today’s presenter: mitch vandiver controlling your future through succession planning passing the...

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 mitch@strategiescorp.net

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