Predictable Futures Presents:

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Predictable Futures Presents

• Family Business Succession
• Its all about planning
• Preserving the Endangered Species

Presented by Gordon Wusyk President and CEO of
Predictable Futures Inc. the Business Family
Centre
Canadian Construction Association Conference
Hawaii 2006
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If you think

• RETIREMENT
• DEATH
• Are OPTIONAL EVENTS
• Youre in the WRONG room!!

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Family Enterprise in Canada

• Canadas family businesses employ 4.7 million
  full-time and 1.3 million part-time workers
• Total annual sales of Canada family-owned
  businesses 1.3 trillion
• Most family enterprises are highly dependent on
  their current leader
• Major leadership change in Canadian family
  businesses
• 27 of family business leaders will retire in
  next 5 years
• 29 will retire in 6-10 years
• 22 will retire in 11-15 years
• Most have no contingency plan covering the death
  or the disability of their leader
• Only 29 have a succession plan
• Unlike US counter part, Canadian family business
  owners see the generation of wealth as the
  primary role for the business. Keeping business
  in the family is a lower priority
• Source BDO Dunwoody/ Compass Report on Canadian
  Family Business (2003 Survey of Canadian
  Family-owned Business by Deloitte Touche for Tax
  Education and Research at the University of
  Waterloo (1999)

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From FAD to FIELD of study

• Research over the last 25 years provides new
  understanding of family business their issues
• Growing number of family business advisors coming
  from a variety of disciplines
• Family Firm Institute Founder in 1983 by 22
  professionals, now has 1200 members
• Certification program now available for
  professionals
• Clients are more knowledgeable and sophisticated
  than 10 years ago
• Families have access to many different
  educational opportunities
• Families have access to many networks
• PFI
• Family Business Network (FBN)
• CAFÉ
• BFF
• ABFI
• CEFE
• FFI
• Clients now expect advisors to be well informed
• Source CALU May 2005 Evolution of the Family
  Business Field

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The Enigma of the Business Owner
The Four Part Personality

• 1) The Owner
• ROI
• Growth
• Income
• Exit strategy
• 2) The Aging Male/Female
• Physiologically
• Psychologically

• 3) The Best Employee
• First in, last out
• 4) The Manager
• Hires
• Fires
• Organizes

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The 7 Fs of Balance
Family
Fitness
Fun
Friends
Faith
Finances
Firm
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All about PERSPECTIVE
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FAMILY BUSINESS SUCCESSION PLANNING
A Multi-Dimensional Process
Your Family Your Business
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Roots/ Principles

• M Make Things Happen
• A Achieve Significance (vs. Success)
• X X out the Negatives
• I Internalize Right Principles
• M March to a Mission
• I Integrate all of Life
• Z Zero in on Caring for People
• E Energize the INNER Life
• R Re-align Rigorously
• S Stay the Course

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Family Business Valuation Same notes different
melodies

• The Government Silent Partner
• Deemed dispositions (fictions) liquidity
• Wives, sons and daughters
• Section 69 (the Family Trap)
• The Estate Freeze Price adjustments
• The small business exemption
• Employees employment, leadership retirement
• The Executor Fair Market Value Legal
  Fictions

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Family Business Valuation

• The Liquidator Wind up or going concern?
• The Business Founder Value with/without him
• Special Buyer
• The CBV
• Going concern?
• Sale of assets?
• Sale of shares?
• Multiples?
• Tax issues?
• Normalization?
• Maintainable earnings?

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The Interdependence of our Family,our Ownership
and our Business Entities
Business
Family
Ownership
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Perspective of Each Entity

• Needs / Priorities
• Strategic Planning
• Market Value Compensation
• Results (targets)
• Profits (retained earnings)
• Competent, Competitive Staff
• Systems for Management
• Control
• Marketing
• Quality Product/Service
• Accountability
• Regular Reviews
• Solvency
• Cash Flows
• Entrepreneurial Perspectives
• Fast, Efficient Decisions

Business
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Family Perspective

• Needs / Priorities
• Nurturing
• Communications
• Affection and Love
• Equality of Affection
• Individual Needs
• Personal Development

Family
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Ownership Perspective

• Needs / Priorities
• Return on Investment
• Return of Investment
• Equity Growth
• Stewardship of Assets
• Reputation of Owners
• Diligent Management
• Timely Reporting
• Responsible Board
• Selection

Ownership
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Neglect one
Business
Family
Ownership

• and risk destroying the whole system

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The Natural Conflict

• The Family
• Goals
• Support Family members
• Rules Informal expectations
• Evaluation Rewards for who you are
  unconditional
• Succession Caused by death, divorce or illness
• Relations Deeply personal, of primary importance
• Authority Based on family position of seniority

• The Business
• Goals Profits, revenues, efficiency Growth
• Rules Written Formal w/rewards punishment
• Evaluation Support conditional on performance
• Succession Retirement, promotion or departure
• Relations Semi Personal or impersonal, of
  secondary importance
• Authority Based on formal position in the
  organizations hierarchy

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If you dont have PROCESS
you have a PROBLEM
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The Process
1. Clarification of founders dreams of the
future
7. Building the Legacy review of estate plan

• Clarify family members personal vision for
  business at a personal level

6. Choosing and Training the New Owners
3. Aligning the business strategically to support
family founders dreams and goals
5. Choosing The New Leader
4. Prepare the successors
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A Game Plan..

• Or its GAME OVER

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WISH BONE JAW BONE BACK BONE
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How to Contact PFI

• Predictable Futures Inc
• The Business Centre
• Suite 1211 10104 103 Ave
• Edmonton, AB
• T5J 0H8
• www.predictablefutures.com
• solutions_at_predictablefutures.com