Client Success Story: Preparing for a Successful Succession

Speaker 1: We're an registered investment advisory firm in Sebastopol, California, which is in Sonoma County, northern California. The firm started back in 1984, and we've been in Sonoma County the entire time. We're about 1. 6 billion under management, and we've got about 20 employees. And the big event that we're going to talk about is this succession from the original founder to the shareholder group that we have now. Well, at the end of the day, how I make most decisions is the people and the people that I got to know at Oak Street. I have so much respect for, and it's been such a great relationship. So at the end of the day, that's always my biggest consideration, is the people. And then of course, we did so much due diligence on the different options that were out there and understanding at that time the interest rates and the amortizations available, and the different time and the locks that you could get on sort of a flat rate versus an adjustable rate and all of that. Kind of due diligence there. And at the end of the day, Oak Street definitely presented us with the best options. And maybe the most gut- wrenching part of all of this was developing that corporate governance. So once you've decided to go to a different structure and thinking about the longevity of your succession plan and how that's going to work, we did so much work on getting those parameters set ahead of time. So now we understand what our process is. We know how we want to add partners. We know, thanks to Oak Street, we have some financing options in place for the transcript shares. So it's been a really huge learning curve on that, and I would say the corporate governance was super important to get that all agreed upon ahead of time. So there's no question and there's not... With your employees, they understand the process. They understand what it takes to be invited to be a shareholder or a partner. So that was the work that we did. So we actually started the transfer of share, or I should say the purchase of shares from our founder back in 2006. And it was a slow process because we did not bring in outside financing and were all those transactions were owner financed. So that gradually built up over years until, like you mentioned, there came a point where it was clear that we needed to do a larger transaction to allow the founder to step away from client facing and day- to- day and be able to make the process of his retirement and accumulating his wealth easy. Transparency is really important when you're inviting shareholders in. You have to be able to show what the value proposition is on the purchase of those shares. Aside from all the other reasons why you would want to become a shareholder, but just the straight up, how can I afford this? And what have the profit margins been? And what do they look like going forward? So it's really important, that transparency.