Today’s Presenter:
Mitch Vandiver
Controlling Your Future through Succession Planning
Passing the Torch without Getting Burned
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Family to Family: Laird Norton Tyee Family Business Survey 2007, Retrieved December 2011 from http://familybusinesssurvey.com/2007.
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Essential Elements of the Founder’s Plan:
Founder’s role – Today & Future
Business afterlife…
Transfer of power
Financial independence from the business
Eliminate need to sell company to pay estate taxes
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Essential Questions to Ask:
Do I want to pass my company to my children? Why?How do I want to be remembered?What does my spouse want for the future?What dreams have I not yet fulfilled?What hopes do I have for my children? Company?Do I have my own personal 5-10 year plan?
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Won’t let go
Lets go to return
Retires and advises
Retires and disappears
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The Hero’s Farewell, Jeffrey Sonnenfeld, Oxford University Press, 1988
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Disruptive
• Based on Need • Relationship Focused• Qualitative• Not by Choice• Permanent
• Based on Merit• Results Focused• Quantitative• By Choice• Temporary
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The Business Transition
Understand the business lifecycle
Develop effective and efficient operations
Craft a strategic vision
Make clear financial assumptions
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The Management Transition
Recognize that the current management model will and must change
Provide a mechanism for those who will not be active in the business a way to cash out
Become serious about developing thenext generation of leaders and managers
Make the Decision
Document the Plan
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The Ownership Transition
Once you have made decisions required to complete the Management Transition, you know who will run the business in the next generation
Now you are in a good position to answerthe principal question of the OwnershipTransition
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Key Point – Ensure retention of Control coupled with distribution of ownership
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The 5 Most Critical Elements…
Challenge assumptions
Understand the differences between “fair” and “equal”
Document and communicate your decisions
Strengthen the ownership team
Provide for an orderly exit for those not participating in the management of the business
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Structuring the Transition
Expand your perspective and have a broad view
Ensure retention of Control coupled with distribution of ownership
An effective Governance and Tax Plan should round out and support the balance between business prosperity, family harmony and personal well-being
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Best Practices
Meritocracy brings lasting Liquidity & Legacy
Socialism causes Illiquidity and Liquidation
Protect the Golden Goose that Lays the Golden Egg
Current generation must launch and support the process
Communicate, Communicate, Communicate and respect individual
strengths and choices
The best business families plan one to two generations in advance
Don’t fall in love with your plan – develop a Plan B…
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A great succession is a process and one that hardly anyone notices.
It is a non-event, an evolutionary process arising from careful planning and the artful management of expectations over a period of years.
It is not a legal and financial transaction alone, nor just an insurance funded plan – rather it is a process which the various disciplines within this room should work through in concert to address the six required plans.
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Thank you for attending!
More Questions?Contact us at 410-363-6669or [email protected]
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