103: Don’t Ignore The Ultimate Finish Line with Mark Fujiwara, Baird

by | Sep 21, 2022

Succession
Stories
Podcast

103: Don’t Ignore The Ultimate Finish Line with Mark Fujiwara, Baird

by | Sep 21, 2022

Health and happiness after selling your company is often ignored. Business owners race hard to maximize monetary returns, but is it the ultimate finish line? This week on Succession Stories, Mark Fujiwara joins Laurie Barkman for a conversation about the succession journey. Mark Fujiwara is a Director at Baird, bringing solutions to 8-figure and 9-figure families and businesses. Working with many clients over the past 30 years who have been through succession and business exits, Mark has seen first-hand how selling the business means more than just the dollar amount of the transaction.

Listen in to learn more about:

  • Multi-family offices – what they are and how they function
  • The challenges of navigating succession and transition alone
  • Preparing for M&A transitions on an emotional level
  • Importance of pre-M&A planning
  • Goal setting beyond financial outcomes

Show links:

markfujiwara.com

About Succession Stories Podcast

Succession Stories is an award-winning podcast hosted by Laurie Barkman, the Business Transition Sherpa– guiding business owners through the process from “transition to transaction.” Subscribe to Succession Stories and share a review if you enjoy the show!

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Transcript

Intro:

Mark Fujiwara is a Director at Baird, bringing solutions to 8 figure and 9 figure families and businesses. Working with many clients over the past 30 years who have been through succession and business exits has given Mark the benefit of hindsight. Selling the business can mean more than just the dollar amount of the transaction. Health and happiness after the sale is often ignored, because business owners typically want to cash out with the most money. But if it is ignored, then you’re not getting to the finish line, your ultimate finish line. Enjoy my conversation about finding presence and not ignoring the ultimate finish line with Mark Fujiwara.

Laurie Barkman:

Mark Fujiwara, welcome to Succession Stories. I’m so glad you’re with me today.

Mark Fujiwara:

Thank you, Laurie, honored and very excited.

Laurie Barkman:

This is a topic we have not yet addressed on the show, which is a multifamily office. Let’s start with you, some introductions, of course, you’re a director at Baird, and you focus on multifamily offices. But let’s talk a little bit about your background, how you got to that point, and then what the heck is a multifamily office?

Mark Fujiwara:

Sure, Laurie, so I’ve been in the wealth management business for about 30 years. I went to school to manage money, really to be a portfolio manager. Through just some different experiences, I started to learn that there’s more value to a client’s finances and just the investment part so pretty much early on, I started to develop a family office type of business, recruiting and finding other professionals in different types of specialties, like tax estate planning, and it’s really just more from that, as well. Fast forward 30 years, I wrote a book on multifamily offices, that’s really been the focal point and it’s really come about in terms of the experiences I’ve had, with quite a bit of clients, and specifically, to your world, a lot of business exits. As you get as you go through one, and then the next one and the next when you search to find ways to improve, my role with those clients.

Laurie Barkman:

Your role with those clients is really a key advisor, and we’ll talk about that and sort of this hub and spoke model where they coming to you to help you give clarity, right to help them solve what problems they’re facing you yourself aren’t going to solve those problems, but you want to point them in a direction. Let’s go back a sec. Multifamily office–what does that mean? We’ve talked on this show–I’ve talked with single family offices where a family has had an exit, and they want to do investing, and or they want to manage a portfolio of properties, whatever asset classes they may have, and they’re managing it themselves. How is that different than what you’re doing?

Mark Fujiwara:

Yes, there’s some similarities and some differences. The big difference is that the single family offices, typically have, say, the billionaire families, typically, and they can afford to go out and create their own business, if you will, around their family. For example, if you have a tax team,  CPA team, the CPA firm will or the CPA will work just with your family. The estate planning team will just work with your family, they have multiple exclusive engagements with different professionals and typically they have family members working in that family office. The difference though, with the multi, is that you’re working with individuals and professionals that work with multiple families. The beauty of that is that it affords you to be very selective with each individual client so you can be very specific in which professional fits which client in which situation.

Laurie Barkman:

What types of clients are you working with, in terms of, let’s say, wealth ranges, you know, if you say billionaire, most of my audience is gonna go, Oh, that’s not me. I mean, we have some billionaires out there listening. And that’s exciting, if we do, but I think mostly our audience or people who are aspiring to one day have an exit and create wealth for themselves and their future generations. And maybe that has a ‘b’ in front of it, or maybe it has an ‘m’. Regardless, I’m curious about the types of clients you serve and what problems really are they coming to you with? What benefits are you providing to them, to provide that clarity and help them?

Mark Fujiwara:

That’s a great question. Probably a lot of them come from–they don’t have that net worth just yet and they’re the types of business owners who are maybe looking to exit in the near future, when they do exit, you know, that’s when they have the net worth and it’s hard to put $1 around that but typically they say, the ultra high net worth is 25 Million and above, but it can it can kind of range too, because of the fact that sometimes it might be lower, and you have the similar needs of that so let’s just take the exit, for example. They come to me, and they say, “Okay, I want to exit in a couple years.” I always love those calls, because it’s not–I’ve gotten them before where the introduction comes to me and says, “Oh, I hear you can really mitigate the taxes, when I sell, you can just kill the taxes. When I sell the company.” I say, “Oh, yeah, there’s a lot of things we can do.” We figure out what you want so when your company, “When do you plan to sell your company,” “Oh, we’re gonna be closing in about a month and a half.” “Okay, that’s too late.” 

Backing up a little, what we typically will do is just figure out the right professionals to take them to what levels they want so really, as simple as I can put it, they want results, whatever those results are, we’ll find the top team top professionals to do that. I’ve been doing this for 30 years so you constantly upgrade. One, I constantly upgrade the professionals, but I constantly find, like you, Laurie, we met and I said, “Oh, you’re going to fill a gap because no exit, no plan for a client is always perfect.” There’s always things that you can find, you can say, “Oh, there’s improvements here, we can add that person here,” so yes, typically, the clients that I serve are not just necessarily the ones that are exiting, or having a quit event or have that liquidity that they’re there. They’re families that want results and they don’t want to go looking around and doing all the research. The typical client says this, “I want these results, and you put me in front of the right people, you’ve been doing this for 30 years, I’m not going to look around so if you tell me I need to talk to this person to mitigate taxes, I’m not going to go around and ask five different people and interview five different people.”

Laurie Barkman:

You’re saving them time, and you’re giving them the high quality referral, which they value that makes a ton of sense. Let’s talk about the exits. In the benefit of hindsight, so many of these clients, I’m presuming, have already had an exit, maybe that’s when they start working with you, as they’ve now acquired these assets and they look into deploying in a new way. You can have the benefit of 20/20 with them. I’m curious about the issues, because you just said no exit goes perfectly and we know that there’s always bumps in the road, for your clients that have sold their business, what are your top observations on the common challenges?

Mark Fujiwara:

Oh, yeah, that’s a good one. I think, first of all, they don’t realize the magnitude that they’re going to have to go through when they sell the business. They also don’t know, it’s a complete shift, because a lot of these business owners, not not all of them, but there’s a good amount of them, like to have control over everything. I mean, I’ll give you one example, then and there’s multiple ones that I’ve come across actually, where the business owner will literally get so stressed that their health problems when they exit, they have health problems that are from the stress of trying to sell the business. The common thing here is that they don’t realize that there’s a lot of emotion, there’s a lot of stress.

There’s also a lot of work if they tried to do it themselves. Or maybe they have their existing professionals try to work. Now that sometimes works, but a lot of times it doesn’t because those professionals are good at helping the business owner, presale, not during the exit. I had a really good conversation with a CPA client that sold his turf company, did very well selling it, and I called his CPA who had been his parents CPA, I knew this woman for probably about 20 something years, and I asked her I said, “He’s going to be selling his company. To what degree do you want to be involved in that?” She was very honest with me, she said, “Nothing at all.” She’s like, “I’ve been through a couple exits, but this is way over my head,” so sometimes you don’t get that though. Sometimes those professionals won’t carry over into the exit and then the professional is left or excuse me, the business owner’s left to do a lot of work and to be in all these meetings and so it’s like, I think the short answer to this is that they are trying to do two jobs. They’re trying to run their business, and they’re trying to sell their company.

Laurie Barkman:

Yeah and it’s very stressful. The emotional toll is no joke. It’s very stressful, the health issues, you’re the first one to bring that up, and these are people that they got across the goal line, right? 

Mark Fujiwara:

Absolutely. Yeah. 

Laurie Barkman:

Just pause on that for a second. I mean, yeah, it really is wearing on you, and if you’ve done this on your own, it can be even more stressful and emotional, because you don’t really know if you’re making the right decisions. That’s why on this show, specifically, I’ve brought so many different types of advisors to the program, because I really like to stress that you need trusted advisors around you for this very reason. These are hard decisions to make, and it’s very lonely to make them in your own head.

Mark Fujiwara:

Oh, that’s correct. I want to talk about health for a second, though, because that’s a question sometimes I get, and that’s one of the roles that I help clients with is the medical part, which has become such a big part of my multifamily office business, I kind of learned the hard way. We talked about stress and this is somewhat early on, where a client of mine sold his business, Type A, liked to have his hand and everything, and six months after he sold his business, he died of cancer. 

Now, I don’t know, there’s a couple of things going on here. One, he had a history. When you take a genome tests these days, and you can, that’s what I did, actually, him and I have a very similar genome, which is that if you’re going to die, you’re not gonna die of a heart attack, you’re gonna die of cancer, and you’re probably going to die of gastrointestinal–some sort of cancer, that has to do with your digestive system. It was literally the next day I called a friend of mine, Dan Carlin who runs WorldClinic – they’re the top telemedicine medical practice in the world – and I said, “I gotta have you on board here,” in terms of preventative, like genome tests, and just try to beat it before it happens kind of thing and they’re the ones, like, unfortunately, my daughter got COVID yesterday, so they, I was on the phone with them, and it was just, these are the types of people that you need. These are the types of people that can prevent something like that happening. I have therapists, actually, and I have people that I can turn to that will make this process as easy as possible, whether it’s medical, whether it’s a relationship. It’s such an important part. Again, you figure these out, when you go through these exits, and you say, “Oh, this was a tough one,” because it was like, it’s not something you can really fix. 

I have another client that got really sick for a couple of years because of the stress. Because all of a sudden, like, “All my buddies are still working. I thought this was gonna be really fun and I can just play golf and travel all the time,” and that became stressful, because it’s like all of a sudden the guy’s feeling lonely, so, yeah, these are very important things.

Laurie Barkman:

Would you say that it’s common enough that these folks have not really prepared personally and emotionally for this transition, and do you think that’s why, after the close, they sort of feel a little empty?

Mark Fujiwara:

Yeah, absolutely. We talk about finish lines and say, “Well, once I cross that finish line of exiting and not having to pay a lot of taxes. I’m done.” You’re not done. There’s such a big component to that, Laurie, right, you’ve seen it all the time, you’ve seen the ones where they have this picture in their mind, but the finish line is beyond that, and I’ve talked to a lot of owners that have exited and it’s like, “Wow, you’re doing the right way. You figured it out,” and I think it’s because of the fact that they’ve had discussions with people like me, or other people that have exited, so I’ll give you some examples. 

This is the classic one actually where I have a friend who sold his waste management business, and then really figured out that he needed to keep busy. He needed what I call Ikigai, he needed to still be in his Ikigai, this is a big principle of mine, which is when you’re doing, you’re in flow, you’re doing something you love something, you’re great at something that will make the world a better place and something provides you with capital. It’s not necessarily financial capital [but] emotional capital. A combination of a lot of different capitals. So my friend discovered that by helping other entrepreneurs, now it’s providing them with some financial capital, but that’s not that’s not the real reason he does it. By helping other entrepreneurs in the waste management business, and just saying, “Look, I’ve been through this, I know what it’s like, I know there’s some things that you should do and should not do, and some things you should focus on and not focus on,” and just really hold their hands. 

This is exactly what you do, Laurie, exactly what you do, just in terms of expectations, in terms of making sure that everything goes as smooth as possible, which is why it was such a shining light when I met you because it’s like, “I can I can hold their hand,” and say, “Oh, as a multifamily office director, I’ve held many hands before,” right, “I’ve gone through a lot of different sales in many different industries have many different values, and many different types of owners, but I’ve never sold a company on my own, so I don’t know what it is to stand in those shoes.” You’ve been on the field, you’ve gone from point A to point B, you’ve finished the game, right, and that is so valuable, that is so valuable when it comes to these owners, because they’re going to listen to me to a degree, but it’s in someone that has done it successfully like you. You can take them through it, hold their hand like that, so I think that’s so valuable.

Laurie Barkman:

The conversation we’re having is so critical. When I start working with a client, I spend at least two, if not three of our first sessions, on the personal readiness questionnaires that I give them. They are hard, you get the questions and you think, “Oh, I’ll answer these in five minutes.” No, it takes us two to three hours to really talk through it, and why is that? Well, we’re trying to enable you to see yourself in a different way, see your relationships in a different way, and why is that? Because we want to create a forward framework. We want to help you see what you could be spending your time on, and engaging on, and feeling good about. If you’re not spending most of your time in the office or with your job or with the company that you own, that’s a very, very different thing, and it’s like a cold water bath. You can’t just jump into it. We as humans adjust better over time, so the more we talk about it, the more you can start to put yourself there and allow yourself to move into that mental space so that physically once it happens, you’re more ready for it. It’s so important. 

The other thing around that is survey data that I’ve seen, and I don’t think this is going to surprise you, Mark, based on what you just said.Owners who have been surveyed about a year after a transaction on a scale of one to 10, if we want to kind of talk generally that way, they are below a five for sure, right, so below average. I’ve seen ‘as low as 25% of people would say they’re satisfied’ or happy. It’s really not good, and you can then say well, “Why is that?” I think a lot of it has to do with some of the reasons we’re talking about. Some of the other reasons have to do with how they felt about their team, and how things were left behind and all of these aspects are, as you said earlier in the pre M&A planning, and which is another reason why in the advisory process, that’s where we spend time.

Mark Fujiwara:

That’s a good point. I want to add to that too, which is the fact that that’s what I look for in someone, a professional I want to work with. You just nail it right on the head, which is the discovery, the deep dive discovery that you do, because 90% don’t do that, they ask the general questions, right? 

Laurie Barkman:

Yeah.

Mark Fujiwara:

I know that you go pretty much as deep as I do if not deeper in terms of getting to know what the clients really want. That is so valuable when it comes to these things.

Laurie Barkman:

Yeah, and I have a couple of clients where we’ve gotten pretty personal, in some of the challenges they’re facing with substances, where they want to reduce or reduce their reliance on those substances. We talk about that, and having other healthy options, having things that excite them to spend their time, whether it’s woodworking, or walking, or playing golf, whatever those might be, are no small thing and it also then creates that health and wellness picture. Again, back to, you’re the only one who’s talked about the health and wellness side, and in a kind of a very specific way. I have had therapists come on the show and we have talked about it really in the context of succession planning, and families and family dynamics, but it’s probably just worth underscoring that, it’s okay to need some help and feel good about where you are and talking about the challenges you’re facing, whether you are ready to exit, thinking about exit,  post exit, we advocate for those types of advisors to be in your life and so that you’ve cashed out great, but as you said, “Now what,” and that can feel empty or lonely, and it can cause other problems so we really do care about our clients in that way and I know you do, too. I’m really glad we’re talking about that. I asked you about 2020, and looking back, I know you do it, because it’s in your nature, and it’s how you’re wired to do that. Is that something that you also actively do with clients as you help them in looking back, and seeing what they might have done differently? If they’re looking to maybe sell another business? Or how can they learn from their experiences?

Mark Fujiwara:

Yeah, that’s a great point right there. I not only learned from my own clients, but because I play in this world quite a bit and I have plenty of discussions with other professionals about these things, it’s great to hear stories from other professionals, and how we can improve every single exit, same thing exactly. It’s funny with clients, you think, “Oh, it’s one exit, and they’re done.” Now, it’s really not. I have a 60-63 year old client. Sold a very large food company, and you assume that he’s gonna go play golf and travel the world, which is what he showed, and no, he’s on a second, actually, third company, trying to try to build that so it is valuable, and to really see where some of the things that we’ve missed. 

I always like to just kind of accumulate all the different exits, because where I can come into value is that sometimes we are focused on just that one thing, which is the dollar amount. That’s what I call family first planning, which is, family first plan doesn’t mean that you’re cashing out at the most and not paying the most taxes so you’re left with this big bundle. That’s actually part of it. Absolutely. But the other part of that is, figuring out the next stage to that. A couple of examples, I was teaching a class with the Global School of Entrepreneurship on M&A. These are students who have exited from one to three different companies. One of the students mentioned that he sold his company for a very large amount to the top bidder. Great. Okay. “So I wish I knew you because you could have gotten me more money with the taxes.” But the main point of that was that he had to stay on board for 10 years.

Laurie Barkman:

Wow, that’s a long time.

Mark Fujiwara:

You start to learn that there’s just more than just the dollar amount and it has to do with what happens after that. Now, some might say, “I want to stay on for 10 years,” this guy did not, and his family did not need either. Again, it’s so valuable to figure out all the things that could happen after that proceed to the finish line. Right after that finish line, what does that truly mean to you? 

Laurie Barkman:

Yeah, absolutely. You mentioned the word Ikigai earlier and I don’t want to take for granted that people might not be familiar with that word. I know I wasn’t when I heard it. Is that a Japanese word?

Mark Fujiwara:

It sure is. There’s two words right here in Kanji Japanese. The first one is Ichigo ichie, and the other one is Ikigai. Talking about going back to Ikigai, it’s something that I grew up with that my dad always mentioned that that’s where you want to play, and play, when I was kid, but also as an adult. This is why I got into this business, which is you want to focus on, you want to take a career where it’s providing you with Ikigai. A lot of people take careers focused on one of the four, which is typically the money or something that they love doing, or even something, something that they’re great at. But this kind of takes it a step further and says that having all four corners, taking care of something you love, something you’re great at, makes the world a better place, and something that provides you capital, financial, emotional, because typically, if you’re playing in Ikigai, everything flows in the right direction. 

You’re going to make some money off, you’re going to provide your family with the right amount. The other word, though, is important in it, which is Ichigo ichie, which is the Japanese word for presence, so I noticed that about you, and this is why, just right after our first meeting, I was like, I want to work with you. I want to have you help my clients, and this is actually the big thing when it comes to what professionals do I partner with? What’s the criteria of the professionals I partner up with? It actually comes down to those two words. Now. If you’re helping the types of clients I am, there’s hundreds of 1000s of professionals out there that fall in that category, but very few have those two words, practice those two words. I know for sure you’re practicing Ikigai. I know for sure you practice Ichigo and why is that? Because when we’re on a Zoom, you’re just focused on me, so right now I have literally like four screens. Okay, in my room, this is the only one that’s open. I don’t have like 20 windows open. This one and then the notes on the right side. That’s all that I have opened. Same thing with when I’m with my daughter, which is when I get emotional. Sometimes I will literally just be so focused on her that nothing else. I can’t even sense anything outside of that. I’m just looking at her, looking at every moment movement, really connected with her. 

In fact, I think I told you this. The other day, I said, “Oh wow, am I true Ichigo ichie? Am I 100% present?” and that other voice said, “No dummy. You just asked that question.” 

Laurie Barkman:

[Laughs]

Mark Fujiwara:

So I looked at her little fingers, I looked at the fact that their eyelashes are so uneven, so long but that’s a pure criteria of what I look for, and every professional I partner up with falls in that category. Those two principles. They don’t have to be Japanese, you’re not Japanese. But it’s how they play their life. That’s how they play their business. That’s how they are when I’m on a zoom with him, I’m face to face with him, I’m on a phone call with him. I know they’re 100% present, but not worried about what they have to make for dinner. They’re not worried about that last client that they talked to, it’s all about being here, and that’s what makes the multifamily office that I play in people like you, people with the top professionals make it so high level, they know for sure they’re gonna get the results and the clients are going to feel the same thing.

Laurie Barkman:

That’s so powerful, to feel noticed and heard, listened to, focused on. Your daughter’s three. She’s adorable. I’ve seen pictures of her that you’ve posted and I’m sure it means a lot to her from her father and I can also imagine it means a lot for the clients, and you’re right, and thank you for saying what you’re saying about me. I really appreciate that, and I do try to provide that focus with people that I work with and people I love. I think I could always do better. But I really do try, so thanks for saying but it’s not easy and so when people find it, it’s really a special thing. and if you’re watching on YouTube, you could see Mark with his amazing tattoos on his arm. It’s hard to describe on audio here, but we encourage you to watch the YouTube video to see more. Mark, if people want to get in touch with you about your book or about your services and what you do at Baird, what’s the best way to get in touch?

Mark Fujiwara:

Sure thing. MarkFujiwara.com is one. The other one, I wrote the book Superior Results: Maximize the Value of High Performing Multifamily Office. That’s coming out in September. There is a website to that, and the website is mfo–which stands for multifamily office–book, so MFObook.com. Either one of those.

Laurie Barkman:

Well, that’s exciting the books coming out in September. That’s great. I’m working on a book as well. I’ve mentioned that on the show. But it’s a little slow going. I wanted to have it out there by now but I think it needs more work, and I’m not going to put a product out until it’s ready, but I admire that you’ve got one ready to go and this show might be airing right around then, so I do encourage people to check that out and to reach out to you, and Mark, thank you so much for coming on the show, sharing what you do sharing your experience and your insights.

Mark Fujiwara:

Thanks for having me, Laurie.

Laurie Barkman:

To our listeners. Thank you so much for your support. You can always catch Succession Stories on any of your favorite podcast players or of course on YouTube. Don’t forget to like and subscribe to the show that really means a lot to us. If you want to maximize the value of your business and plan for future transition, reach out to me for a complimentary assessment at meetlauriebarkman.com. Join me next time for more insights from transition to transaction. Until then, here’s to your success.

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