Thinking ahead about transition
Brian Friedman, founder of Friedman Realty Group in New Jersey, got an early start addressing succession issues wiith his son David. Circumstances forced them to do so.
At a conference table in the sleek, contemporary headquarters of Friedman Realty Group, a real estate investment and management firm in Gibbsboro, N.J., Brian K. Friedman and his son, David, are reflecting on issues that have taken center stage for them: analyzing risk, their business future and structure, as well as continuity, succession planning and exit strategies.
With them is Nancy Drozdow, principal and founder of the Center for Applied Research (CFAR), a consulting firm that has offices in Philadelphia and Boston. Brian and David Friedman (no relation to the author of this story) have been working with Drozdow for two years. "Second-generation businesses often have a need for future planning and reorganization, and a medical event can be a strong signal for outside help," Drozdow explains.
The Friedmans know that now.
These two men had to become more deliberate about their plans for the future of their business after Brian Friedman suffered a stroke following surgery in 2004. They also have had to become more self-aware.
"Of course, I've learned a lot about life, about risk and, most of all, about my family and myself," says Brian Friedman, the president of Friedman Realty Group.
"They are both working really hard, individually and together," notes Drozdow. "Like most of us, they didn't expect that a crisis would force them to look squarely at themselves and their business."
Brian Friedman hadn't planned on undergoing major neurological surgery, the results of which could not be predicted with certainty, at age 50. Still, the surgery was not optional. Without it, a brain bleed would be fatal.
Brian awakened after the procedure to discover that a stroke, attributable to the surgery, had left him with vision and language impairment.
"It was a shock, and yes, I was frustrated," he recalls of those early weeks and months. Brian's business had been the driving force in his life. Rehabilitation took a totally different kind of energy and commitment.
"You ask yourself, 'Will I ever be able to do what I used to? Will life ever be the same? What will happen to my family?,' " Brian reflects.
A decade later, he has most of the answers. He recovered and was able to return to the office. And his son David is proving to have strong potential as a successor. In the aftermath of Brian's illness, David stepped up to the plate not solely out of a sense of duty, but because the business his father launched attracted him, and tapped into his own skills and interests.
The Friedmans are taking steps toward succession. Brian's situation forced them to begin thinking about transition sooner than they otherwise would have, and to have explicit conversations about matters they might not have discussed openly.
As David continues to learn from his father, their story remains a work in progress.
"Brian is still figuring out what he wants for himself now, and David also is aware that even though he has learned a lot already, he still has more to learn," says Drozdow.
"We're experts in real estate," Brian says, "but not in how a father and son can define their roles."
Building the business
Brian Friedman's earliest years were spent in Philadelphia and then in nearby South Jersey. His father, an accountant, began investing in distressed properties with his accounting partner in the early 1970s. Brian began working with them in May 1975, about the time of his college graduation. Property management was a good fit for him.
About three years later the company, Associated Property Management, sold all its properties. At that time Brian bought out the APM partners and changed the name of the firm to Friedman Realty Group Inc. "I loved the business, and I saw that I could expand it," Brian says.
Initially, Friedman Realty focused on apartment communities, office buildings and retail shopping centers in the Philadelphia-South Jersey region. Its more recent area of emphasis is value-added apartment ownership and management, with a specialty in improving existing properties both inside and out, and enhancing them with added amenities.
Life was full, exciting and challenging when Brian Friedman's health issues intervened. His wife, Marcy Dash Friedman, owns and operates an interior design firm. David was just about to start his freshman year at the University of Maryland. David's younger brother, Eric, was still in high school.
After a few months of rehabilitation, Brian went back to the office part-time. Yes, he needed help, and he needed to accept that fact. "It's not easy to do when you prefer doing things yourself, but I really had no choice," he recalls of those transitional times after the surgery.
David, who had had summer internship experiences in unrelated businesses, joined Friedman Realty upon his college graduation in 2008. His parents were careful to ascertain that coming aboard was truly something David wanted to do—that concern for his father's welfare was not his only motivation.
When David entered the business at age 22, Brian gave him this advice: "Watch what I do. Learn my way. Be a sponge, and ask questions in private."
A son learns the ropes
David Friedman and his father are different—in some ways, very different. Nancy Drozdow of CFAR has helped them to see and understand those traits.
David was always studious and scholarly. His parents would often say that their older son had an "old soul." Brian is more instinctive, and has strong opinions. The company he leads now includes a headquarters staff of nine and an outside regional staff of about 55.
David, now 30, remembers his early days at the firm. "I recognized from the start that I might be seen as 'the boss's son,' and I certainly didn't want that image," David says. "I wanted to be the guy who worked harder than anyone else, not the guy who got away with things because of who my father was."
David's first office in the company's former headquarters was a tiny, dark space, but he didn't mind the stark environment. "That was fine with me," he says. "My goal was to prove myself by adding value to the company."
As is true of many fathers and sons in business together, the working relationship between the two had to be defined, and there was a bit of a learning curve. "My dad had been at this many years more than I had been," David says, "but I also wanted to carve out a place for myself if this was going to work."
David's calm, quiet demeanor contrasts with his father's admittedly more impatient nature. "David can involve himself in long conversations with our property managers, while I tend to be quicker and shorter," Brian says. "But it's an example of how I can learn from him."
By the time David came into the company, his father had gone through his rehabilitation and adjustment to a somewhat altered lifestyle. The determination that has guided him to success in business and life, Brian believes, has motivated him to conquer his limitations.
While Brian has recovered much of his language acumen, he still occasionally is slow to access words. David has had to learn to recognize when his father needs help in expressing himself—and how to offer his assistance.
"Sometimes, I want and need to be an extension of my father," David says. "When he can't express what he wants to, I can do it for him—but I always wait for him to try."
Learning from each other
Brian has been capitalizing on David's technological skills. The younger Friedman recently spearheaded a redesign of the firm's website.
Brian has had to make space for David to expand his responsibilities. David, for his part, has needed to absorb and learn from his father's long experience and considerable knowhow. Both have been gaining the insight that knowledge flows both ways.
"David is absolutely prepared to do property management and does it extremely well," Brian says. "I want to be more cautious about having him do asset management too soon, and completely on his own. The buying, selling and refinancing can get very complex."
Yet Brian has discovered that good things can happen when he is open to his son's suggestions—and David has learned that having the courage to express a differing opinion can pay off. They recall a disagreement over a property in a nearby South Jersey town that David felt had enormous potential. His father was skeptical, wary of its small size. David prevailed, the company purchased the property, and it has proved to be a successful acquisition.
"This was a case of the son convincing the father," Brian says. "And I'm not easy to convince!"
"That kind of flexibility is really important for both father and son," Drozdow notes. "Even though there are skills David may need to [acquire], he has the talent and aptitude. And it's being recognized."
Brian's staff, and his son, look to him as an expert in his field. In 2004, Brian wrote a book, The Real Estate Recipe: Make Millions by Buying Small Apartment Properties in Your Spare Time. He wrote it with his then-teenage sons in mind. "I just wanted them to know that this isn't such a profound mystery," he says.
At this point, Brian is not ready to step completely away from leadership, though he and David are preparing for transition. "All of these buildings we own are my 'children,' " Brian says. "It's hard to let go."
Friedman Realty Group has weathered market fluctuations and changing trends in housing, but Brian's health crisis was by far the greatest challenge he and David have faced. They believe they passed that test.
"We're stronger as a family," Brian says, "and I've surely learned that in business and in life, it's how you handle the tough times that defines who you are." Drozdow, their adviser, says Brian and David are doing the hard work they need to do, with loyalty and love as their motivation. "Decisions have to be made," says Drozdow. "But I am awed by their progress, and they should be, too."
Sally Friedman is a writer based in the Philadelphia area.
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