Please excuse any typos in this hasty transcript.
Matt Register: Welcome back to Texas Business Radio. Texasbusinessradio.com is the Web site. Get your calls in 844-814-8144 is our 24 hour call in line. 24 hours, call now, call in the middle of the night. I’m not sure I really care. We’re going to get the experts on here to get those questions answered. You know, we have a regular segment we like to call National Adviser Showcase. And this is where we’re at right now. There’s a lot of really smart guys coming to Texas, talk to CEO’s, they have a wealth of knowledge. We’d like to get them in here and impart some of that knowledge on you. So, that’s we’re going with right now. I’m your host Matt Register. Jay Curry’s over there in a co-host chair. Jay talk to me.
Jay Curry: Well, if you’re out there, you got to hear this. When we bring in these speakers from all over the United States, they’re bringing in some real knowledge, some real skills. And every one of them adds a little bit of maturity, business maturity for our listeners. This is going to be another good one. Stick, stick around folks, this is going to be good.
Matt Register: Yeah, no, no doubt. When you have a business and, and it’s never too early to start planning on how you’re going to exit that business. And Scot Hunsaker is here all the way from the outskirts of St. Louis to talk to us a little bit about that exit planning. And things you need to do years out from, from, from wanting an exit that are going to set you up for success. Scot welcome to the show.
Scot Hunsaker: Well, thank you for having me. I appreciate it.
Matt Register: So talk to me a little about, you are the Owner, President of Ardent Group out of Missouri. Tell me a little bit about Ardent Group. What you guys do and who it is you’re in town to speak to.
Scot Hunsaker: You know, I’ve had the privilege of leading eight companies over the years. And when I sold my last company, my plan was to go do a ninth. But what happened was, as I started having some my friends come to me and say “Hey, what happened with what you were doing?” I kind of told them the story and they said “Scott. I’m in so much trouble because I’m ten years older than you and I haven’t even started. What do I do?” So I started work with companies about how are we going to transfer that institutional knowledge and business savvy to the next team. You know, I was doing some research right after I kind of figured this out and I found that 66 percent of businesses will close their doors when the current leadership team leaves. Think about that.
Jay Curry: That’s two out of three. That’s big.
Matt Register: Yeah. And anytime you have wealth destruction like that, value destruction, it’s always sad. There’s always a better way to do that. Right?
Scot Hunsaker: But not even wealth. Think about what that does to families. Think about whats that do to the employees. What’s that do to the customers. What’s that do to our communities. What’s that do to our industries. It’s pretty significant. Now you were, you were chatting in the intro there about what our choices are and I don’t believe we can predict the future. So kind of, I think the tool is, how do we create as many successful paths to get us to where we want to be. So when it’s ready to make a decision, we have choices instead of just a default answer. Which may or may not be good.
Matt Register: Well, as an investment banker, we were talking, you know, really quickly during the break.
Scot Hunsaker: Sure.
Matt Register: I have seen the effect of not having a plan. Right? Of somebody that, that gets a diagnosis that, that necessitates a need to exit their company. And, and they’re not ready and have realized that having no plan is incredibly harmful to everybody all the way around. Right?
Scot Hunsaker: If you’re wanting to maintain value or even be successful in transferring these businesses, you need time. You can’t do it in 45 days. It’s not flipping a switch. You know, in my case it took me 12 years to build a team to take it over. Now, when I work with people, we get it done in three to four. But if you’re dealing with a month, your choices are very limited. Both whether you sell internally or you sell to a third party.
Jay Curry: Or the value you’re going to get.
Scot Hunsaker: Right.
Jay Curry: You know, goes down if you only have…
Scot Hunsaker: You know, my personal opinion is that I think one of the reasons that we have this 66 percent failure rate or lack of ability to transfer is because we’re so busy concentrating on the urgent, instead of the important, we never get around to it.
Matt Register: Well, that’s, that’s exactly right and that’s what these guys are, are doing. They’re smart guys, they understand the need to have it done. But they’re busy, they’re busy, they’re too busy to mess with it. And if they’re, if they realize the importance of it, they’re too busy, they can’t not mess with it, they have to mess with it. Right?
Scot Hunsaker: I, maybe ask our listeners for two things. One is, are you robbing from the future to pay for the present. In other words, are you not investing in the future, so you’re taking it all today. And then, what is your personal definition of success? And why I think that’s important, is when you’re looking back on your career as a business leader, are you going to be proud? You know, we all have a mission/vision statement, usually for our companies but how many of us have a mission statement for us personally? So, you know, the definition of a business success is usually money. But when you look back on your career is it going to be money? Is it going to be the legacy? Is it going to be taken care of the employees? How many people have built buildings to try and maybe make up for some of those other things?
Matt Register: Well and legacy is more important to people, initially will tell you. Right?
Scot Hunsaker: Particularly if your a founding owner, legacy can be huge.
Matt Register: Yeah. No, no doubt at all about that. You specialize though, in really nontraditional, companies where, where it’s intellectual property. Engineering companies and firms that don’t necessarily, aren’t making a widget. Not necessarily manufacturing firms, which are sometimes a lot easier to sell. Talk to me a little bit about, because there’s a big knowledge transfer component with that. Right?
Scot Hunsaker: So, if, if, if your machine walks out the door everyday of five o’clock, I call what you’re selling, is gray matter.
Matt Register: Sure.
Scot Hunsaker: So how are you getting all that information, because where do we store most information? In people’s heads. Where is the worst place to store that information?
Matt Register: In people’s heads. Right?
Scot Hunsaker: Right. So how do we get that information out of their heads into the organization, so it can transfer to the next generation. But not we, that’s not good enough because all that information comes with a born on date. We also have to teach them how to keep it current and keep sharpening the saw. Because whatever is valuable today is going to be different in Five, 10, 15 years. Think about all the change going on. We either change when we want to or we have to. When we want to, it’s a whole lot more pleasant. When we have to, it’s a whole lot more real.
Matt Register: Yeah. No doubt about that. Your approach, I really, really like your approach to this. Now you have and we’re and we don’t have that much, that long. But walk, really quickly, through some of these steps because it’s a very well thought out process.
Scot Hunsaker: So, I mean, the tools aren’t as important as the lessons learned. The first lesson is authentic conversations. It’s really hard for somebody to push all in on your company if they don’t understand it. How are we going to talk about our culture? How are we going to talk about our employees? How we’re going to talk about customers money? The second is, how are we going to identify the future leaders or owners? I mean, I don’t know about you but I’m not that great at 100 percent hit rate on hiring people.
Matt Register: I’ve never hired a knucklehead on purpose, yet I’ve hired a lot of knuckleheads. Right?
Scot Hunsaker: Exactly. So my point is, is trying to pick our next leader, what if we create a leadership team bench and then create a situation where we let the cream rise to the top? The third step is institutional knowledge and that’s, how we get things out of our hair.
Matt Register: Sure.
Scot Hunsaker: The fourth step is, how are we teaching them how to improve it, sharpen the saw, manager change and lead by change? The fifth step is what I call trusting with confidence. Now the first four steps work even if you’re not going to sell the company, it’s just good business. But the fifth step is really the culture of ownership. What are the expectations from each other in an ownership relationship? So, when we end up in some challenges, we kind of know where we each are. Where does family fit? Where does money fit? Where does getting sick fit, that fit and all those other different types of things. So we have the trust to be willing to risk our family’s investment in future and investing and pushing all the chips in on this opportunity or company.
Matt Register: Well one of the tough parts about this is you literally have to teach your employees. If you are going to bring up a team to be able to end up, you know, exiting your business. You need to train your employees how to be owners of companies. There’s a lot of risk associated. There’s a lot of things that somebody that’s only been an employee for their entire career isn’t going to be comfortable with having it dropped on them. Right?
Scot Hunsaker: Absolutely. Absolutely. And it’s, it’s really learning about how to be an owner and a lot of people come in thinking they never will be. But when they have these tools and they see the opportunity, they make, they make it happen. The tagline of my company is turning your employees into owners, here’s the secret, you can’t. They have to turn themselves into owners. Our jobs as leaders is to give them the tools, the understanding and the opportunity to step up and lead.
Matt Register: Well, guys this is a very well thought out process and something, you know. Ardentgroup.com. We’re going to have it linked right there from Texasbusinessradio.com. This is something that’s not, not easy to do. And you’ve done it multiple times and now you’re standing by to help other businesses go through this process themselves. Right?
Scot Hunsaker: It’s very fulfilling to watch this happen successfully because I feel like we’ve saved a company.
Matt Register: Well, no doubt about that. So I appreciate you joining us. Scot Hunsaker is the President of Ardent Group. Ardentgroup.com is the Web site. Thank you very much for joining us. This has been fun. Anything else you want to add right before we leave?
Scot Hunsaker: Matt, Jay thank you so much for having me. Greatly appreciate it.
Matt Register: All right, wonderful. Guys, we’re going to jump and pay some bills real quick. We got our own bills, we have to pay around here sometimes. But we’ll be back right after this with a whole lot more Texas Business Radio. Don’t go anywhere.
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In addition to hosting "Texas Business Radio," Matt is an investment banker and serial entrepreneur from Montgomery, Texas. He is the owner of RREA Media and Register Real Estate Advisors and a Managing Director and Principal at Corporate Finance Associates. He has a BS from the United States Military Academy at West Point and an MBA from Rice University in Houston. You can read more about Matt HERE.