A Presentation By

“Preserving an Endangered Species…

Gordon WusykOf

Predictable Futures Inc. - The Business Family Centre

If you think…

Are “OPTIONAL” EVENTSYou’re in the WRONG room!!

Retirement & DeathRetirement & Death

FAMILY BUSINESS SUCCESSION PLANNING

. . . “70% of all Family Businesses never make it to the second

generation

And 90% fail to reach the third.”

Family Enterprise in Canada• Canada’s 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 Educationand Research at the University of Waterloo (1999)

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

All about PERSPECTIVE

The Interdependence of our Family,our Ownership and our Business

Entities

Ownership

BusinessFamily

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

Family Perspective

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

Development

Family

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

Neglect one…

and risk destroying the whole system

Ownership

BusinessFamily

FAMILY BUSINESS SUCCESSION PLANNING A “Multi-Dimensional” Process

Family/PersonalRelationships

Family/PersonalRelationships

Protection FromFamily Law

Protection FromFamily Law

Wealth Management“Game Plan”

Wealth Management“Game Plan”

LegalDocumentation

LegalDocumentation

CreditorProtectionCreditor

Protection

RetirementStrategies

RetirementStrategies

“Death Tax”Liabilities

“Death Tax”Liabilities

EstateEqualization

EstateEqualization

Tax Planning/Minimization

Tax Planning/Minimization

Your Family Your

Business

Charitable GiftingCharitable Gifting

IMPORTANT PLANNING DECISIONS

Are Often Made One At A Time

… But Even A Series Of What Seem To Be Quite Reasonable Decisions, Taken In Isolation,

Can Produce A Result That Is Unacceptable When They Are Combined …

What You Wanted

What You Got

The Enigma of the Business Owner

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

The Four Part Personality*

The 7 F’s of Balance

Family

Fitness

Friends

FinancesFirm

Faith

Fun

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 organization’s hierarchy

Conflict is healthy…Unresolved conflict is not

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

If you don’t have PROCESS

you have a PROBLEM

The Process1. Clarification of

founder’s dreams of the future

2. Clarify family member’s personal vision – for

business & at a personal level

3. Aligning the business strategically to support

family & founder’s dreams and goals

4. Prepare the successors5. Choosing The New Leader

6. Choosing and Training the New

Owners

7. Building the Legacy – review of estate plan

A Game Plan..

Or it’s GAME OVER

Ownership/Governance SystemLawyers

AccountantsEstate Planners

Business SystemsBusiness/OD Consultants

Family SystemsFamily Therapists

Role of the Family Business Consultant

Family Business

Consultants

JAW BONE

BACK BONE

WISH BONE

How to Contact PFI

Predictable Futures IncThe Business Centre

Suite 1211 10104 103 AveEdmonton, AB

T5J 0H8

www.predictablefutures.comsolutions@predictablefutures.com