sale of a business or some monetizing event, and that charitable bucket is way larger now than it was at the time because they didn’t really have that level of charitable intent.

(14:16):
So yes, they give money away, but it just keeps getting bigger and bigger because they don’t have that interest. They did it really as a tax saving tool when in reality they probably shouldn’t have done it or done it at a smaller amount.

Craig Castelli (14:28):
Yeah. Yeah. That’s a big conversation. Not everybody’s charitable, not everybody wants to take advantage of that.

Michael Murray (14:34):
No, that’s fine. That’s perfectly fine.

(14:37):
The other one I see a lot is communication more often than it should occur, families involved, mom and dad have an idea what the business is going to do, which might be different from what the kids intend the business to be. They sort of in the back of their mind like, “I’m going to go work out and come back to the family business. That’s my intent to run it. ” Or maybe they’re working in the business. So when they’re contemplating a succession of the business, and if they’re in their mind, the parents’ mind, it’s likely a sale, communicating early can prevent a lot of personal family conflict where without that communication, it’s already too late. And then at that time, the next generation says, “I was really angry about that. I thought you’d involve me. I always viewed that I was going to take it over like you did from your dad in the future and you never asked, you never had the conversation.” So making intentions clear is important and also being open to feedback. In some cases, there are ways to structure transactions, which you can help with as well besides a full sale, which is, “Hey, we’re just going to do a sale to management. We’re going to do a sale to the family over time and how do we structure that? ” That’s all should be on the table and under consideration and have clear communication.

Craig Castelli (15:53):
I mean, families really should be having their own family board meetings independent of a business board meeting to tackle these conversations because you’ll see certain circumstances where the kids are in the business begging dad to retire, dad has nothing else to do, so he’s still showing up every day, even if he’s just having lunch and harassing people. Then you get the flip of it where Junior wants to come back into the business and mom says, “He’s not capable of running this business. I can’t let him take this over. He’s going to burn the thing to the ground.” But more often than not, those views are not shared. And maybe there are ways to bring junior into the business in the right way, but also I think you have to have the conversation of what are you solving for? Are you solving for succession? Are you solving just for some liquidity needs and de- risking?

(16:44):
Because to your point, if certain family members need to continue to earn the ongoing distributions from the business, but the family members running it want out and want to do other things, there are ways to sell to management, partial sale of the business, let management run things and have the control they need, allow certain family members to maintain their ownership interest, maintain certain cash flow. And you never make everybody happy all the time, but there are plenty of ways to address this and avoid what really the shame is, is when families see their personal relationships fractured over money and over what happens with businesses.

Michael Murray (17:26):
100%. And I think if you grow up in a household where mom or dad has been running the family business, you view them as the role as shareholder, the role is CEO, the role is everything. But this idea that you can be a shareholder and a management, executive management officer are different roles. Just because

(17:44):
Mom and dad can have both, it doesn’t mean you can’t have a very happy, successful career as a shareholder of the business with professional management that may not be family.That’s just a conversation that needs to happen.

Craig Castelli (17:57):
Yeah. And we’ve seen issues to that point, even independent of family businesses, just with partnerships in general. We’ve seen medical practices and dental practices where you’ll have two doctors that own the business together and they grow to a certain point where Dr. A says, “I’m going to step away from clinical care. I’m going to be the CEO. I’m going to run the business.” Dr. B says, “I’ll be the chief clinical officer. I’ll keep practicing.” And they compensate each other just by splitting profits at the end of the year. Well, that might work fine for a couple of years, but eventually a rift is going to form. They’re each going to perceive the value that they create to be greater than what their partner creates. And if they have an established ordinary compensation as if they were ordinary employees for those roles, separate from the shareholder roles, it creates problems more often than it doesn’t.

Michael Murray (18:50):
That’s a really important point. And that happens. I see that a lot, but compensate for the role and the ownership is sort of separate and distinct and that alleviates a lot of the issues over time.

Craig Castelli (19:02):
Yeah. So when you’re working with entrepreneurs, and let’s think about those that may have more of a … I guess I’ll touch on this both ways. I want to touch on the family aspect too, but I want to think about entrepreneurs who are heading towards the sale of the business. This isn’t any podcast after all. When should they first pick up the phone and call you and tell you that they’re thinking about selling?

Michael Murray (19:30):
Couple years in advance. And I think the first call goes to someone like you, which is, “Hey, we’re considering a sale. How far is the business from being ready for a sale? Be ready for a process.” That’s sort of step one, because that’s going to set the tone of how long this process might take. And then once you get, you really want to have it separated by at least one tax year before the heavy planning comes into play, because as you said, once you have an LOI, the game’s over, you want to make sure you separate tax years. And then some cases, you have situations where you have family owners that don’t reside in different states. Some of those states might be very high tax states, and if there’s flexibility and the dollars are adequate, as a shareholder, if you live in California, for example, and you’re going to pay 13.3% in sales tax, how would you feel about moving to Texas for a couple of years or Florida for a couple of years, get through the process, sell the business, you’ve separated the sale by a couple tax years and you could save, think about that for every $10 million, 13% is a million three, right?

(20:40):
These are big dollars that you can change. And if you’re not working in the business and where you reside is just based on personal preference, it’s something to consider, but you want to do that at least a tax year or two in advance because you can’t intentionally move temporarily just avoid the tax. That’s not going to be looked fondly upon the states, but there’s planning there. And then of course, the estate planning economics of it too and making sure it gets to the right place, but really a couple of years in advance.

Craig Castelli (21:10):
Yeah, go ahead.

Michael Murray (21:11):
One thing to add to that, the other thing is the generation that’s running the business, they also want to retire and enjoy the success of the business. And things can take long. Things happen, markets go crazy, COVID happens. So you want to think about it far enough advance like, “Hey, I don’t want to decide and this year I want to sell the business and then realize for reasons out of my control, it’s going to take four years.” Well, you might be two years past when you actually wanted to transition the business and retire. So you got to think about all those considerations and the earlier, the better.

Craig Castelli (21:45):
Right. And there’s a difference between just getting it sold and getting it sold the right way. If the business is big enough and it’s in the right sector, you can call me tomorrow and we can probably find a buyer for it in a couple months and have the deal done well before the end of this year. But that doesn’t mean, unless you are facing some hardship, illness, some level of distress that is compelling the sale prematurely, that there really shouldn’t be a need to rush it.

Michael Murray (22:11):
Yeah. I have a question for you.

Craig Castelli (22:13):
Yeah.

Michael Murray (22:14):
A lot of the consideration too, when I think about working with a prospect who’s about to become a client and verbally become a client, they’re selling a business. We’re in the stage where they’re talking about rollover proceeds. I always view it as, and of course the dollars become bigger if you’re willing to roll over because you’re basically self-financing their acquisition of your company by doing the rollover essentially. I always think about it as rollovers aren’t guaranteed. Let’s make sure the economics work under the assumption the rollover will never happen. It has to work for you. And then we can do a lot of estate planning around the rollover because once again, now you own a minority interest, you get big discounts. I always view it as whatever you get today is what you should count on. And the rest of it is a tool for transition of wealth and estate planning.

(23:04):
What’s your general advice to clients when they’re debating between the top line number and the rollover amount?

Craig Castelli (23:11):
So I view it the exact same way, but I think there’s an important piece of context that needs to be understood by everybody who’s going into this scenario. If you’re rolling equity, more likely than not, that means you’re selling into a private equity environment, whether you’re the platform or you’re an add-on to an established platform. And more likely than not, you’re selling for a premium to non-private equity buyers. And that is how you reach the premium. The capital stack does not work if it’s all a cash deal. And in most cases, I’d probably rather take rollover equity to an earnout. Certain sectors will see earnouts instead of rollover equity, or we’ll see some level of flexibility to allocate dollars between one or the other. I personally prefer rollover equity because earnouts typically are all enough and they don’t have a shot at the upside and it really is a full carbon of the purchase price.

(24:13):
So first and foremost, I want sellers to understand, “Hey, look, your sector right now, your business trades for 10 times, or I’m going to use 10 times because everyone thinks they want to sell for 10 times.” If you sell to management without involving private equity, these guys are just financing it from the business or from a bank. Maybe you’re selling it from four to six times. If you’re selling to a competitor and they’re borrowing senior debt and a little bit of mezz to buy the business, they can probably borrow four to five times. So maybe again, it’s a 6X deal. So how are you bridging that gap? Hopefully you’re getting more cash at close than just that 6X anyway. So there’s a little more cash at close inherent in the PE deal, but that rollover equity is really the sweetener and it’s required. But to your point, it can go to zero.

(25:01):
It is an investment. The target is for it to triple in five years. That’s what most PE firms will tell you is their game plan equates to roughly 22.5% rate of return, beats the doors off the S&P, but being an alternative asset, it comes with greater risk than just parking money in the S&P for 20 years and forgetting about it. So you have to be comfortable with that risk. We have seen PE deals with seven times cash on cash returns, 10 times. I’m aware of one that was in the 30s, but there are also those that you’re lucky to just get your money back and it takes 10 years, not five, because it didn’t go as planned. And so I think as long as a seller is going into the process idewise open and fully understanding that in order to get this valuation that I know I can get, I need to accept the role over equity, it makes it a lot more palatable and comfortable for them.

(26:01):
And they know what they’re signing up for.

Michael Murray (26:03):
And I like your view on the earnout versus the rollover too, because in the rollover, you’re in the same seat as the acquirer. You own equity in the business, right? Your interests are aligned. The earnout piece can be somewhat of conflict because, of course, the long-term hold of the business wants to pay out as little as possible, but also be fair and equitable. And it’s a short period of time. It’s often, it’s all or nothing, and it’s usually over what, 24 months, maybe 36 in the long end. So I totally align with you that rollover is a much more interesting component to drive the price higher with the opportunity for upside.

Craig Castelli (26:40):
Yeah. And earnouts, they just lead to disputes, they lead to playing games. There are scenarios in which they make a lot of sense, and we will sometimes even introduce the idea if it’s a fast growth business with a large unrealized pipeline at the time of sale. And so that business owner, more likely than not, is wrestling with, “Do I sell now or do I realize a little bit more of this growth?” They’ll always be chasing, if the business continues to go up and to the right, there’s always going to be that unrealized potential. So how as a buyer do you bridge that gap? You can’t underwrite the acquisition that they haven’t yet made, but if it’s in their pipeline, if they’ve developed a relationship, maybe they even have it on your LOI. There should be some level of credit that they get for it. So we do support earnouts in those scenarios, and typically that’s on top of the baseline valuation.

(27:33):
They’ve gotten cash, they’ve gotten rollover at equity, and this is essentially a bonus if things go as well as I say they’re going to go.

Michael Murray (27:40):
Yeah. One thing related to that, and we see all the time in our world is when people own a business, they’re all in. It’s oftentimes their identity, it’s 24 hours a day. If they’re going to sell and walk away, it’s really tough because everyone else in their lives, their spouse, their kids, their friends, they’ve been living a different life this whole time, right? Their life won’t change because they stopped working. So this transition, and we see it with clients, whether they’re business owners or C-suite executives, is, well, what’s the great transition? So what we’ve found tends to work pretty well for clients is involvement in board opportunities, and especially in situations where they’re selling into a PE backed environment, somehow getting involved and engaged with the PE firm and their other platform companies can be a nice transition into retirement. You can’t go 120 miles an hour to zero, but you can go from 120 to 40 or 50, and it keeps them engaged and interested and helps on the personal relationships as well, as opposed to the expectation.

(28:44):
Everyone’s going to change their lives because for me, because I just stopped working and it’s just not realistic and it can lead to conflict as well.

Craig Castelli (28:51):
Now, are you able to help them either find those opportunities or connect them with coaches and other advisors who can steer them in the right direction there so they’re not trying to figure this all out on their own? Or do you find that typically they have a network already established and it’s just a matter of making a couple phone calls and they’ll find those opportunities?

Michael Murray (29:09):
In their industry, yes, but oftentimes there’s non-competes involved, so it can be challenging to go work with a friendly competitor, like it’s going to violate the agreement you just made. So we use our network of clients where we will make introductions and we’ll talk, introduce them to clients that went through that same process three, four, five years ago and how they got to where they are today. So the answer is yes to all the above that we can help facilitate things. Usually private boards are very different than public boards. The hardest public board to get is your first one. Once you get your first one, the limitation is usually, there’s a limitation of time as opposed to opportunities. So we’ll use it by networking, introducing them to people in our network or clients that have been through the process and then it goes from there.

(29:58):
Yeah, I can see that That being hugely beneficial for them. Mentally, physically, you hear the horror stories of somebody selling a business immediately retired and step into that health decline six months later because life just starts to fall apart. Anything you can do to avoid that.

(30:17):
I’ve seen it many times. Anything you can do is important for sure.

(30:21):
And sometimes you’re surprised. Sometimes you see those that you think will have a really hard time with the retirement transition, do really well at it. And then the opposite I’ve seen as well where people are like, “Oh, it’s going to be easy for them and they struggle.” So you never know. But as an advisor, both on your front and the transaction side and the longer term advisor post transaction is helping them. It’s not just about the spreadsheet and the dollars, it’s about the lifestyle. And they’ve worked really hard to afford an opportunity for lifestyle for them and their family. So thinking about where we’ve seen people struggle in the past and making them aware of it and helping them through that process is important.

Craig Castelli (31:01):
Yeah. So you know what I’m interested in watching. You and I have a mutual friend who just retired at a pretty young age and he seems to be taken to it pretty well so far. We’ll see six to 12 months from now what things look like. But out of the gates, it seems to be going well.

Michael Murray (31:16):
100%. 100%. Yeah. And usually the retirement, usually there’s a lot of trips involved when people first retire and then you sort of get into your movement. I think he’ll do fine is my suspicion.

Craig Castelli (31:27):
Yeah, mine as well. So Mike, this has been a lot of fun. I want to ask you one question here. Just you’ve dropped a lot of great nuggets, but one last piece of advice for the crowd. For business owners listening, what is one thing that they should be thinking about regardless of how long they plan to own the business? One thing that they can either decide today or implement from a planning and succession perspective this year that’s going to be really, really meaningful downstream.

Michael Murray (32:01):
I think the number one thing, and that is if you think there’s a possible sale in the future is think about the business not only from the family seat, but as a potential buyer seat. You’re a successful business operator, right? So think about it as, “Hey, if I’m going to sell this eventually, I should at least consider in all of my decision points through the years about how I would view that as an outsider.” And sometimes if you head down a path because it’s entirely catering to the family need, you can get really far from where a potential buyer would want you to be. And the way to get those nuggets of information is view it as a business operator and also introduce yourself and talk to people like you that can say, “Here are the things that really drive the value of the business over time.” It’s up to you whether you want to execute on it, but you should always know in the back of your mind what’s going to drive a potential buyer’s valuation and have it at least be a consideration along the way.

Craig Castelli (33:00):
It can be a very eye-opening exercise for business owners. When we first meet a company, part of our own due diligence is we’re taking a pretty deep dive and we’re coming back to them and sharing some thoughts on valuation, some thoughts on how we might position the business, but also taking them through, if we think of valuation as a range for any company and industry, what pushes you towards the low end of the range? What pushes you towards the high end of the range? What are the really big issues that we can anticipate every buyer wanting to unpack? No company’s perfect, right? So there’s always going to be something, but we’ll oftentimes find owners are equal parts impressed with what they’ve built and impressed with the value and finding one or two areas where it’s like the light bulb goes off, “Oh my God, I need to address this before I can go to partner.”

Michael Murray (34:00):
Right, right. The other thing to do that too is people like you, good advisors on the transaction side aren’t also, because some people will be reticent to have those conversations because they think they’re going to try to force a sale on them, they’re not ready. Good advisors, thoughtful instances like I know you are, it’s your sales cycle to get to a client that’s going to sell a business is years in a lot of cases.

Craig Castelli (34:23):
Yeah.

Michael Murray (34:24):
You build a relationship and you’re not looking necessarily like, “Okay, if they’re not going to sell in six months, I’m going to move on.” You build multi-year relationships and that’s going to be a sale in three years or five years or longer, but you build the relationship and you build the confidence and the trust is really important.

Craig Castelli (34:41):
I plan to be doing this for a long time and so the trust and the relationship is important. I have the patience to wait and I’d rather take a company to market when everybody is truly primed to do it.

Michael Murray (34:55):
That’s right.

Craig Castelli (34:56):
That’s right. Mike, this has been a lot of fun. If people want to learn more about Alter or get in touch with you, what should they do?

Michael Murray (35:03):
AltairAdvisers.com is the website and my information’s on the website. You can just reach out to me directly. Thanks again for having me on. I really appreciate the conversation and hopefully people will learn a little bit from this and pick up a couple of nuggets that’ll help them.

Craig Castelli (35:18):
I think everybody will learn a lot. So thanks for joining here and thanks all of you for watching us on The Close.