Business Transition Essentials by ROCG Americas

PowerPoint Presentation

The Truth About Business Transition

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#1Succession Replacing the owner as an Operating OfficerExit Transferring ownership of the businessWhat is Business Transition ? It consists of planning & implementing the actions required to successfully transfer business wealth both while operating the business & upon exitTransition deals withboth the owners rolein the business & theirinvestment in it.Transition#2Surviving Transitions isnt Easy

The odds of surviving a transition from the founding generation to the next are 30%.

The odds of surviving to the third generation is 12%Given these odds, why dont owners begin treating succession planning the same as they would treat retirement & estate planning?

The odds of surviving to the fourth generation is 3%#3The Approaching WaveMost private businesses will be closed, sold or turned over to others by 2015Trillions of dollars will be transferred as a resultThe largest transfer of wealth in our historyThere will be fewer buyers than sellersLess than 40% successfully transition their businesses, yet 75% say they need to sell or transfer their business to finance their retirement

#4Do You Have to Sell to Retire?

Copyright ROCG Americas, LLC 2007 Survey#5Is there a Wealth Gap?Exit ValueCurrent Value$$$$Whats needed from the business to live your future lifestyle?#666 It occurs at the time of the owners choosing

It occurs in accordance with the owners wishes for the future ownership of the business

It occurs with a satisfactory value that meets the owners wealth objectivesOwners Need to Address the Basics When?To whom?For how much?#7When are You Going to Transfer? Copyright ROCG Americas, LLC 2007 SurveyOver 15 years10 to 15 years5 to 10 years2 to 5 yearsUnder 2 years

#8What is Your Plan for the Business? Copyright ROCG Americas, LLC 2007 Survey

#9How Much will You Get for the Business?

#10Working less in the next few yearsConsidering how to ultimately leave your businessNot sure how you will actually get outWanting to maximize the value & wealth generated from your businessUnsure of the value of the business to othersSuccess at transitioning your business uses different skills than building it

Is this You?#11Do You Have a Plan? Copyright ROCG Americas, LLC 2007 Survey

#12My two kids both think they should be CEO. They manage differently & have different goals than I. My partner doesnt want to retire, & his kids are not involved in the businessIt took me 30 years to build this business to what it is today I could lose everything. I need to protect my retirement/wealthThis is my business. I built it & no one else can run it as well as I have. I am just not comfortable that good decisions will be made, or that proper attention will be given to important details, if I am not here watching over thingsWhy is Transition Planning so Difficult?Fear of Loss of Wealth:Fear of Loss of Control: Fear of Conflict:

#13

What are the Benefits of Planning?#14Familiar???? "Hang on...We must be doing something wrong...How does that saying go again?"

What comes first?The TransactionThe Management of the TransitionThe Strategy for the Transition#15

#16Key Issue 1 - Understanding Value Worlds

#171717Looking with Buyers EyesEarnings quality & transparencyEquity risk factorsGrowth strategiesExternal factorsDo the words & the music match

#181818Non-financial Factors Investors Value95% of employees dont understand company strategy50% of average employees time spent on non-productive work50% more likely to have turnoverSources: The Balanced Scorecard David P. Norton; Arthur Andersen estimate: Corporate Strategy Board research;Measures That Matter, Ernst & Young, LLP, Gates, Stephen, Aligning Strategic Performance Measures & Results

Companies Not Delivering Consistently on StrategyOnly 1 in 10 can consistently achieve their Strategys full potential >90%