Derek: Take me back to the beginning, 1984 in Fort Worth. You have this idea. How did the business get started and what was that like?

Luke: He was like that growing up. He sold me um his his boom box and he wrote out a a contract. I had to have the money to him by a certain point that there would be interest.

Chris: So, we get a phone call from the school and Luke had gotten to a fish fight.

Derek: Well, hello everybody. Welcome to the Leave My Business Well podcast. My name is Derek Moffet. I'm a certified exit planner and certified financial planner. And today we have a special treat for you. We are sitting here with the owners of Electro Acoustics, founded by my friend Chris Jordan in 1984 and now run by his sons Sam and Luke. And today what we're going to do is we're going to talk about what it was like to start a business and then transfer that business for Chris to his sons. All the pluses, all the minus, and hopefully we'll have a good time, tell some great stories. So we're glad you're here. And with that, Chris, let's get started. Tell me, take me back to the beginning, 1984 in Fort Worth. you have this idea. How did the business get started and what was that like?

Chris: So, I grew up in the audio business with my dad who did stereos and homes. So, think of vacuum tubes, okay? And think of his garage in a small house and uh working out of his garage and he had a 197 Pontiac station wagon. and I w I wrecked the station wagon. Uh but I had started moonlighting and doing uh churches in particular. I got interested in acoustics and larger projects and I had a deadline and wrecked the station wagon. Didn't have a way to get the equipment to the job to the job site. My dad didn't want to rent spend the money to rent a van. Sue and I were talking about maybe breaking out and starting our own company because instead of making $12 an hour for my dad, figured we could make $25 an hour and I'd only have to work 20 hours a week and I'd be be at the same. So that was our business plan. And the biggest thing keeping us from starting the company was the van. So, I sold my uh Grand Prix and went bought a used white cargo van, went to a pawn shop, bought a handful of tools and ladders and started my business and that was our business plan. So, I wanted to work and make more and work less.

Derek: Yeah. Very I think that's why we all we all get in this business. I had a friend tell me one time that owning your own business is wonderful because you can work half days, you can work, you know, you can work any 12-h hour shift you want to.

Chris: It's about right. Yeah.

Derek: What was that early What were like some of the early projects that you did? Uh people that you worked with, first hires, big wins, setbacks. Paint us a picture of that. the that first year.

Chris: So we started the business April 1st, 1984 and then found out just a few weeks later that Sue was pregnant with Sam. And so that put the pressure on to succeed.

Derek: Yeah. So the 20our weeks are out now.

Chris: Yeah. They're they're out. You know, I've got to you I've got to figure out how to run a business and uh figure out the technology, figure everything out. And so I had been moonlighting, learning as I'm going and in October had completely run out of work. Uh it had had nothing on the books at all. U and got a call from an architect and said um doing this auditorium at Hugley Hospital. Uh the guy that we were using has defaulted. Got to have this done immediately. can you can you help me out? And I said, "Yeah, I think I can probably squeeze it in." So, uh, and so that really turned into a a very very nice project. Um, and did all the work myself. Uh, I would hire friends, uh, you know, that would come and and work with me. Um, and but I didn't have any employees for quite a while. Uh, did all the work, all the, you know, everything myself. Sue took a class on how to file.

Derek: Sue is your wife.

Chris: Yes. Uh, how to file taxes and sales tax, things like that. And so we just made it up as we as we went. And uh, so that that was a real big win.

Derek: Yeah. Huge hospital.

Chris: Probably the the next big win was we won a um high school auditorium for the Grosbeck goats.

Derek: Gbeck goats.

Chris: Yeah. And yeah, I'd never done a project more than $10,000. That was $140,000.

Derek: Wow. So that's a huge jump from what you had been doing. All of a sudden now we have $140,000.

Chris: It was huge. So, we had to put the uh our house up as collateral uh you know to uh to get a home equity loan.

Derek: Yeah.

Chris: Yeah. You know, to to for for the business. Uh and we didn't borrow money for the business. We you borrowed money for cash flow to buy equipment, you know. Uh and so we had to do well with that because we had everything on the line.

Derek: You know, I'm glad you shared that because I think sometimes uh and I know our audience listening know have all have stories like that. Sometimes when you start a business um people realize they look at successful businesses down the road 40 years later they don't realize those early sacrifices and really how much risk you had to put. I mean you risked it all to make it successful. And I'm I'm curious somewhere in the conversation to hear what you guys because you come in second generation that's completely different. you're not having to take those types of risks today probably because of the risk your dad took. So that's kind of an interesting comment there.

Chris: Yeah. And so the I think the next big win from that was the uh got invited to bid on the Texas Rangers Ballpark in Arlington.

Derek: Okay. Yeah. What year was that?

Chris: That was uh 94.

Derek: 94. Okay. So 10 years after you started, you've gone from $10,000 jobs to $140,000 jobs, and now you're bidding on probably one of at that time one of the largest construction projects in the DFW area.

Chris: Yeah. It it it at the time it was the largest computer controlled sound system in the world.

Derek: Wow. Wow. And so went from, you know, 140,000 to probably 1.4 million.

Chris: Yeah. um and had to go to school because computer control and sound systems were just coming out at that time. No one really knew them. No one knew what to do with them. And so it was the manufacturers that did the training and you know so we learned you know uh how to do that on that. So that was the the next big and we we actually lost you know money on the job.

Derek: Oh that's true.

Chris: you know, uh, but but it it it became credibility, right? You know, and so I, you know, a group of us could show up, you know, to make a presentation to a client and everybody else could talk about themselves and then I would say, well, we just finished the ballpark in Arington, right? And it's the largest computer controlled sound system in the world.

Derek: Yeah.

Chris: And it just that was our trump card, you know, and so that that really put us on the map. And then we got the Bass Hall a couple of years after that. And then once we've done the Bass Hall, we've done the ballpark in Arlington, then there's nothing we can't.

Derek: Right. Right. Now you're playing in the big leagues. When did you realize in that journey that it was time to go from a solar a solo what in my world we would call practitioner to to a real business where you've got employees and systems and processes to begin to handle those larger jobs. Tell me about that transition a little bit.

Chris: I was reading about acquisitions of small AV companies and so they were starting to in what was entering the scene was companies that were starting to buy up other companies you national building national brands.

Derek: Okay.

Chris: And I realized that I had to be able to compete with that national brand. And if I wanted to do that, I had to be large enough that I could uh have the credibility, the employees, the engineering, you the business to compete with that. But I wanted to remain small enough that people would choose us because we were a local family-owned business, right? Not a national brand. So, we want to be large enough to compete, but small enough to stay personal.

Derek: Personal. Yeah. That's great. So Sam, Luke, you guys are both involved in the business today. Sam, you are the CFO. Uh, and Luke, you are the CEO, and I'm sure that creates some fun dynamics. Uh, Sam being the older, right? I was just thinking what it would be like to work for my brother, who's my younger brother. Uh, what were your earliest memories of the business? And tell me about that. Now, you're older, so you probably have earlier memories.

Sam: you know, I mean, really my my first real memory of the business, you know, beyond I mean, I got some memories of just kind of playing in the front office as a kid and just being obnoxious. But my first real memory was that that trick that trip that you took me on uh when we went out to Arkansas to do uh to do some work for that that church out there. and you know, you you picked me up from school, you know, and then you know, we went out and not only did we, you know, did I get to actually help you, you know, conduct sound measurements and things like that. And I was this was third grade, so I was probably um, you know, 9, 8, 9 years old at the time. And you know, I built a um I mean, I built a little um uh a photo album that kind of journ journaled the you know, I've got ticket stubs and receipts uh and the photographs and the state park that we

Derek: You were the record keeper at age nine.

Sam: I was the record keeper even from from that age. And so, but that was when I really understood like what what it was that we did as a business and and really had a connection with it.

Derek: Yeah. Wow. That's great. You know, a friend of mine calls those moments in our lives destiny markers. These little things that give you an insight of of what you're gifted at, what you're called to do. And so that was sounded like a real destiny marker for you with your receipts.

Luke: That he was like that growing up. Yeah. He sold me um his his boom box when I was probably seven or eight years old and he wrote out a a contract.

Derek: Yeah.

Luke: uh with a with a a receipt and I had to have the money to him by a certain point that there would be interest. Um so he's he has been consistent and I am enjoying those tendencies now as his business partner much more than I did his little kid brother.

Derek: Yeah. Yeah. That's awesome. So what were some of your early memories?

Luke: So, we did residential audio as well as commercial kind of up through the end of the 90s. And so, we had a demo room at the front of the office. And so, he had a projector, screen, uh, surround sound system, and Indiana Jones on laser disc. And so, our mom would pick us up from school and drop us off at the office. And then he'd he'd work uh, and then take us home for for dinner. So, I mean, we watched Indiana Jones weekly. Um, so that was fun. And, you know, we would strap each other to dollies and push each other around the the warehouse and and really be obnoxious, like you said, to to the employees at the time.

Derek: Um, and how many of those employees are still working for you today that you are now their supervisor?

Luke: One.

Derek: Wow, that's cool.

Luke: Uh, so yeah, Ben Landman, our our one of our shop technicians, has been with us for is it 35 years?

Chris: Yes. He's been with us for 35 years.

Luke: He's the only person that has done any of the programming on the uh computer system for the ballpark.

Derek: Oh, wow. And is still the only one that's in that system.

Luke: So, that's that's been fun.

Derek: That's cool.

Luke: Um but so when we did the ballpark, uh I was about six.

Derek: Okay.

Luke: And uh I don't know how you did it, but he took me to the construction site before it was was opened.

Derek: Mhm.

Luke: And so I remember walking through a tunnel onto the field. Uh there is no bleacher seats installed. So it's just this big concrete dome very much in progress. And he's kind of pointing out where speakers are going and and what we as a company were doing to make that vision come to life.

Derek: Yeah. And what was going through your mind? I mean what are you thinking at this moment?

Luke: So, um, my best friend growing up, his dad was a lawyer. And then at six, I don't really know what lawyers do, right? And my other good friend, his his dad was some adviser for the Air Force. And I don't really know what that means. So, this is my first time to connect to work and understand this is a business. This is what the business is doing and this is how people are going to experience the work product that that business does. So, it was the this very concrete understanding of this is what daddy does. Uh, and that was cool. It was the the Texas Rangers. I remember going to opening day and Rusty Greer Day and I got to meet Chuck Morgan at the ballpark once uh as a kid. Um, you know, later uh we did uh Will Rogers uh Coliseum and we had just done some work. He takes me to the rodeo. Uh we're walking around taking measurements and and Mr. Bass is walking down the mezzanine and he stops and you know we talk about business around the dinner table. I know who Mr. Bass is uh or of him and and so he stops, talks to my dad and then he puts his knee in the dirt, gets on my level and says, "Luke, nice to meet you. I'm Ed Bass." And I just thought that was the most amazing thing to see my dad um respected and to see the venues that that the company's doing and to start to get an understanding for this is what the business does. So at at 6 years old I I proclaimed this is what I want to do with my life and I never changed my mind.

Derek: Yeah. That's amazing. That's amazing. So pretty proud of your dad and like man my dad's pretty cool. He put sound systems into ballparks. That's awesome.

Luke: And and he's still very cool.

Derek: Yeah. Yeah, he is.

Luke: Plus, we get to play rock and roll really loud over big speakers in big places.

Derek: Yeah. I mean, it just doesn't get old. That is so cool. You know, Chris, one of the things that that and all you guys can jump in on this question here, but one of the things that I know about you is just how intentional you are and and part of what I think makes your company unique is those your values and and for a long time you were the chief steward and now you call yourself the founding steward. Tell me a little bit about what that stewardship value is today. Did you just stumble on that idea? Was it intentional? How did that become a part of a culture? And then if you guys can chime in as well about how that affects you today as youre running the business and and those values that your dad kind of passed the torch with.

Chris: Yeah. Yeah. I think it was probably in the '9s and I had become part of an organization called FCCI which stood for the Fellowship of Companies for Christ International and went to one of the uh national international um conferences uh and talked and they talked about you know these are this is not our business but we're we're managers of God's business. And so, we need to run our business in a way that glorifies and honors God. And boy, that that that just penetrated everything within me. And I I decided that night uh that I would change my title from the president to the chief steward. And that uh everything we did it it was it was God's business. um not only the profit but the values you know were were God's values uh the way we wanted to treat employees the way we wanted to treat customers everything was came out of this is not my business but I'm here to here to serve and I think that is what has really permeated our our business over time you know and I think we'll get to this later but I That's also what helped me plan to step out of the business was that that's what's best for the business and for the people and employees we serve.

Derek: Mhm. Yeah. I I want to dive deep into that later on because that's such a hard transition for a lot of business owners to make is to be able to step out, you know, and and and these kids that you raised and uh you remember when they were in diapers, you know, and now they're got to run the business and for them to be successful, you do have to step out. I think you've done that really, really well. So, we'll get back to that. What about you guys? How how has those values shaped you today and where have you come in and added maybe your own values to to the business?

Luke: My turn. Yeah. So, um TCU had a a family business class part of the business school and so our family came and talked to that class every semester for about 12 years.

Derek: Wow.

Luke: And so the, you know, my parents would do it by themselves. And then as I was starting to to work my way up into the business, I started coming as, uh, as a non-owner, but um, you know, as as part of the family and then my mom stopped coming and and Sam joined the business as our general manager. So the three of us would come. Um, and then the last time we we went, um, did we invite you? Yeah. But you were you were completely out of the business at that point. Uh so it was fun for for the professor to see the transition and and to see our story change a little every year. Uh but we got this one question one year and and this girl wanted to know if she thought if I thought that joining the family business was a good idea if you didn't really get along with your family. And I said absolutely not. Rule number one of family business is you have to really like your family. And if you don't really like your family, you can start your own business. You can work for someone else. You can find a buddy and start a business. But if you do not absolutely share the same values and enjoy each other naturally, don't even think about it.

Derek: That's good advice.

Luke: And so we had a friendship growing up. Um, one of one of our dad's um, common sayings, uh, and he repeated a lot as we started having children is you want to have you want to create so much fun within your family that they would rather spend time together than go spend time with other people. And one of your jobs as a dad is is to just make sure that it's a lot of fun.

Derek: Yeah.

Luke: And he did a great job at that. He uh we were both Eagle Scouts and so he was going on a lot of the camping trips and you know backcountry backpacking trips and uh I got into sports and so he'd be at every game and he'd yell louder than any other parent. Um you know we were both into very different things and he made sure to to really show up for for both of us, right? And so he'd work 70 hours a week, but on the weekends he would absolutely be there. And and we very much understood his commitment to the business, but that we were at least given the same amount of uh intentional dedication time and we felt very loved. M um and so because we have the same values because if we had different values growing up, it would be hard to get along and work together.

Derek: Yeah.

Luke: And so neither of us really just had this rebellious stage where we just said, you know, forget you and and everything you stand for. We just kind of got along, had fun. And so that really set the foundation for working together as adults because we always liked each other and agreed on what those values were and should continue to be.

Chris: Well, that's mostly true. So Luke I said never really rebelled. So we get a phone call from the school and Luke had gotten into a fist fight in the lunchroom.

Derek: Yeah.

Chris: Which was really out of character for either one of them. And uh because the fist fight was over a French fry. Uh but at the same time, Luke was just really getting mouthy, just disrespectful to his mom. Just started to really cause trouble, which was really out of character to him. And so we went to Risy's barbecue. We were sitting down and we were talking about it. And so I say, you know, what's up? You know, this is this is not this is not you. What's up? So, as we talked, this was the same time that Sam was starting to visit all these different colleges.

Derek: Mhm.

Chris: And Luke had just fallen off the radar.

Derek: Yeah.

Chris: And so I said, "Yeah, you know, I said, I'm wrong. I was, you know, this is my fault. I'm sorry."

Derek: Yeah.

Chris: So, I pulled Luke out of school the next day um and went up to Beaver's Bin and spent the entire weekend just camping and fishing and caught hundred trout under that bridge. I mean, just like the first hour.

Derek: Yeah.

Chris: I mean, it was insane. It It was just unbelievable. But we just had a great time and we listened to some stuff, you know, on the way up and back and just had some great talks and, you know, but just that realization that what happens outside of business really matters.

Derek: Yeah. Yeah. That sounds like that commitment to your family really was more important than the business. and you you did a great job of blending those two, but but protecting that family unit really made a difference and you reap the rewards of it today. Sam, you have anything you want to add in on that?

Sam: One of the things that I think is is really one of the most important contributions that family business makes to the marketplace is that there is no distinction between family values and business values. in that in a in a family business, it really does reflect value of the family that's serving and leading that business. And so I think for us, you know, stewardship was really critical for the business and you had that realization, but stewardship was an incredibly important concept within our family and how we treated our the things that that God entrusted to us and our vacations and our house, right? and we made, you know, you taught us how to have good stewardship of, you know, our finances and, you know, living within our means because that's both honoring to God and it's really important for the business. Uh, and you'd gone through so many seasons where where that had been so important. And so, you know, I think that that's that's really really important is that that recognition that, you know, that that's what makes families so important because I'm also a member of the Air Force, right? And the Air Force has its own set of values, but there's very much a real there's a real experience that I put on the uniform. And when I'm performing that service, I'm living different values and I'm I've got to, you know, comply with different priorities than I would have within my own family. You know, it's not to say that the Air Force values are bad. They're not. They're wonderful. But they are differences and and our family does hold different values. And so to be able to have that fully integrated life where family and work and faith and all of those things are fully connected, they're not just blended. I mean, they really are are one, you know, that that makes just such a really special uh a special result.

Derek: Yeah, that's awesome, man. Thank you guys. That's really good. That's really that's really good. Let's let's shift gears a little bit and let's talk about your decision to exit the business uh and to do that internally. As you mentioned earlier, you were saying there had been this movement of other companies coming in buying up sound companies and of course the that you kind of rode that wave of incredible, you know, innovation in in your field and industry. You could have sold to an outside buyer probably for more money than what you got by transferring it to your sons. Why was selling to Sam and Luke the right move for you and the company?

Chris: um I think it goes back to that stewardship value.

Derek: Okay.

Chris: Uh employees had become family also.

Derek: Yeah.

Chris: You know, and so to the idea of selling to someone that was not going to value, you know, the families and their lives. You we had medical things come up over the years that we help with. we had we you know we've just lived life with you know those people um and then you know we would talk about business stuff around the dinner table you know at night you know and so business was just part of our identity right of of who we were I mean you know the the Jordans are electro acoustics or electro acoustics is the Jordans you know it was just together. Um, and so the idea of if they were interested and had the uh capacity to do a good job that it made sense that they could continue to serve the clients in the same way that they had been served. It they could serve the employees the same way that the employees had been served. Uh, it would continue to serve the family. business has been very good to us over the years. Uh would it keep us together, you know, where we could, you know, continue to talk to interact. Uh it just seemed it just seemed like the next step.

Derek: Yeah.

Chris: It just seemed it it it it would be like selling your son in a way, you know.

Derek: Yeah, that's a great point. A lot of times when we talk about exit planning with owners, that idea of protecting culture becomes more important than getting the maximum value. You know, you they care about the employees. I had a guy tell me one time, Derek, you've got to be prepared when you sell to private equity for that phone call from your 20-year-old employee uh when they get laid off, you know, and and so protecting that company culture is really more important than than maybe maximizing value. And so that's I'm glad you said that. When did you guys what was your for what was your biggest concern as you're making this transfer? What was the thing that really worried you the most or had the most concern for you?

Chris: How to finance it?

Derek: Yeah.

Chris: You know that uh cuz they didn't have any money, you know, and so the you know how the mechanics of how that you know how does that work? Where does the where does the money come from to uh to finance that? And you know the it's and so we hired a third party to help us through that process. And so with them working in the business, you know, Luke, you've been 15 years now.

Luke: Mhm. Yep.

Chris: Uh so it they contributed to gosh dang near doubling the size of the business in the time they were involved. and their sweat equity, you know, grew the business enough to help provide the financial equity that we could uh pull out of the business. So, we were able to get, you know, good money out, leave the business financially healthy.

Derek: Mhm.

Chris: um and you know and then not put a burden on them, you know, so they could have a company that's not in debt, that's got cash, it's got customers, it's set up.

Derek: So really it was your cash flow that financed the whole deal.

Chris: Yeah.

Derek: You know, I think that's an important thing for for owners because when when you think about selling to a third party, you think about getting your books, your systems and processes, all that buttoned up so you can maximize value. But you really have to do that even if you're making that inside transfer because you need you need a healthy business that generates enough cash to finance that transition and then like you said leave it in good position so that you guys can thrive and and be successful. What was it like for you to to realize, hey, I'm going to own this business? Did you was there a time where you thought I didn't want to? You know, what was how was that experience for you on the other side of that? Oh my gosh, my dad's going to charge me how much for the business? What was that like?

Luke: Honestly, it felt like a very natural next step. So, I graduated with a bachelor's degree from Texas A&M um and hired on with electro acoustics for $12 an hour.

Derek: Wow.

Luke: Which is not much more than uh I made at like high school jobs when I was 16.

Derek: Yeah.

Luke: And I remember uh I got married 3 months in and and my wife, you know, I guess my fiance at the time said, "You're only going to make $12 an hour. Does your dad not like you? You know, all your friends are making 60 grand out of college." I said, "Yeah, they have engineering degrees." Um but my degree does not help me understand how to install sound systems.

Derek: Right.

Luke: So, this $12 an hour, which to be fair, was $2 an hour less than we were paying all the other entry level employees. Uh, we really wanted to make a statement that nothing was being handed to me.

Derek: Right. You're earning your position in the company just like everybody else.

Luke: Now, the first promote uh pay raise I got from our general manager, my dad was actually kind of upset. You know, I had done some really good work and he's like, "Well, we need to pay you more." and you kind of went to the general manager and said he's supposed to do good work. Um, but so started off at at, you know, barely making anything and found out that I was I was quite good at the work and that I really enjoyed the work cuz at six I wanted to do this, but I didn't get a project management degree. I didn't get a construction science degree. I didn't get an electrical engineering degree. I didn't study anything that would have been a really helpful um you know degree plan. Uh I didn't own any tools or I I really was just a a very regular high school kid that wasn't hyperfocused on my career. And so I got to work and I said, "Well, now I've got to take this seriously." And so I had to really start at the bottom. And we didn't know if I would like it or if I'd be good at it. And so once we checked those boxes, I moved from install to project management. I took over our service department. I moved into sales. And so everything I was doing, I was just adding another skill set, developing something new. And uh around 2017, I was running our our service department. Didn't have enough broken things to fix. So I started selling, designing um and managing installs for that team. And then I started uh hiring employees um to to do some of that so that I could do even more sales design. And I found out that I liked running a small business within the business. And I discovered that I liked making all of that happen maybe a little more than the actual work that the company did. And so I had always wanted to own the business, but that's really when it clicked for me that I enjoyed it. I kind of understood a little more about what that meant and that I was good at it. So by the time uh Sam came in, um, which is a a real fun story we should probably talk about.

Derek: Yeah. Yeah, let's do um he was uh really growing the the company's...

Luke: he immediately made an impact on the strategy and the way that we ran the business and so I was technical and I was selling things and so uh you know very long answer to your question it it felt like a very natural next step to own that uh it's been immensely harder than I thought it would be. I look back and laugh at the, you know, how naive I thought it it it was, but no, it wasn't surprising. It wasn't all that scary and it it's been a lot of fun.

Derek: Mhm. That's great. That's great. Sam, tell me about, you know, your story as as Luke was alluding to joining, you took a little bit of a different pathway. You uh went to the Air Force, you became an attorney. Uh, I think you've got your NBA as well. I always joke with your dad, you're such an underachiever. But what I love about your family and setup is you're you really you guys have great complimentary skill sets that really add value to your leadership team and to your company. And so what was your journey like? How did you eventually roll into the business? Let's let's tell that story.

Sam: you know, a as a kid in a family business, you know, there was just always that assumption, I think, that of course I'll work in the business. And I had worked in it in high school. One of my first jobs was doing shipping and receiving over the summers for the business. I'd done some installs. Um but then you know I I really uh you know just through some some pretty significant life moments I really felt like I was really being called in a different direction and uh and so the consequences I mean I told I told dad coming back from that experience that I I really needed to pursue uh the law and becoming an attorney and and I really understood that in making that decision vision. I knew that I was walking away from any future or future stake in electro acoustics and I I just I had that understanding of in doing that I knew Luke was on the track to to go into the business and that that would all be be his and I would have to figure out my own way and and I had and I had great peace about that. I was really excited about that and and I had a really wonderful uh experience and and career with the Air Force. But uh it was really, you know, it was really kind of my third my third or fourth assignment, you know, within the Air Force where my wife and I were just like we really wanted to be back near family, right? We missed that connection. And especially with the Air Force, it was hard because I would do something and build something and then a year later I was in a new job or or in two years I would be at a different state and and I never really got to see like what was the result of everything that I was doing. and and I really had this strong desire to both have my kids grow up around their cousins, which was not something I had growing up, as well as I wanted to do something that that was going to have staying power. And and I think that's a tremendous value that a family business brings. And and so my dad and mom were visiting uh my wife and I up in in North Dakota. And you know, we we broached this up. We said, "What would you think about us leaving the Air Force and coming back and joining uh the business?" and and dad says, "Man, that would be great. I think that would be a ton of fun, but you know, it's gonna be Luke's show, so you need to call him and see if how he feels about that."

Derek: Yeah.

Sam: Yeah. And and so you know you you talk about the complimentary gifts and I think that's that's one of the things that really makes or breaks the next generation particularly if you have multiple uh multiple siblings is you know how how do you know what are their gifts and what's their understanding and appreciation of their gifts and of each other's gifts. And you know, I I think you know, Luke and I really did not appreciate each other growing up. Uh, and we had different interests and even though we had the same values, we basically did all of the same activities. We went to all of the same organizations, but we were just very different people. And and Luke points out that I left for college when he was 14 and I came back to the business when Luke was 28. And so, you know, we had spent half of our lives apart and, you know, Luke was in middle school the last time we lived under the same roof.

Derek: Wow.

Sam: And and so there really was a real question of who who are each other and would we will we like each other even. Um and and so there there were a lot of things that we really had to work through. We've been super blessed that, you know, I've really come to have an unbelievable appreciation for Luke and his giftings. And I just I have zero desire to want to do the things that he does. And and he pretty much feels the exact same way. And so for us at least, we really get to have, you know, we're just excellent battle buddies and that we can just, you know, tackle this, you know, back to back and I can cover 180 degrees, Luke can cover the other 180 degrees. And that really allows us to be able to serve and support the organization together. And we've got the support of each other. Whereas when when it was just dad, dad had to cover all 360 on his own.

Derek: Yeah.

Luke: Yeah. Wow. That's Yeah. We we don't have hardly any overlapping skills or desires. Um, and so I think it would be really challenging if there was something the business needed that we were both interested and capable of doing and having to really decide well who does this one and and why.

Derek: Yeah.

Luke: But um it's not so much a um a job description of well this goes to the CFO and this goes to the CEO and we let our roles decide it. you know, we certainly have that uh clarified within the business, but it we've really tailored our roles, you know, around this is what I'm good at doing and interested in doing. So, so he he calls me and and says, "Hey, how would you feel about working together and and I realize he's he's saying, you know, you're you're not going to own half, right? And I didn't own anything at the time, but I'm not going to own more than than half. Uh I also failed accounting twice and switched out of the business school because I couldn't get past it.

Derek: Yeah.

Luke: And Sam got a 4.0 in the honors business school at&m. Um so the biggest question and I really feel like it was a gamble in a lot of ways. It wasn't is Sam smart, is Sam hardworking, is Sam dedicated and intentional. It really was, will we enjoy each other as adults, especially with the pressure of performing and being good stewards to God, being uh good caretakers of the business, providing a place that the employees would want to because you hear stories of siblings or, you know, co-owners that they ruin a great thing because of their personal mess.

Derek: Yeah.

Luke: So that's that's been the biggest blessing and and provision from God. And you it's just clear as day that we have just become best friends and get to work together every day. And I get to see his his gifts that God gave him in ways that most brothers don't get to see.

Derek: Yeah. Yeah. That's awesome. That mutual respect that you guys have for each other is really amazing. and and that that you recognize so gifted in two complimentary areas is really such such a benefit. Um you know we deal with business owners all the time where that's not the case and a lot of times they're trying to figure out they've got maybe one business active child and then they've got another child that's not in the business and how do they be fair, you know, and equal and in deciding things and and you guys just have figured it out. So good. As we kind of near the end of our time here, let's let's talk a little bit about that actual transition. Um, you know, you you said you we financed it through cash flow. Uh, you had a consultant that worked with you. Uh, was it did you do it all in one year? Was it over a period of time? What was that like? And what were some of the lessons that you learned if you're doing it again? Like maybe when you do it at the next time around for your kids, what will be some of the lessons you do a little bit differently?

Chris: There was a I had a friend who had taken over his dad's actually his granddad's business. had gone from his grandfather to his dad.

Derek: Okay.

Chris: And he had given me a book called the family business answer book.

Derek: Yeah.

Chris: And and I had read that gone through it and it it made nothing but sense. And so I said I'm going to do it that way. And so I you know from kids working in the business you know uh

Derek: This was early on when you read this book.

Chris: Yes.

Derek: Yeah. Okay.

Chris: You know it uh it just made sense. So I I developed probably u once I realized that Luke enjoyed the business and felt that he was good at it. Uh I then began to work on developing a 10-year strategy of uh how to how to begin that uh that process and literally that book was um um a guide u in that and I can I can remember and I still have the journal entry one morning as I was writing down you know those those things of what I wanted to accomplish. But I wanted to leave it as a a young feeling fresh company, you know, ready to go into the next generation. So I didn't want to strap them with old employees that were unmotivated. I didn't want to strap them with debt. And so everything became how do I begin to uh set the business up so that for whatever reason should it not work out it is sellable to a third party but if it does work out it really sets them up uh in the best possible scenario right to go forward with it.

Derek: I think the key statement there and is that 10 years you were thinking that 10 years out which is really about the time we like to you need to be take thinking seven to 10 years out in advance and that's very unusual. So so that's awesome.

Sam: What what I'd add to that too, you know, it's a it's a a lot of kids I think in a business assume like you said, well, I want to I want to work with dad. I want to be a part of that business one day, but I also don't want to buy a business that's struggling, right? I I love my my family and because I grew up with the business, I'm I'm sentimental about it. But if it's full of debt, we're getting sued by our clients. Uh turnover is high. Everyone hates everything. No. Yeah, I'm not doing that. So, not only is it, you know, setting up the business to be successful so that it can handle that transition well, but it's also creating a business that your kids want to buy, right?

Derek: Yeah. That's really good. That's really good. Yeah. I think that's often overlooked in in the situation and somewhat of an expectation. and hey, I'm ready to retire, so you're going to buy the business whether you want it or not, you know, and and that creates all kinds of challenges. What was harder for you, Chris? Was it harder to let go uh or watching your sons do things you would have done differently?

Chris: It's harder to let go.

Derek: Yeah. Tell me more about that.

Chris: Uh so I've worked since I was 10 years old. So I've got six decades, you know, working in the the AV business.

Derek: Yeah.

Chris: So that is who I am. That is that is my identity. So to try to imagine uh an existence where I'm not in the business, you know, was very very fearful. Like we then I can't remember why we got together at my house one afternoon. We were talking about that business would be, you know, putting a timeline on it, I guess. And I I literally broke down and cried because I realized the I realized that gosh, I've got to let go of this, you know, and it and it was it was terribly fearful. I mean, but but what I knew, I'm not sure why I knew this, probably read it somewhere, uh that a man is at his peak in his mid30s in terms of energy, creativity, uh drive, you know, all all that. And in that I was in a group of business owners and many of them were family businesses and the number one complaint was dad won't get out of the way.

Derek: Yeah.

Chris: And I I promised myself I would not be that dad.

Derek: Yeah.

Chris: And so I said I cuz I I felt good. I still feel good and I think I could do a good job running the business. But if if I cheated them of that time

Derek: Yeah.

Chris: it it I did not want them running my business. I wanted to get out early enough that it would become their business and they would change it. So I I wanted them to make different decisions. I wanted them to go different directions, not not my directions. And so I I had to get out of the way whether I wanted to or not because it goes back to that stewardship thing. It's what's best for the business. It's what's best for the employees. It's what's best for the customers, the clients, if if the business is is really working well. And so it was

Derek: Yeah. Yeah. That's awesome. What was that like for you guys to to navigate that transition? Dad is stepping down. He's stepping out. And if I remember right, you kind of phased your way out. You quit coming to some meetings. You you took on maybe just a sales role without a quota. You made sure to I don't have a quota. Uh but but you did some things. And then one day you just didn't do anything and you were out completely, stopped showing up. So walk me through that experience from your standpoint of helping your dad kind of wind his activity out of the business.

Luke: I feel that we are unbelievably blessed as a family and we we know that.

Derek: Yeah.

Luke: Uh, I don't think it normally goes this well. And so, just like the progression from from growing into the business and saying, "Yeah, we're going to buy this thing and it's really not all that scary." I think the transition to we are running it and dad is not was also just handled pretty well and and was fairly smooth. So, um 2019 we both bought, you know, a minority, um share of the business. Um this was fun. The plan was that we were each going to buy 5% every year, but then we had a really good year and found out that if we owned a minority, our tax liability would be lower.

Derek: Yeah.

Luke: So, we actually bought a combined 40% upfront.

Derek: Wow.

Luke: um and saved a lot of money on on taxes. Uh and then we just stayed at that 40% until we bought the rest of it um in 23. So around that time we started making more decisions, started really running the dayto-day as minority owners. Um, and we started going to lunch every Monday, the three of us, and would talk, you know, more strategically at an ownership level and just making sure that the three of us were on the same page in what we communicated and how we represented things and just took years of running that playbook, right? And then a year before we bought the rest of the business, he he said, "I am a a silent partner of the leadership team." But he really quit leading meetings. Um if I if I showed up in the room, right, I'm the founder.

Derek: That that is such a great point right there and and and very astute for you to recognize that if you walk in the room, everybody focuses on you and and you guys don't have a chance to lead. So just by making that decision not to be present in those company meetings and things like that really shows one your confidence in them which which hey we can trust these guys and then two you know your ability to let go and let them run the company. I think that's great.

Luke: But so we had a we had a full year of us running the day-to-day operations, making the decisions before we bought it.

Derek: Yeah.

Luke: And so that that year was a really good kind of test run while he was still in the business and was able to see things and it really just confirmed for all of us that we had gotten to a point where we were competent and able to continue that because again we paid for it with cash flow from the business. So for him to hit his payday, he had to trust that we would keep it going, right?

Derek: Yeah.

Luke: And so that that was kind of the last gate that we had to clear to really say, I want to sell you this business. And we said, we feel comfortable buying it knowing that we have a uh the ability to do that to do it.

Derek: Yeah. That last year was very special. Yeah. Yeah. That's awesome. That's awesome. Well, we What would you add to that?

Sam: you know, I I think that so earlier you made a comment about how um you know, many many owners, you know, struggle with how to be fair to all their kids. And fairness has never been a value of our family. And and dad, you know, dad has always been very clear that we're not equality, you know, but you know, and that we're going to treat people, you know, like the same, right? you know, and and you know, and so and that was why, you know, when I walked away, like I knew that I I didn't expect to have a have a stake in it, you know, and and that was that was just that was okay, you know. But I think in in the same way there's been, you know, as we as we were navigating the transition and the the purchase and sell and all of those aspects, there was an incredible sensitivity on all of our parts for for trying to be sensitive to the relational dynamic. Uh really trying to be sensitive to the timing of things, you know, and it was very much a we we kind of I mean we had we were talking about it constantly. We had some some pretty good timelines, but there was always a lot of just we were very delicate around pushing on those things and we didn't want to push dad out before he was ready. You didn't want to leave until you were ready, you know, and if that kind of stretched out some of the time like there was there was there was just a I think just a sensitivity and a and a and a gratitude for the the great relationships that we had. And none of us wanted the transition to ruin those relationships. We wanted to be just as good of friends before, during, and after the sale.

Derek: Yeah, that's so good because you guys built a life of fun together and you didn't have anybody else to hang out with, right? Because you needed each other. That's awesome. I think the takeaway for me and one of the key takeaways is just the intentionality along the way that this stuff, these types of transitions don't happen overnight. They don't happen when you come in and say, "I'm ready to leave. Think I want to retire tomorrow. Hey guys, you want to buy the business?" you know, it it 10 years prior, but even back then family values that you're working in and and doing that and even giving you the freedom to go your own pathway, you know, it wasn't about it wasn't so much the family took the priority over the business in a lot of ways even though we were really intermingled and and you guys all worked together to protect that relationship and I think that's I think that's really amazing. Well, we are kind of nearing the end of our time and and Luke, we were talking earlier before the show about your son uh who Hank if I remember right and and he is 11 and uh tell us a little bit about the next generation and what your thoughts 10 to 20 years from now when you see uh your you guys' business and how many how many cousins total do we have? How many grand?

Luke: There's six between us. So, I've got I've got two boys and Sam has uh three girls and a boy.

Derek: Yeah.

Luke: Um, so you know, something that I think is really fun. So, so he worked for his dad, but there are actually two venues that the three generations have worked on.

Derek: Oh, wow.

Luke: So, Will Rogers Coliseum and and TCU's uh Aean G. Carter football stadium. My grandfather, my dad, and I have all worked on those two venues.

Derek: Wow.

Luke: Uh, but a guy came into our office several years ago and said, "I bought a uh a pair of speakers from from your grandfather and and your dad helped install them and they're not working. Would you would you come out to my house and fix them?" And I really didn't uh have the time, but I recognized it was a cool opportunity. So, I brought Henry with me and uh I I get to the back of the speakers and there's just a loose connection. And so I tell my son, "Go ahead and, you know, turn this screw." And as soon as he turns it, music starts playing. So four generations of our family have worked on that pair of speakers.

Derek: I love it. That's cool.

Luke: Uh, so I I've got a picture of us in front of the speakers and my smile is is huge. Um, so I don't know what Henry wants to do when he grows up. You know, I told you earlier, you know, when he was four, he wanted to run a Chick-fil-A franchise and be an astronaut.

Derek: Yeah.

Luke: Um and then he wanted to work in the business, and then he wanted to be an engineer. Um he really doesn't know what he wants to do. Um you know, at the end of the day, I love my family too much to ruin the family and and probably the business at the same time by trying to force it. So when when I graduated college, you know, I said, "Hey, I want to I want to come to work." And he said, "Well, maybe you should go work for a competitor and kind of learned the business." I said that I don't want to waste my time. I want to I want to come work. So he tells our our uh our field manager at the time, "Hey, Luke wants to interview. We, you know, kind of need the help, but he's sleeping on my couch. So if you don't hire him, he will be okay."

Derek: Yeah. So if he doesn't add value, right, don't even let him in.

Luke: Wow. you know, he he was always encouraging me in college, is there anything else you want to do? Because he was afraid that I would come in, I wouldn't like it, it wouldn't work out, and that I would blame him for how my life turned out. So, he was very intentional to not pressure me. He He almost didn't encou He did not encourage me to join the business. Anytime I said, "Well, I want to do this." He'd be like, "Oh, well, that's nice. Uh, you know, I hope I hope that works out for you." but he didn't say, "Oh, that would be fun, and here's what it would look like." So, I have not put any pressure on my son. I've put more pressure on him on where to go to college than what to do with his life.

Derek: Yeah.

Luke: Um, and so I always make work uh fun when I talk about it. I've I've gotten to show him and he's gotten to experience Dickies and some of the things we've done and he thinks it's cool and he gets to see us work together and see our friendship. So, it's it's naturally attractive. It's another thing to pursue that and that's up to him. But one of the things that dad said growing up that uh and it's a little tongue and cheek, but it it it's spot on is you you raise your children like they're going to run your business.

Derek: Yeah.

Luke: And if I raise Henry into an adult

Derek: Mhm.

Luke: and he's doesn't have the character or the work ethic to work in my business, much less buy it, then I will have failed him.

Derek: Right.

Luke: And if he had the potential and I didn't foster that, I've failed the succession of the business by not raising a leader right that's competent and capable of of doing that. And so if if I can um guide him well um and and my younger and and Sam with with his kids if if he is got the potential and the opportunity that's all I can ask for.

Derek: Yeah, that's awesome. Well, on that note, we probably need to wrap it up. Thank you guys so much. I I have enjoyed this. This is a great conversation. Maybe we have you come back sometime and we'll do it again and talk a little bit more. so much depth in your family. Of course, been friends with your dad now for a long, long time. And he always outfishes me, which is not hard to do, but uh we have a good time when we do that. So, thank you for spending your time with us and sharing your your family and your lessons, your business. Well, this has been the Leave My Business Well podcast. I'm so grateful that you tuned in. We'll make sure to have some show notes for you. Uh and uh thank you so much. If we can help you in any way work with the transition of your business, please give us a call. We'd love to be of assistance. Thank you. The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance references are historical and do not guarantee future results. All indices are unmanaged and cannot be invested in directly. Consult your legal, tax, or financial adviser before making any decisions. Investment advisory services are offered through Moffett Financial Strategies, a registered investment adviser in the state of Texas. Business consulting and exit planning are offered through 7-Eleven Consulting LLC. Moffet Financial Strategies and 7-Eleven Consulting LLC are not related entities.