Coming up on this episode of the Leadership Lounge. There's this belief that we have to separate business from personal things. That's just not true. Successful people live their personal lives, their values, their goals, their objectives, their faith, whatever drives them. They live those 24 hours a day. They don't just go to work and then turn it off. My name is Mitch Slater, Executive Director, UBS New York City, and I'm joined by my colleague Saman Samii, Account Vice President, Wealth Management from Dallas, Texas. And the best way to contact us is by emailing mitch.slater at ubs.com or saman.samii at ubs.com. Our guest today is not affiliated with UBS. That was the voice of Jim Shields, our guest today on Leadership Lounge. Jim's the founder of Lighthouse Value Partners. He is the author of the best-selling New York Times book, Wealth That Lasts, 10 Principles of Legacy Wealth. We had a fantastic interview today.
And for anybody that works with families, legacy is about values, not valuables. I think that is absolutely beautiful. And I love to hear, you know, how you created that and what's your take on that really? So great to be here, Mitch. Thank you. You know, through the years, everybody stays focused on value. How do we create value? How do we make more money? And the really, really successful people that I've been privileged to work with for almost a 40-year career, you know, they like making money, they're entrepreneurs and, you know, the money is meaningful. But at some point, it becomes less relevant than the values that are used to create the money. And the massively success, so I started a soft, I'm going to use the word study, right? Because one way that we learn, successfully learn, is to study people who are successful in our eyes and then follow what they do. So I started studying people, Mitch, that are focused on values and not value, right? Not the money, but the personal values that created the money.
Wow. So we have to look at that and say, is that a value, a money problem? Or is that a values problem? Well, clearly, it's a values problem. And the families that have been successful in generational wealth, people think they're lucky, they're, you know, they had so much money, they couldn't lose it. None of that could be further from the truth. It's not about luck, and it's not about amount of the money. It's about teaching the next generation the values of preservation and investment and, you know, lack of consumption and all the other things, work ethic, communication strategies, right? The things that are values-based and not value-based. And that's what I believe is the most important thing we can do from a generational perspective. So true, so true. Samii? Jim, you and I have gotten the pleasure of working alongside some of the entrepreneurs here in the Dallas area.
One is humility. The ability to learn. You know, there's an old cliche that there's two kinds of people in the world. There's those that think they're the smartest person in the room and those that want to surround themselves with the smartest person in the room. Right. The really successful families, the really successful entrepreneurs are humble enough to know they don't know everything. And so they're willing to rely on and, frankly, trust others that may have better skill set, knowledge, experience. So that's the first thing. The second, I would say, is the ability to manage people effectively. You know, I believe and it's it's born of, you know, lots of opportunity to watch people and, you know, not only be successful in my own business, but there are people who, if they're willing to embrace change and they're willing to think about delegation to extremely competent talent, they're going to exponentially take their ideas, founders ideas, let other people execute against it, and then create alignment. And then the third that I would say, I think, is critical is everybody's motivated, Sammy, by their own self-interest. Right.
And the challenge, both the challenge and the opportunity of creating success is understanding and then aligning people's self-interest because teams are built around people that have a common goal. And so a leader's responsibility is not only to delegate, but it's to identify what the goals and objectives are. How do we align our goals and objectives with the people who are not just being paid to share our goals, but the people that are passionate to share our goals? And then you you incent them with upside so that they're participating in the success of whatever the venture is. Then you've got alignment of passion. You've got delegation of responsibility and you've got identification of goals and targets and objectives that are, frankly, just worthwhile for people to achieve. And this is a deeply personal thing. Right. I mean, there's this there's this belief that we have to separate business from from personal things. That's just that's just not true. Successful people live their personal lives, their values, their goals, their objectives, their faith, whatever, whatever drives them. They live those 24 hours a day. They don't just go to work and then turn it off.
They live those 24 hours a day. They don't just go to work and then turn it off. And so this alignment is a more of a holistic lifestyle choice that just happens to permeate business and then makes them makes people massively successful. Tell us a little bit about Lighthouse Valley Partners. I've seen you do magic in about 18 months with businesses like we work with a lot of business owners and a lot of them say, hey, I'm not really ready to sell, but I do want some options. Like, how do you work with an owner that how do you convert such value into in 18 months? I've seen you do it. We've been, you know, Sammy, to watch companies that founders have built for decades, sometimes, and then convert them into just high value, high enterprise value machines that are that are valuable on the market. They can sell. It's been really one of the greatest joys in my life. So Lighthouse came about as a result of our of a program we started over 10 years ago, Sammy, that I sat in a room. I'm going to tell you a 30 second story. I sat in a room representing a private equity in a buy side transaction. We met with an owner. They were a founder. Great company, but they were unsophisticated.
And here's the ways we're going to drive down the price so we can buy it cheaper. And I thought to myself, you know, that's the way a lot of the world works. Like, we all want to buy things, pay as little as we can for them and sell them for as much as we can. But I walked away from some of these meetings thinking what I should be focused on is helping founders, families realize the high value of their life, generally their life's work. So that they can go do, you know, magnificent things with their family generationally and from a legacy perspective. And so we developed this program to create high value. You know, your question is interesting, Sammy, because one of the, there's two things that we have to overcome, which is essentially what you're asking. Thing one is about 50% of the time or more, we ask the owner to step down so that we can hire CEO or C-suite level talent that will transition with the business. Because many CEOs don't want to transition with the business.
And then the second is just change management. I oftentimes, I had this meeting a couple of weeks ago with a founder where, you know, we were asking questions, how do you run your business and what's your strategy? And he told me, and then he looked at me and he said, you know, I haven't made any changes to the business in virtually 20 years. And I looked at him and I said, then you're doing it wrong. And he said, what do you mean by that? I said, if you're using legacy strategies, financial reporting, sales, then that's going to be recognized as a weakness. And if you want to maximize value for your business, then we have to do something about that. And he recognized that because we educated him a little bit around techniques to increase enterprise value using values-based strategies. And we appeal to the owner's desire to maximize exit with a process strategy that is a very well-recognized playbook. Yeah, and that's so critical. That actually leads into what I wanted to ask you is, you know, when we talk to a lot of folks that work with business owners, we hear a lot of common traits, common myths sometimes, but also common mistakes.
Right. Because, you know, we work with business owners, they have companies at five, 10, 20, $30 million of net income. I mean, these are families that are successful and they're successful family businesses, but there would be a challenge to take to market to sell. They require change. And an owner a lot of times looks at me and says, well, I've been successful. Why do I need to change? And so managing change is one thing. The second is the people side of the business, the talent side of the business. We've had a lot of owners, Mitch, who basically said, you know, look, I've got a whole team of people that have been loyal to me for decades. And I don't want those people to go away. I don't want them to get hurt. I don't want them to feel like they were slighted in a transaction. The way that we manage through that is I tell the owners, if we get a high value exit, if we add 10 percent, 20 percent, our average valuation ad exceeds 40 percent. So we add 10, 15, 20, 40, 50 percent. To Sammy's point a minute ago, we've actually had some where we doubled enterprise value in 18 months. Then what I tell the owner is those people that got you here with that added enterprise value, reward them.
Let's reward them. And I'm a huge advocate with owners supporting the people that got them to the level of success where they are. And higher enterprise value exits allow the capacity, the opportunity and frankly, the gratitude, the expression of gratitude, which is a big value that I espouse. The expression of gratitude for the people that helped got you there, get you there. It's really important. Critical, critical. I want to ask you a question about family businesses. One of my favorite parts of working with business owners at UBS is helping a lot of families pass off wealth to their different generations. And I want to touch on your book later on, but I know you, you personally have family members in your own business that you work with. And that's part of my joy in working with you and your kids. Talk about the dynamics of working with your sons in your own business and some of the best practices, maybe for some of our audience. Maybe some some stories there as well. Can I brag on my kids a little bit? You can. Absolutely. They're fantastic kids, by the way. Yeah. Thank you. Go ahead.
Right. Part of the challenge and opportunity is setting your kids up for success. I think that doesn't start with the quality of the business or the process or anything else, but it starts, we talked about this, it starts with values. It starts with active communication. It starts with setting expectations, right, for the next generation. I'm watching my kids right now, Sammy, talk to their kids, my grandkids, using some of the same languaging and the principles that I used when they were young. And, you know, I don't know whether to think that's awesome or not, but I certainly see the generational passing of values and hard work and, you know, little things like looking people in the eye and shaking their hands and those kinds of things. So I'm deeply touched by that. Some of the challenges, you know, I have a couple of my kids that are in several of our family businesses.
Right. I'll step in, Sammy, and say, hey, have you thought about this or, you know, you might want to consider a different approach. And if they agree with it, great. If they don't, great. But I'm giving them the autonomy, the freedom to make their own decisions, which includes earn their wins and own their losses, own their failures. And you're doing that even if you know sometimes that the outcome could be wrong. I am. I am. That's I have to tell you that that really struck a nerve with me throughout my career. Probably one of the most important things for me as an advisor was financial literacy, because I realized very quickly when I started working with families how these conversations just never were happening. And I'm talking husband and wives as well as as kids. And years ago, I met a woman named Neil Godfrey, who's become a very close friend. And she's one of the big speakers on this topic. And her book, Money Doesn't Grow on Trees, really dealt with it. And she talked in the early days in the book. And it hasn't really changed. I mean, I think as a country, we're like 14th in financial literacy, which is insane. And that it's still easier for parents to have the sex talk with their kids than the money talk.
And, you know, let's talk about that a little bit, because clearly you've broken the mold here. And the fact with your kids and your grandkids having those conversations, that's I mean, that's that's, you know, I would love to say that's the norm, but it's not. So talk about, first of all, why you wrote the book. And then maybe a little bit, you know, we can talk about highlighting it a little bit. Perfect. So, Mitch, I I'm watching families who are watched families for decades who are they're great people. They work hard. They build amazing businesses. And like you said, there's just no. They'll put processes and plans and objectives and goals and budgets in place for their business, but they don't do that for their families. Right. There's virtually no planning for their families. And the real. So when I thought about what, you know, what to name a book and principles that I think are, you know, create successful generational transition, the wealth that's in that book, Mitch, in my book has nothing to do with financial wealth. Right. This applies. I mean, the true wealth that we all own is our character, is our morals, is our values. And that's what we want to pass on. You know, I'd much rather pass on the wealth associated with values and character and work ethic than I would money. Money is a tool. It's not a goal. Money, you know, nobody should strive to make a lot of money. People should strive to build great businesses, to employ a lot of people, to embed culture, you know, to create mentoring and growth opportunities for their employees. And those businesses happen to make a lot of money.
He literally looked at me. He's in his mid 70s. And he looked at me and he said, my kids are derelicts. Derelicts is a harsh word to describe your kids. Yeah, really? Like, yeah. And so I said, what's going on? And he said, and he's self made. He said, I have made so much money that now my kids don't want to work. I can't get them involved in the business. You know, there's some substance abuse or failed marriages. And he said, I feel like I've failed my kids, even with all the money that I've made. And that was a bit of a paradigm or an epiphany shift for me. And he, I never, I didn't ask the question. He's since passed. I didn't ask the question. But I believe if I'd asked the question, would you give up all of your money to instill values that would transcend the generation? I think he would have said yes. And so at that stage of his life, you know, he was, that's the true wealth at last. It wasn't the money because he, I believe he would have been ready to give it up. And since then, I've seen a number of families. I had a meeting with another high net worth family where the patriarch of the family pulled me aside, excused his kids. And he basically said, I hate the fact that my kids are waiting for me to die. He said, I hate that. And, you know, that's a paradigm for, you know, what's important in life. So at what point do you think it's appropriate to have these conversations? Let's say you're an entrepreneur, you're building great value. You deal with them all the time. We deal with them all the time. It's such a taboo topic. Like, when do you, when do you bring it up? Because, you know, sometimes you want to have secrecy with this stuff.
The second conversation is how did we get here? What are the values that created it? You know, we've worked hard and, you know, we have high work ethic and we do what we say and our word is our bond. And, you know, we've got commitment and passion and service and gratitude. The way I undertook this, Sammy, is we talk about that second bucket early and often. I'm now spending time with my grandkids at, you know, four and five and six and seven years old talking about values and principles. And if you say you're going to do something, you do it. The discussion about wealth should come later when there's enough financial literacy to have an understanding. And I personally, I'm not going to divulge my conversations with other people, me personally. We had those conversations with our kids after they graduated from college and they were, you know, a couple of years into a professional career. The early conversations, one that I think are important, we had early, early, early. That's a great time. And actually, that's when we started with our kids. And unfortunately, my wife's family, my mother-in-law is 93 and just about ready to start those conversations.
I don't want to let you off the hook just yet. I want to go a little bit deeper on this because I see this a lot with clients. This is a really important topic for us at UBS. Families often wrestle with what's fair and equal. We see this a lot, especially with equity ownership and wealth transfer and all this. How do you help them negotiate that practically and relationally? Yeah, another great question and a difficult subject. My answer, and we deal with this a lot, Sammy, my answer is going to be less than satisfying, but it's really family specific. I'm going to give you a quote from my grandmother. She was born in 1884. She died at 97 when I was still 18, 19 years old. And I still remember this. She used to say, we're going to give resources and help and money and support to the kids that need it. She was not a, we're just going to split everything in thirds or fourths or fifths or halves or whatever it is. You have to earn it. And so the theory that I tell people, the practice and my own practice is, if you want to work in one of the family companies, you got to work your way up, just like anybody else.
They've got to earn it. And they earn, Sammy, commensurate with what that job position would otherwise pay in the marketplace. Everything else is being distributed according to an estate plan. So if they're entitled to equity because they're earning in the business, great. But they're earning that as a participant, not because of their last name. That's the way we've managed it. Because then that removes heartaches and heartburn that maybe there's been an early gift that's been made or, you know, we're favoring one child over the other, you know, removes a lot of those conversations. So that's how we've done it. Let me just, I just want to remind our listeners that Jim's book is called Wealth That Lasts, Ten Principles of Legacy Wealth. And we'll be linking to that in all of our show notes. Sammy, do you have anything you want to ask us before I go to the lightning round? I was about to say I was going to go through the lightning round. So go ahead. Well, I'll do my usual one and then you can pick one from that you think works. So this is a question I've asked in pretty much every podcast that I've been involved in as the host over the last few years. And it's, you know, I kind of borrowed it from someone else, but that's sort of how the way these things goes.
Jim, what would it be and why? Gratitude. Gratitude would be the message, Mitch. We have so much to be grateful for all of us. It doesn't matter what our circumstance in life is. We have a lot to be grateful for. Gratitude helps to shape decisions. It helps to shape perspective. It gives us an understanding of what other people are going through so that it increases our desire to want to help and support and be a servant leader. I think gratitude is the foundation of success, frankly, from my standpoint. So my answer to you would be be grateful and express gratitude in all things. I love that. That really is one of my favorite answers. I don't hear it that often. And just on a personal note, I just back to work after having some open heart surgery in June, which went really well. And I thought I understood the meaning of gratitude until now, just to be so grateful to have been able to have what was discovered quickly, taken care of quickly. And now I'm doing so amazing. And the gratitude that I have, obviously, to the medical staff and doctors and everyone that took care of all that but to my family, to my friends that would stayed in touch with me (0:23) throughout the time period, nothing else really matters. Gratitude really is, is, is, is such a (0:29) great word. And that would be exactly the word. If I was doing my billboard today prior to that, (0:34) it would be listened to more Bruce Springsteen, but I'm going to go with gratitude, Sammy. I'll (0:38) let you, uh, wrap it up with one more, uh, lightning round. All right. I'm going to give (0:43) you a little bit of a reverse question.
You should be selfish, you know, focus on yourself, (1:11) focus on what's best for you and you'll be successful. If you, you know, if you do that (1:16) and I thought this was 30 years ago and I've thought about that often. And then I'm really (1:21) glad I ignored it. Right. We can't, we have to be the opposite of selfish, Sammy. We have to be (1:27) selfless. We have to, you know, want to help other people want to do good in the world, (1:33) want to change our environment, want to positively impact people. I think it's the opposite of (1:38) selfish. And so I would say somebody did offer me that advice. They were financially successful, (1:46) but generationally poor. And I'm glad. One thing I've learned, uh, one thing I've learned by hanging (1:51) around you is that, uh, if you want to be a good business person, you gotta be a good person first. (1:58) And that is very obvious with you and your family. So we really thank you for, uh, my personal (2:05) partnership with you. Um, and thank you for joining the UBS Leadership Lounge podcast (2:11) and looking forward to many, many years of, of, uh, partnership with you. (2:16)
It is such a privilege to be here. Um, Sammy and Mitch, UBS is an amazing organization. (2:22) You know, they've been a great partner for us and I just, it's a privilege to be here.
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