Revolutionizing Taxes with AI & Real-Time Optimization

We produce more adjudicated data than anyone.

Brent Ryan is the founder and CEO of Ryan, an award-winning global tax services and software provider and the largest firm in the world dedicated exclusively to business taxes. Brent has been recognized among the Dallas 500 Most Influential Business Leaders and is a 3-time recipient of the International Customer Service CEO of the Year Award, highlighting his leadership in both business and client service excellence.

Imagine taking the government, out of tax. That's what we're trying to do.

It seems like with ChatGPT, how do you stay relevant?

There is an awful lot of gray in the tax code, in the tax regulation, and it's forever changing. In an AI real-time world, we can change it to change the tax outcome, to optimize in real time, which is never— nobody's ever been able to do that before. We're going to go back to work 5 days a week or 4 days a week. We just chuckle. We've been remote since 2008. When the pandemic came, we were getting calls from clients saying, oh my goodness, our offices are shut down. We don't have the capacity to do the work. Can you take the work?

In that growth phase, why not go to New York? So when you started, Ryan, was it right out of college or did you work other places and then get a— like, how did that structure start?

Well, so I took a job in public accounting. And Coopers and Lybrand here in Dallas. And my whole life, my whole life plan from grad school forward, because I had focused on tax my junior year, I took a tax class at UNT and I fell in love with it. It was phenomenal. It was my calling. So I went to do that in public accounting. I thought I was going to be a Fed tax partner in a Big Six firm back then. And it turns out, after about a year doing that, I got assigned to the state and local tax group and I just saw it, my career's ending. This is like for widows and orphans. I mean, this is not something I want to do, but I got drafted into it. What I didn't understand is that there were forces at work that were going to propel that to be the most important decision in my life. Because the Texas legislature, just a year before I started in October of '87, passed House Bill 61, the largest state tax increase in the history of the United States up until that time. And why it's noteworthy is because it was for the first time that any state started taxing services in their sales tax. So before you paid tax on tangible items, but not on services other than repair, which became taxable in '84. This was a giant $5.7 billion tax increase. And you know what? Nobody knew anything about it. It was brand new. Nobody had ever tried this before. And I'm sitting here, you know, junior guy with the state tax expert designation, right? I didn't know come on from sick 'em, but, uh, the phone just starts ringing and it never stopped. So many companies trying to figure out, okay, how does this data processing tax work? You mean, how do you calculate tax on information services? What's this remodeling tax? How is that going to impact us? So I did that for another couple of years and it was like we couldn't keep up with the demand. I mean, and I went to the folks at C&L and I said, look, this is This is going to be huge. We got to get in front of this. We need more people. I mean, our practice development budget was $1,000 a month. That was it. And I literally, I couldn't convince him. The partner that I was working under couldn't convince him. And so finally that spring, we decided that we've had enough. You know, we're going to, we're going to just see what happens. We're going to, you know, go out on our own.

When you say we— so he would—.

His name was Chris Collins. And he had been the former state tax director for Dresser Industries here in Dallas, was the first person in the state of Texas to become a state tax consultant, because before that, you know, in public accounting, there was no such thing. But he and I left, and the official date was July 15th, was our anniversary. And we came, we started the practice, You know, for the first 5 months or so, I thought I'd made the biggest career decision, mistake in my life. And I was hoping that Coopers would take me back. But we won this case in October or November of '91 for a little company that no longer exists anymore called Esco Elevator. They're based over in Fort Worth. And we would go in and we would say, look, you don't know us. We'll review your taxes. And if we can save you money, you pay us. And if we can't, then, you know, no harm, no foul. You don't owe us anything. This elevator company was sourcing all of their national receipts to the state of Texas under franchise tax. It was completely wrong. They owed tax on about 5% of it. We went in, we looked at the returns and we're like, wait a minute, you got 100% apportionment factor. There's no possible way this can be right. And we recovered virtually all the franchise tax they paid over a 4-year period of time, which turned out to be a little over $300,000. We got a $61,000 check out of that deal, which is twice what I was making. I mean, so that was the first time I realized, oh my goodness, this is going to work. This is— this— this— we're on to something. Now, Chris, unfortunately, he stayed for a couple of years, and I never will forget the day he came in and decided that we were breaking up the partnership. He said, you know, we got 15 employees now. I've got to worry about this payroll. I'm not sleeping at night. And besides, I came out here because I wanted to play more golf.

Success in business is screwing up his golf game.

That's right. And I'm like, well, boy, I didn't— that's not why I came out here. I wanted to build something. I wanted to do something special. So anyway, you know, to make a long story short, we negotiated a separation of the business. He went off and retired and, you know, I changed the name to Ryan and kept going.

You meet entrepreneurs or aspiring entrepreneurs all the time, especially at like at SMU where Elaine's a guest lecturer there. And you always hear these questions of how do you do this work-life balance? And when I hear that, I just think, not going to make it.

Work-life balance doesn't exist. At Ryan, we figured out a long time ago that it's not work-life balance. That's a, that's a false narrative. It's work-life success. Okay? It's a very different concept. So work-life success works like this. You recognize that in order for you to be successful overall, you have to be successful professionally. You have to be successful spiritually. You have to be successful at home, right? None of those are ever going to balance. There are going to be times in your life where you are heads down doing nothing but focusing on the business. Right? There's just no room for anything else. But then there are going to be other times when you're going to focus on the family and you're going to have to make the time. You're going to have to take time away from the business to focus on whatever might be happening in the family. And you've also got to make time spiritually so that you take care of your body, you take care of your mind, you take care of your spirit. We learned that the way to do that was to give people as much flexibility as we could. Because Ryan, you're different than I am. Lane, you're different than I am. You're the way you work, your wants, needs, and desires, they're all different. So in 2008, we came up with this concept called the results-only workplace. And the idea behind it was we don't care when you work. We don't care from where you work. As long as you provide the best customer sat scores you can, and the best financial stewardship you can, go be successful. Be the CEO of you. And it transformed our company because people realized then that they could achieve work-life success. That's possible. Work-life balance, it's not a thing.

So digging into that a little bit, because— and I'm not too familiar with your profession, but in the legal world, it's all about billable hours. So how in your world is it billable hours or is it billable project? Like how does that work? Because if it's results only results and hey, whether you work 1 hour or 100 hours, I don't care as long as you get the thing done. Like how does that translate? Like how do I get paid or how do you bill for that?

Yeah, well, Ryan, the great thing about our business back then and even today is that the vast majority of what we do is success-based. Okay? So, you know, when you go to a client, do they really want to buy hours? No. They want to buy a result. They've got a problem. They want a solution. They want you to fix it. We learned a long time ago that it's much more appropriate and effective to tie your fees to the results you achieve, not how much time you put in them. And that was one of the big factors early on because it was born out of necessity, right? When we left public accounting, nobody knew who we were. Nobody understood our value proposition. So we kind of pivoted to say, don't pay us if we can't save you money, don't pay us. And that was really the start of the business. The beautiful thing about it today is we can measure everything. We know for every partner, every associate, every team member, we know what their client sat scores are across the board. We also know what their financial stewardship is. So we can measure all this. Now, another thing that we learned, this again was born out of disagreements that I had with my first partner, because when we started, the deal was, He was 75% because he was the gray-haired guy that had credibility in the marketplace. You know, I was 27 and I was doing all the work. So the deal was he's 75, I'm 25, and by the end of the second year, guess what had happened? He's on the golf course. I'm hustling. It flipped. So all of a sudden I'm 75 and He's 25. So after the split, I realized that I can't really figure out, you know, what individuals— each individual's contribution is going to be. I don't know. Maybe they're going to be a rocket, you know, rock star, and they're going to just take off, or maybe they're not. So the firm's value proposition is success-based, but so are our team members. So if they're on a team and they save a client money, the client pays us a portion of that in value share. And you know what we do? We turn around and pay a portion of that in value share to them. So they're highly motivated. It doesn't matter where they're working from. They could work— if Elon Musk can get them to the moon, they could work on the moon. It doesn't matter. They're motivated. They want to help our clients save money and they want to participate in that value share. So I don't have to police them. You know, I mean, I still chuckle, frankly. I hear these companies and their CEOs, everybody going back to work. We're going to go back to work 5 days a week or 4 days a week. We just chuckle. I mean, the reality is we've been remote since 2008. When the pandemic came, it was one of the biggest booms for us ever because we were getting calls from clients saying, oh my goodness, our offices are shut down. We don't have the capacity to do the work. Can you take the work? Well, we'd had VPN access for all of our team all around the world since 2008. We hadn't bought a tower computer since 2008. We just pivoted. And much of that business had flowed to us in the early days of the pandemic, never went back. The companies never took it back. And so that was a huge benefit because of that flexibility. But that's the beauty of it. We can measure it. And so we tell our people, These are your metrics. You go figure it out. And some people work all over the place. You know, some people work early in the morning, you know, some are getting emails in the middle of the night. I mean, it just, you know, just whatever works for them.

It's a great model. When I was the age when you started your business, I was a young stockbroker at Dean Witter Rentals. They paid me $1,000 a month draw against my production. I was highly motivated too. And every morning we'd look at that bunk of Ramo and I would see what my tally was. Now, there are probably some perverse incentives there. In your case, I love the fact that it's aligned with you're saving your client money and you're sharing and participating in that savings. But I certainly understand and have grown up as someone who lives off of their P&L, essentially, and you either sink or swim.

Lane, here's what I learned. You cannot fight human nature. You will lose, but you can harness it and do great things with it if you align the incentives to the mission of the organization. And if I get credit for anything in this, it's that piece of it. It's aligning the value proposition and the incentives all the way through the organization.

Right. You saw an opportunity. You're kind of right place, right time. But 1,000 people, maybe 1 out of 1,000 would have seized the opportunity the way you did. Um, but you saw an opportunity, a change in the, in, in tax taxation, um, that nobody understood, and you were able to be the problem solver because you understood it and you could solve that problem for people. But I was looking at the stats for your company. It's just incredible. Um, you started in 1991 and you've grown every single year.

That's one of the great things about tax. I was going to say it's the quintessential growth industry. Did you know this? Globally, tax grows 5 to 7% every year, whether you need it or not. You know, when I look back in, you know, 37 years of doing this now, there's only been one year that that wasn't true. And that was 2020 when a lot of the government was shut down. But even then it wasn't a loss, it was a deferral. You know, they just picked it up the next year. When we talk about our goals for the company and growing the company, I got to have a rule with my partners. I'm like, if you can't turn in a growth plan less than double digits because you're already going to get 7% just by showing up. So in order to be a double-digit grower, we have to beat the market by about 300 basis points and we're able to do that. So again, I'd love to tell you that a great visionary that I saw this opportunity. In fact, the truth is I fought it in the beginning, and then once it occurred, I didn't realize until later what a phenomenal opportunity it is. Because here's the thing, when you look at the tax services market, even today, it is dominated by the public accounting firms, whether it's the Big Four or the big regionals and national firms. What I did, totally unknowing at the time. I mean, I'm a tax guy. I want to do tax, right? I plucked the crown jewel of public accounting out and I put it in a market-facing entity. I put it in a market-facing entity that I can capitalize with private equity, that I could take public if I wanted to at some point in time. But that just, that circumstance that, that, that, that, that, hey, I'm going to focus on tax. I had no idea at the time, but it was one of the most important decisions that I'd ever make. Yeah.

So the part that, that I'm intrigued with, because I don't fully understand it, is I get that in 1991 you were able to gather information and be able to solve problems for people because they didn't understand, they didn't have the knowledge. Today, it seems like with ChatGPT and sort of the decentralization of information where you can get on your computer and go find things, how are you— it seems like the proprietary nature of being able to do your homework and find a solution that the market's not aware of and provide it. How do you stay relevant in that circumstance? Or what am I missing in that equation?

Lane, you're not missing anything. I mean, you know, the reality is At Ryan, we're knowledge workers, right? There is an awful lot of gray in the tax code, in the tax regulations, and it's forever changing, right? When you think about it, not only are the tax laws changing more frequently, you know, back in the early days, you know, big tax changes were generational, right? You'd see them every 20 years or so. Now it seems like every administration is going to change and they're going to change back and forth.

Right.

So the permutations of it are virtually endless. And we, we come up with ways to figure out how to navigate those gray areas for our clients. We don't really see generative AI as a threat. We see it as a force multiplier. We were early in early adopters of AI. We started with narrow machine learning models 5 years ago, trying to help us make decisions faster and more precise. In order for those models to be successful, you have to have access to the data. And that's one of the big advantages we have today at scale. We produce more adjudicated data than anyone. You know, there's lots of software companies out there and others that are processing transactional data. You know, there's lots of firms that collect and curate property tax data, for example. But no one has the level of adjudicated data that we do, meaning that not only do we have the data, but we know the answer associated with it. So our, our strategy has been to plow that knowledge and know-how back into these large language models to create an AI infrastructure where we can do the same thing we've done for clients in the past faster and more efficiently and more precise. But we're also seeing ways that can change the business model entirely. It used to be that when you, when you went to a client, they had a problem. You'd put people on it, right? You'd send some consultants in the field, you know, accountants, lawyers, whatever. And you saw the problem. You know, 10, 15 years later, you saw the advent of point solutions and technology where you could use technology solutions to help the client better manage their circumstance. If you look at it today, most CFOs do not want any more consulting hours. Okay? They do not want any more technology. They want the problem to go away. So what's happened is over time, a big part of our business has gone from helping clients to basically stepping into their shoes and performing the service for them. We refer to it as tax as a service or managed service. And what it means is that we are the functional department for our client. We, we run every aspect of it. So if you think about property tax, which is our biggest domain, we're the world leader in property tax, both software and services, that those teams start with the assisting clients with the evaluation of assets they are going to acquire, to managing those assets, to valuing those assets, to making sure that the appeals are successful all the way through payment. Last year we paid about $22 billion in tax on behalf of our clients. And most of my clients today in property tax, don't maintain expertise inside of their companies anymore. Now, when I started, everybody had a property tax department. Everybody had a property tax director. That's changed now. About 95% of our business in property tax today is managed service where we are, we are the provider. And AI helps us because the more efficient, the more precise, the more effective we can be for our clients. Not only does it drive their margin improvement, it drives our margin improvement. So we're very excited about it. We're spending significant, making significant investments to try to make sure we're at the forefront of where that technology will take us. And the other thing about it is it's allowing us to do things that we never could have conceived of before, right? You're kind of in a box and what AI does is it blows up the box. I'll give you an example. We sold an AI application that we developed last year to Vertex. That uses AI, a large language model, to determine how to tax, how to apply tax to SKUs in the retail environment. So if you think about, you know, the Walmarts of the world, they've got thousands and thousands of SKU changes every month. Well, somebody has to go in when they go, when they put that into their system to determine, well, is that— do I have to collect tax on that or do I not? And nobody had been able to solve that problem for many, many years. We solved it with a large language model and we sold it to Vertex. We're in a channel partnership with them because they got software deployed all around the country, really around the world that can make use of that AI technology. We think that those opportunities allow us to do things that have never been done before. Real-time tax determination. Imagine taking the government out of tax. That's what we're trying to do at Rai. We want to get the models so precise and so efficient that when the government comes in, they go, oh, you got it right. See you later. And that's what our clients want too.

So in those services, you've talked about a model where you save money for your client, you participate in that savings. It sounds like some of those managed services though would follow that model. So is it?

Lane, I got to tell you that that's exactly what I thought. Yeah. You know, 5 years ago when my partners in Houston who really kind of conceived of this idea, when they came to me with it, I'm like, Yeah, I'm a treasure hunter. That doesn't sound too good to me. You know, here's the part I missed, and it's a profound miss, because what we do historically is client takes the first pass, they try to comply with the law, we come in behind them and ascertain if they did that or not. If they did, great. Check the box. If they didn't, then we go in and we fix the problem. We either recover money that they overpaid or we help them with money that they underpaid. With AI and real-time tax determination, you know what it affords? It also affords real-time tax planning. So imagine a contract, a transaction, something you entered into 3 years ago. Maybe you taxed it correctly, maybe you didn't. We come in, we look at it and we say, oh well, you pay tax on that. We might could recharacterize it as this, or we might offer additional evidence. We might try to defend it. We can't change it. In an AI real-time world, we can change it. We can see the transaction if it comes through and, oh, Mr. Client, if you unbundle this, you'll save significant tax dollars. Okay, call the purchasing agent. Let's have an amendment to the contract. It's still executory. I mean, we only signed it last week. Right? So we're going to go amend it. What that's afforded us is the ability to change the tax outcome, to optimize in real time, which is never— nobody's ever been able to do that before. And we think AI is going to give us that opportunity. So the way we price it is we have a run rate for the status quo, and then we take a success fee based on that real-time tax planning that we can do. And clients are blown away because they're getting the benefit of the service immediately. In my old world, I'd go back and they get a check from 3 years ago, which excited exactly nobody. I mean, they're happy to get the money back, but then they're like, okay, well, that means our financial statements were maybe wrong and that's not a good thing. We need to get it right. We need to get it right the first time. And oh, by the way, it's far more efficient to do it that way. So we think AI changes the business. I mean, we think we become the operator of these very sophisticated large language models that help our clients achieve real-time tax determination. I've had, last 2 weeks, I've had 3 big client meetings. All 3 of them have said 2 things. One, what are you guys doing with AI? It's in every topic, every discussion, because everybody's getting pressure, right, to understand and learn and be a prompt engineer. But the second thing they're telling me is there's no way we will ever match your investment. We're going to depend on you guys to figure this out. You get it right, you perfect it, you, you, you, you suffer all the blood, sweat, and tears, and then we're going to subscribe. So, you know, to me, I would say, you know, you know, we've got over 6,000 people working around the globe, and I'm sure that there are many of them that are still nervous about what it's going to do. And, you know, we were at the session across the hall here earlier this morning, and that was a big topic. I really think it's a force multiplier. And I think if you look at it inside the box of today, it's scary because it's going to radically change that. But the dividend is it's going to create a lot more opportunities, some of which we can't even conceive of right now. We can't even understand where it might take us. So for me, I'm an optimist and I think The better technology we have, the more tools that we have to be better at the mission just benefits everybody.

In the topic of AI, like you've got ChatGPT, I pay my $200, you know, $20 here, $200 there, $100 to Google, and you have all these services. And I know that's the consumer grade. Now, is Ryan— have you all developed your own AI system or are you just APIing into and already established a system? Because I think one of the big topics of AI is, hey, it's incredibly expensive. You know, OpenAI hasn't made any money yet. And they're just, the energy it takes to do all these data centers. Like how does a company at your scale implement on your own and then keep, like how are you navigating those waters?

I'll tell you the technology strategy Ryan, that I've employed really since we first started looking at technology and getting into technology 15 years ago. And the reason we got into it is because if you're a services firm, with the advent of technology, you have to use it to be competitive, right? But what it means is you have surrendered your roadmap to someone else, right? You are no longer in control of the technology journey that you're on, some software company is. So I made the decision that that just was untenable for me. So we started building and buying our own technology. That's turned out to be a very important strategy for where we are today. And I've always taken the view, we did this when robotics, you know, 10 years ago, everybody was in robotics and it heated up. We didn't know the first thing about it. We didn't know how to use it. We didn't know how to deploy it. So what we did is we just bought a bunch of licenses and we gave them out. And we said, we don't really know what you're supposed to do with this, okay, but figure it out. And it was amazing. Different pockets figured it out in different ways. And it became a huge benefit to us. We automated away many, many, many, many man-years of labor using those tools. So when AI started popping up, we pretty much did the same thing. We started building our own models. We're still doing that, but we're also looking at Palantir and OpenAI and others. I mean, we've got a big ChatGPT 4 enterprise version that we're using inside of Ryan. So my view is I don't know who's going to win this race. I don't know how it's going to come out. We're going to play all of the above until it becomes clear.

You just made a subtle comment about how with taxes, with laws, this administration versus that administration. Recently was at a World Affairs Council event on energy. And the topic was you have all these green initiatives from the Biden years that, hey, here's this tax, here's this program, and everybody is just on hold because they're not sure if they should pay it or just wait for President Trump just to waive it. So there's this big wait-and-see mindset in that, in the energy world. Is that ever come into your world as well? It does, especially right now with— I mean, it does.

I think it is, you know, when, when, when things are on pause, we feel it as well. Right. And we're, we're the ones trying to figure out solutions, you know, to help our clients around those kind of situations, certainly in energy and renewables. I mean, we stood up one of the first transferable credit desks for tax credits under the IRA under Biden. And that's, that's been huge for us. It's been very beneficial for our clients. We got this really great idea and we built this wonderful tech. We set up a broker dealer. You know, we never turned the tech on. You know why? We could never build inventory. Everything that came in immediately went out. And I'm like, wait a minute, we're supposed to be building an exchange. There's supposed to be inventory. We never got there. And now with the, you know, with the one big beautiful bill, we saw some changes in that, but it reaffirmed transferability, which is going to be huge for the tax credit market going forward. So we think there's huge opportunity there. Change is good for us. Now, sometimes in the short run it's not so good, but in the long run it's almost always good because somebody's got to navigate this craziness. And, you know, it's Changes are occurring more rapidly than ever occurred. And it's not just here. I mean, it's all around the world. We're seeing this all around the world. Massive changes in the tax structures in India, new taxes being stood up in the Middle East. I mean, if you're a tax guy, it's like shooting fish in a barrel.

I would just say real quick, the way you light up talking about taxes, I don't think any human on the planet is as happy about taxes as you are. Because he gets to problem solve around it, right? And they're constantly changing. So it's a huge value proposition. You have served as chairman of the Texas Tax Policy Advisory Board in Texas. So you're shaping, I presume, in that role, you're helping to shape policy. Texas has a net immigration of businesses, right? People, businesses are leaving California and other states that have a more punitive tax structure. Talk about Texas and how it is winning business and where do you see we stay on this path? What is it that makes Texas so friendly?

Well, Lane, there's lots of things. I think the overall, you know, overreaching thing is that our state leaders, Governor Perry and then of course Governor Abbott's you know, taking it even to an even higher level, has created the most business-friendly place, I think, in the world to do business. You know, certainly the tax climate is very favorable. We're not necessarily a low-tax state, but we don't tax income, which attracts a lot of CEOs. And when you attract a lot of CEOs, you tend to attract the rest of their company, right? So that's one of the driving forces.. But we have a very, very good regulatory climate. Our regulations are sensible. You know, they're business friendly. The things that the governor and the legislature achieved this past session and in the prior session where we got business courts, we've gotten new rules and regulations that really make it very favorable for businesses to locate here. I think you're going to see a lot of companies moving from Delaware and resitusing here. Moving from Nevada, resitusing here, because this is the most favorable place if you're a business owner to do business. We also have a great workforce. You know, we got 16 Tier 1 universities in the state of Texas. We've got, you know, a lot of smart kids here, and they're wanting to be here. So I think, you know, and we got still housing is relatively low cost. So when you check the box, we pretty much We pretty much check all the elements. And frankly, I still think we're in the early innings of this. I think we're going to continue to see this migration. And even when companies don't relocate, they relocate a lot, right? So you look at the Metas of the world and the Apples of the world, they haven't relocated, but they've kind of relocated and they have huge presence here. And we think that's going to continue. I was a— I'm an investor in the new Texas Stock Exchange, which we hope to get approval for, you know, sometime later this year or spring. It's done some— it's done some great things and we haven't even gotten approval yet. NYSE is now down here with a regional headquarters. NASDAQ's down here with a regional headquarters. And you know what they're thinking? They're thinking about maybe some of this crazy stuff that they put companies through with ESG and DEI. Maybe that wasn't so good after all, because now they've got a competitor that's launching that's going to take a much more business-friendly approach to listing as a public company. We think that's going to be a tremendous asset to the state. And you got to give Governor Abbott credit. It was his brainchild. He's the one that went and found investors and said, hey, we should do this. And I think every one of us that invested like, yeah, you got me at hello. So I think that's going to continue to drive to drive businesses here. And you know, Lane, it's hard to miss the fact that Dallas is becoming a major financial center and could, you know, maybe in the not too distant future be the financial center for the United States. I mean, you look at the investments Goldman Sachs is making, you know, our brand new headquarters building overlooks the JPMorgan campus today in Plano. And they've got more people at JPMorgan in Texas than they do in New York. Which I think is just remarkable.

It is remarkable.

And as all of that comes together, the synthesis of it, I think it's hard to overestimate what we can accomplish here.

Well, you have Charles Schwab. That's right. Fisher Investments. You have Fidelity. They may not officially name this a headquarters. They have more people here. That's right. They're effectively here. They're effectively here. And it is kind of remarkable. And it must please you to be in a position to have some effect on that policy. You have a very friendly government to advocate to, but you also sit in a unique seat to sort of see tax policy around the world.

We're strong advocates of sound tax policy. As you mentioned, I sit on Governor Patrick— Lieutenant Governor Patrick's Tax Advisory Committee. You look at the activity of that committee, we're trying to do things that make the tax system better. Fairer, more predictable for taxpayers.

Doesn't that hurt your business model?

It does. It does. It does in the short run. Yeah, it does. But a stronger economy and a growing economy means that if I give up a little bit of yield here at the front end today for a much bigger payoff down the road, it's worth it. And I get the question a lot. You know, I get that question from, you know, trade associations that, you they're tax focused and their heads down and they're like, you know, Brent, that's gonna hurt our business. I'm like, well, maybe in the short run it might. Like for example, last session the Lieutenant Governor called me and he said, hey, you know, we got this great tax reform proposal. And it was, he passed the greatest single tax decrease in the history of the state. He asked me, he says, are there any other things that we could do? And now keep in mind, Brent, we're kind of outta money here. You know, we got $18 billion that we've invested. Are there things that we can do to make the tax system better? And right off the top of my head, I said, Governor, here's something you can do. Get rid of these no tax due filings on franchise tax. You got thousands, hundreds of thousands of companies that have to go through the rigmarole of filing these no tax due reports when they don't owe any tax. And you know what? They put that in the bill and they got rid of it. Wow. Wiped it out. Well done. So those are the kind of things that we're working with the legislature and we do have We do have one benefit, and that is working in 80+ countries around the world, we've seen just about every tax scheme that's out there. We've seen every tax system, what works, what doesn't work, the good, the bad, the ugly. And we use that to advise legislatures, political leaders. We've seen this before. It's not going to work. When Texas was flirting with appraisal caps, we knew how bad that was, and we had a great example in California with Prop 13 and what an incredible mess that has made of the housing market in California and the unnatural acts that you now go through as a property owner to try to preserve those benefits. It's very inequitable. And from our perspective, equity is critically important to us. You know, we want to make sure that, you know, from an equity standpoint, all of our clients are being treated the same. And when you have, you know, systems like that, it creates great inequity. I mean, we're lobbying the government of Ontario hard because they are now 8 years or 7 years into their reassessment cycle with no reassessment. I mean, can you imagine? How long will that cycle be? Well, honestly, we don't know. But for every cycle that it goes, some people are out there paying a lot more tax than they owe and some people are paying a lot less. It's highly inequitable. You know, those are the things that we're, you know, we're, we're giving them hell. I mean, we're literally, you know, lobbying. We're going public against, you know, guys, this is wrong. You got to fix it. So that, that, that vantage point, that experience gives us the ability to say, yep, we've seen that. Here's what happens. That, that'll work. Or no, that's a really bad idea. And here's why.

Have you thought about offering consulting services on forecasting? The Congressional Budget Office and pretty much all the government institutions that forecast tax revenue, you know, they said that the beautiful bill was going to create a massive multi-trillion-dollar deficit. That's been challenged, that they're, you know, they're biased and they're not producing accurate forecasts. Do you have a— not if you've got a political opinion on that, but in the seat you sit in, do you look at and try to forecast the revenue?

Yeah, not so much from a macroeconomic standpoint, but certainly from a policy perspective, we're involved in all of those discussions. Reduction is. We want to make sure that whatever policies they're putting forward make sense, that they can administer them appropriately, that there's not any downside to them. So we are heavily involved on Capitol Hill with those tax bills, offering our expertise. We give it away free. We tell them, if you talk to the Speaker, the House Ways and Means Chair, they've all been to my office. We all say, look, whatever we got here is yours. If we can assist your tax writing committees, if we can give you opinions, we're happy to do it. And they call us frequently.

Do you do that because, A, your experience when you were younger and you were in that committee, the job that you thought was not a good thing but turned out to be a good thing? Is it so you could be in the room and have a better understanding of what's actually in those? Because as a novice, you always hear these horror stories of tax bills and codes being a book like this big and nobody actually knows what's in it.

Is that just— There's a lot of truth to that. The reason we do it is because we want to make sure that we're providing the best climate for our clients. I mean, it's a benefit to make sure that they don't create things that are a mess. And you might say, Lane, you kind of brought it up, Well, isn't that bad for your business? Should I sit back, let them make the mistakes, screw it up royally, and then go fix it? Well, you could do that. The reality is that doesn't make for a very good client experience. So if you can head off those kind of things, then the client experience is going to be better. When I'm saving my client money, when I am actually having a positive economic impact on their operations, they love me. When I'm spending their money to comply with stupid stuff, to do things that are not value-add because somebody said you had to, or it's so mind-numbingly complex, like the Texas franchise tax calculation, I have many of my clients that probably spend more in professional fees calculating the tax that they owe than the tax they pay. Those are bad outcomes and it's not good for us. It's not the kind of business we want.

Probably helps in the sales pitch as well of new clients like, well, You know, not only do we understand this, we were in the room when we—.

When it was made. Sometimes that can be good. Sometimes, Ryan, that can be bad. We were in the room when the.

Franchise tax was written.

So it's your fault. It's actually one of my partners, my former partner, that actually wrote it. So we try not to talk too much about that.

Being that you're a global company, you know, what was the motive? And I know you love the University of North Texas and your roots here in Texas itself, but It feels like as you keep growing and grow, or not as you now, but in that growth phase, why not go to New York? Not New York today, but New York of the 2000s or the 2010s where it's the central, the center of the universe when it comes to global finance.

Or any of that. Ryan, New York's a terrible place to be located if you're running a national business.

Okay.

You can't, you know, your ability to connect and do day trips is very limited. This is another thing where, you know, you've heard that phrase, you'd rather be lucky than good. Well, being in Dallas was incredibly lucky for me because I mean, you can get anywhere from Dallas. I mean, I've got a meeting in Toronto tomorrow. I'm taking a potential acquisition target to lunch tomorrow. I'm doing that on a day trip. You know, it'd be hard to do that if you're on one side of the coast or the other. So from a logistics standpoint, but there's no better location than Dallas and frankly no better place than Texas. We went to— we're in all those places today. I mean, we went to all those places, but the reality is it was just fortuitous that we started here. And it's also fortuitous that my, you know, my family immigrated here in the 1800s, late 1800s, and And we've just been here ever since. So I tell folks that I'm representing clients all over the world and we're trying to help them save money. But when it comes to economic development, I do have my thumb on the scale for Texas, trying to bring as many clients and as many taxpayers as possible here.

And your wife Amanda gave an extraordinary gift to North Texas where I understand you've got your undergraduate and graduate degree. You and I had a similar experience with our fathers and you told me the story earlier and I didn't share mine. I wanted to go to Colorado to school because I like to snow ski. And my father thought that was the worst idea ever. And he literally took out a map and a protractor and he drew about a 150-mile radius around Memphis and said, son, you can go to school anywhere inside these circles at a state school and I'll pay for that. And there were like 3 state schools right within, within that circle. You— your father tried to constrain you on where you could go to school and you got about as far away from Big Spring, Texas, as you could. And obviously your experience at the University of North Texas was one that enriched you. You've now made an extraordinary gift. The business school is now named for you and your family, which must give you great pride. And I wonder what your goal is with that. When I was at Memphis, I served on the board of the Fogelman College of Business, and there was a lot of discussion about what's the role of the business school school in the community? Is our client the student? Is our client FedEx or Wright Medical or whomever is going to hire our students? What's our responsibility to the community? What do you want to see happen with the business school at the University of North Texas?

Well, Lane, the reason that Amanda and I invested is because I had a life-changing experience there. I mean, I grew up in a little dusty West Texas town called Big Spring, as you mentioned. When I turned 18, I couldn't wait to get out of there. I was ready to go do something else. I, you know, I'd been working on the ranch for, you know, summers, and that just, that just wasn't for me. But when I arrived in Denton, Texas in the fall of 1982, I was undisciplined. I was unfocused. I partied way too much. Basically, I was a mess. Okay. And it was the fear of going back to Big Spring That caused me to make every class, to make good grades, because, you know, I knew that there was a job at the Villemore gas plant waiting for me when I got home, and I didn't want any part of that. So, you know, that experience changed my life. It changed the life of my family. It will change our lives for generations based on what I've been able to achieve given the education I got at UNT. So for me, it was a very easy and simple decision to support the school. When we made the gift, we made so with the understanding with the president of the university and with Dean Wiley, Marilyn Wiley, who's just a phenomenal dean for the College of Business, that we expect the college to up its game. We created 8 endowed scholarship or endowed professorships, and we went on a recruiting mission, and we've recruited some of the very best faculty from all around the world. Because if you think about it, just like Texas is a magnet for business, so too can our Tier 1 research institutes be a magnet for talent from other locations, and we've seen that. So I'm really proud of the fact that not only did we make a large gift we did it in such a way that we got a $20 million trip match for that gift. So that's about $50 million of funding for the Ryan School of Business. Wow. And they're, they're doing great things with it. So you, you watch, you look at where the College of Business was back in '18 when we made the gift compared to where it's at today from a rankings perspective, literally across the board, uh, they're, they're coming up in the rankings. They're They're doing a great job and they're creating something that I hope personally will deliver even an even better experience than the one I had when I was there from '82 to '86.

Yeah. What's interesting is when you were first going into that, and this may have been just a misstep of the tongue or could have been a Freudian slip, you said it was an investment versus a gift.

Well, I think it is an investment. Investment for you. To answer your question, The customers are both. It's the companies, it's the students. I mean, most of my motivation was to give back, to pay it forward. But it wouldn't be lost on me either that we recruit a lot of kids from the Ryan School of Business. They produce graduates and that becomes part of our Ryan team. So there is certainly an element of that. It is an investment.

Well, and that's what I wanted to point out is when you are doing a gift like that to an institution like that, there is that investment, not just with the dollars, but with the, hey, there are strings to this. We want you to be successful. We want you to go this path versus like, hey, here's some money, do a thing. It's a gift. So I just wanted to point that out because I think it is powerful.

Yeah.

Well, I'm sure there's a lot of pride associated with that. Bobby Fogelman in Memphis would come to our board meetings and it was important to him, his name's on the institution. He felt ownership at some level of that product we were putting out in the marketplace. We had a new dean that came in, Rajiv Grover, and he had a completely different mindset than a typical academic. And that was— and he asked me, he said, will you introduce me to some C-level people at FedEx and some of the other corporations in town who hire our students. And we went around town and met with them. And he said, how are we doing? And they went, not that great. Okay, well, what can we do better? One of the things that came out of that was they said, your students don't make eye contact. They're not appropriately dressed when they come for an interview. Memphis now has the largest Toastmasters chapter of any college in the country. They had a clothes closet where people donated clothes. Some of the students could go and be— they, they trained them on how to interview. And so it was extracurricular support in addition to just upping the academic game. Probably the most meaningful thing was FedEx said, look, you know, we— the students you're sending us would be better prepared if the curriculum looked like this. So we introduced a FedEx curriculum and kids could come and they could apply and they'd get a partial scholarship from FedEx, but they had to take that curriculum. And what FedEx said is our cost of talent acquisition has gone down. We're getting better quality students at a lower cost as a result of this partnership with the school. So universities can be so powerful in that, but having a businessman who thinks the way you do influencing perhaps the direction of the school can be can be really critical.

Well, you hear a lot of people talk about the power of education, right? I lived it. Yeah, it's, it's, it's my life experience. So I can't think of a better way than to pay it forward and maybe even increase the opportunity for, you know, kids that are coming behind me.

Yeah, well, that's outstanding. Well, education has been a big through line with multiple of our multiple conversations we had. Jim Keyes, um, he has that book, uh, Education is Freedom. Tom Leppert. Yeah. Talk about education a lot. Want to pivot to business a little bit because you were talking about going to Ontario tomorrow for an acquisition. How much of your business now, you personally or with the business itself, is in that M&A world?

So, Ryan, people ask me this question all the time. In your role, how do you divide your time? I spend about a third of my time still running a book of business with clients. I've got a couple of PE partners that, you know, they scratch their head and, you know, why is he still doing that? Well, it's a fun part of the business, frankly. And, you know, it keeps me connected, you know, front lines. So I'm not a field marshal in the back. I want to be on the front lines. I want to experience it. I want to hear it myself. About a third of my time is my CEO role. Setting the strategy for the company, making sure that we're achieving our goals for the company, taking care of our team members, our shareholders, our investors. But the remaining third is really working on the business in terms of our M&A strategy, our strategic recruiting strategy, because we have a vision for the company. I wake up even today, 34 years later,. And I'm like, how is it that I got here in a world where there is no global leader in tax? Think about that. Now, I'm sure there are people that will listen to this and say, well, hey, Deloitte, it's us, or hey, it's PwC. The reality is, you know, back in public accounting, in my public accounting days, that was channel 2. Tax was channel 2 behind audit and attest. Well, now it's fallen like channel 3 or 4. We're the only specialist in the world at scale, and we think the world deserves a global brand in tax, a category leader that's not, you know, constrained by the regulatory matrix of public accounting. We're not independent. We're unabashed advocates for our clients. We don't have conflicts of interest within our firm because we don't offer services other than tax. We really only have one counterparty. Now we have many of them, but one category of counterparty, and that's the government. So when you look at our vision for Ryan today, we want to be the category leader. What does that mean? That means that if one of our clients calls us up, hey, we've got a problem in Saudi Arabia, we've got a problem in Germany, we've got a problem in Ecuador, We want to have the team of experts that can immediately address those issues. What does that look like? Well, it's a lot bigger than we are today. And the way we're building it is we're finding the Ryans of the world in other countries. We're looking for those best-of-breed tax-focused specialists, and we're adding them to Ryan. And that really is the strategy we're executing both from an M&A standpoint and from a strategic recruiting standpoint, because I think we have a great story to tell. I mean, we have had arguably more success than anybody else in the tax services industry. Our company today is a great place to work in every location on every continent where we work. We were number 35 on Fortune's Best Companies to Work For in the US.

List this past April. Wow. Congratulations.

Our highest, 8th time on the list, highest that we've achieved. So we think we have a great story to tell. So if you're a tax person and you want to come to a place where tax is number one and there's no number two or three, it's Ryan if you want to do it at scale. So it's an ambitious goal, but we think it's achievable. We think that, you know, we're in the second year of a 10-year plan that will take us to category leadership. That means a Ryan with the concentration like we have today in the US, all around the world in developed countries. And we've seen it work. I mean, we've gone from in many of our practice areas, like our biggest in property tax, we're number 1 in the US, we're number 1 in Canada, we're now number 1 in the UK. So in every market we're achieving leadership. We know it works. It's just a matter of time. And I have a sense of urgency. I get up in the morning, Ryan, and I look in the mirror and that sense of urgency every day gets a little more urgent. Because I want to be here to see it happen. And frankly, I don't have that much time left.

So I'm really focused. Harder for him to understand than me.

Yeah, but I get that, you know, I look right here, look in the mirror. It's like, who is that guy? If I'm going to reach this goal and it's going to take this many years, we're going to have to do it faster.

You said that when you built the company, you built it so that it could, you know, accommodate private equity money so that it could go public if that were the strategy. Your company is a private company. You want to become the category leader globally. You want to take on shareholders? You want to be a public company? You have a— I don't want to say exit plan, but you have a plan that you're working.

Have you thought about that sort of? So we have a meaningful portion of the company is private equity owned. I did my first private equity deal in 2018. We took on a partner, Onyx Corporation out of Toronto. They've been tremendous partners and we learned a ton. They still manage their investment. We went through in '22, maybe it was '24, I forget. We did a continuation vehicle so that ICG is now the investor, but Onyx manages that. And then in '22, Ares Capital invested. So we've learned a ton from every one of them. They have absolutely been a force multiplier for us. They've helped us grow faster. They've helped us with M&A and with our global strategy in just so many areas. We can continue to keep doing that. We have a lot of interest. When I first started in 2018, it was very rare, frankly, for— it was unheard of in public accounting and very rare in the tax services space for a private equity investor to invest. Well, now, of course, that's completely turned upside down. We're the hot— We're the ball of the dance now.

You are.

So we can continue to do that. But we also think Ryan would be a phenomenal public company. Yeah. I think you mentioned this earlier, Lang, 34 years in a row of earnings growth. Only 2 years did I have down results for EBITDA, and those were self-inflicted. I invested too much, frankly, in those years. But when you've got that steady tax stream, that tax revenue stream and you're good at what you do, not only have we grown 34 years in a row, we have endured everything that the business cycle has thrown at us and we have excelled. The secret about Frye is we do good when times are good. We do phenomenal when times are bad. I've probably got somewhere around 1,300, 1,400 property tax people around the world praying for the next recession. They see incredible opportunity when asset values reset. So if you look at the dot-com bust, we grew through that. The Great Recession, those 3 years were some of the best we ever had. We grew through those. We grew through the pandemic with a 16% CAGR. Now, '20 was only 4% because of the deferral. But when you look at '21 and '22, Oh my goodness. And so despite all of the changes and challenges, it's been a very resilient business. So it's highly anti-cyclical. And so when you think about, first of all, where would an investor play in this space as a public investor, an institution? You can't. There's nothing out there. There's nothing at scale. Two, where will you find a better more resilient, anti-cyclical investment than tax services? You won't. So for that reason, and frankly, providing liquidity for some of our shareholders and just having the ability to bring people in and out are all attractive things that we think about when we think about becoming a public company. I will say this, we have been for the last couple of years on an IPO readiness journey. That doesn't necessarily mean that that's the final outcome, but I think there's a lot of benefit in just building a company that's enterprise-grade in everything we do. And that's, that's our goal.

You brought up force multiplier multiple times. What do you think is more impactful.

AI or the private equity? So far, private equity, you know, frankly. But I tell our team from an AI standpoint, we're still in the second inning. So who knows what that ultimate impact is going to be. But then again, it might be a little hard to tease out because a lot of the focus of private equity, particularly our Ares Capital partners, has been on technology. I mean, they're bringing resources, they're bringing expertise to us. They made the introduction to Palantir for us. So you might not be able to completely untangle those, but I'd say private equity so far.

It's funny because I work in the lower middle market M&A and So typically founder-owner operators that are, that have built a business, $10 to $100 million enterprise value. And there's this sense that private equity is the big bad wolf, right? That they're just out there to strip out cost and fire people. And what we see over and over again is companies that don't want to sell out completely, but they want a strategic partner because they've taken the business as far as they can and they either need financial capital or human capital or intellectual capital. To take that next step. And with the right private equity firm, it can just be magic.

There's no doubt with the right private equity firm and the right structure, you can create enormous value. In fact, you know, if I had it to do again, I'd have done it much sooner. If I knew then what I know now, we'd have done it earlier and Ryan would be a much bigger company.

Well, I don't— you're not much of a slacker here. You have 18,000 clients in in 60 countries and $700 million of revenue. That was 2021.

You probably lapped that number. That's the beauty of entrepreneurship. So yeah, I mean, we have been successful. We have 6,100 folks around the world. We'll turn in a top line revenue of about $1.7 billion this year, $400 million of EBITDA. Remarkable.

Talk to me when it's $2 billion.

But the thing about entrepreneurship is when I'm at home, I know all of the misses that are in there that you don't see. Yeah, sure. Right. So, you know, have I made a lot of calls right?

Absolutely.

Have I blown a bunch of them? Absolutely. And, man, I can't even imagine what Ryan would look like today if I'd have gotten a few more of those right. I consider myself pretty risk tolerant. Yeah. But frankly, I was too timid. I aimed low consistently. So what would happen is I set a goal, we blow through it. I think, oh, how'd we do that? Then I'd set another goal, we blow through it, and I'm still chasing that. I mean, I'm still— every goal we set, our team's finding a way to exceed it. And, you know, it's tough for me to adjust.

It's probably a great mindset to be thinking about what could I have done differently. I was watching an ESPN documentary on quarterbacks, and, and Patrick Mahomes was one of them. And they were, you know, I mean, my goodness, the success that he's had with the Chiefs is just remarkable, and he's young. And the most telling thing about it was he was recalling a season and he goes, you know, if I'd completed that— when they won the Super Bowl, right? Well, if I completed that pass, if I called this play instead of that play, then— and thinking, you won the.

Super Bowl, you won the Super Bowl. Well, yeah, but you can't, but you can't, you can't help But think about it, you're on the award stage and you're getting this or that award, and invariably I'm thinking, man, I should have done that.

Well, you know, laying open the door, but I mean, this is the Michael Jordan quote: I've missed more than 9,000 shots in my career, lost, uh, I've lost almost 300 games. 26 times I've been trusted to make the game-winning shot and missed. I failed over and over and over in my life, and that's why I succeed.

There's truth to that, Ryan, because Failure is the very best teacher. It sucks though. Yeah, it does suck.

It sucks.

And I tell our folks, if you're not failing, you're not trying hard enough. Yeah. But it does, it's not fun.

Yeah. You said one other thing that I want to repeat because it resonates and it's what I talk to business owners about that are thinking about selling is don't wait until you're ready to sell to build a sellable business. Never wrote that. You said we may not go public,, but we'll be ready. And it's part of our process. One of the biggest mistakes I see those lower middle market, middle market businesses make is they're very owner dependent and they don't have good systems and processes. They may not have the right books and records, and then all of a sudden they're ready to sell and the business isn't ready. And now they got to pause and try to go backwards and work it. So for me personally, I've always tried to run a business as if I'm going to sell it tomorrow, even if I never never sell it. And I think that's a great mindset that you have there as well. So you've given me some good, good lines to reinforce with my clientele.

There's great wisdom in that. And I will tell you that many of the acquisitions I've done were clearly not ready for sale. Yeah. And that created an elongated deal cycle. Yeah. They definitely left value on the table. Yeah, they definitely left value on the table.

Well, you take a middle market company and it sells at a 3 multiple instead of a 5 multiple, and they're doing a few million dollars of EBITDA.

I mean, it's a big difference.

It's a huge difference. So, well, what an extraordinary career you've had in spite of the decisions you'd like to go back and make differently. What an extraordinary ride it's been for you. So we talked about work-life balance and how that's a malapropism. And you're going to bring out words.

Like that? Yeah. Malapropism. Yogi Berra. I'll have to get ChatGPT to define. My father was great at the malapropisms. He had all sorts of things he would say. Like, you know, I was complaining about a deal that I hadn't completed and he said, you know, the best deal I ever did was the one I didn't do. And you're like, what does that mean? But I lost my train of thought. Well, I've got one of those in my email box right now. It's like, hey, do all this work for this dollar amount. And I'm like, that doesn't— and I finally gave myself the You know, because again, when you're an entrepreneur, it's like not all dollars are good dollars, but you still got to make that payroll. But I made the line of, hey, that doesn't make business sense for us. So, and it's, it hurts, but it. Feels good to do it. Yeah, but it still hurts because that dollar. Well, what a pleasure it's been to have you on the Deal Table podcast. Thank you. You cover so many bases with this. You've run an extraordinary business. I haven't personally seen a business that had uninterrupted growth from 1991 to present. Now I'm on a mission to go find another business that could possibly present the way that you do. But what a great journey, and look forward to watching your 10-year plan.

Elaine, I haven't seen one either in all the deals I've done. I think it is remarkable. I tell our team that we're a.

30-Year overnight success. Well, thank you so much for joining us. Thank you. I really enjoyed this. Great.