Preparing your business for the next generation · 33% will Successfully Pass Into “next” Generation 45% of CEOs That Plan Retire in 5 Years have thought about Succession 31%

Preparing your business for the next generation

Henry Hutcheson

President

Confidential Family Business USA

➢ Consultants to Family and Privately-Held Businesses

➢ Objective: Preserve Wealth and Maintain Family Harmony

➢ Background in Psychology, Business, Family Business(Olan Mills)

➢ Family Business Correspondent➢ Author: Dirty Little Secrets of Family Business➢ Adjunct Professor Campbell University


Available through:Hudson BooksellersBarnes & Noble.comAmazon.com

Publisher: Greenleaf

Available: March 22, 2016

• Founding• Door to Door• Studios/Demographics• Telemarketing

• Family Business• 1st to 2nd

• 2nd consolidate• 3rd (Hutcheson)

• New 3rd


Good Newsor

Bad News?

“He and four siblings

are locked in legal battle

with their father.”

Pablo Alvarez of Vega Siliciawinery.

July 20, 2014 (Ian Mount)

Vega Sicilia’s wine is triumphant, but its ruling clan’s bickering has been leaving a sour taste.

THE RIFT— a family dynasty fights

over the future of Luray Caverns

By Ken Otterbourg March 14, 2013

Worth about $20 million, it is a family business run by a family that can’t get along.

They’ve been in U.S.

District Court in

Harrisonburg, where the

three youngest siblings

sued two of their older

sisters

Inside An $8 Billion Family Feud: Who Poisoned The Orkin Fortune?

Today RPC boasts a market cap hovering above $4.6 billion.

Kids suing Father and

Uncle

One lawyer has already

made $1 million

Forbes 9/29/2014 @ 6:00AM

http://www.forbes.com/forbes/

Good News

FIAT Capitalism

6 November, 2013 | By David Bain

The fifth-generation owner/manager of the 26th biggest company in the world wants capitalism to change.

“One of the benefits of family

businesses is they focus on all

stakeholders.”

John Elkann Chairman of Fiat

Perpetual Family Business

http://www.campdenfb.com/author/david-bain

America’s Richest Families – All Family BusinessesForbes July 21, 2014

❖ 80 to 90 Percent of all Businesses

❖ 78% New Jobs

❖ 62% Employment, 64% GDP ($6 T)

❖ 1/3 all “Fortune 500”

❖ FBs Outperform Non-FBs---Why????

The Scope


▪ 33% will Successfully Pass Into “next” Generation

▪ 45% of CEOs That Plan Retire in 5 Years have thought about Succession

▪ 31% Have No Estate/Transfer Plans

▪ 85% Have ID’d Family Member Successor (Danger)

▪ 25% Have Woman CEO – 31% Plan To – 3% Fortune

▪ 60% of CEOs Plan To Die In Office

▪ 86% Believe Their Business Will Remain Family Owned

The Facts

CASE


Family Business SYSTEM

Family Business

Ownership

A family business system is an interactive system and is interrelated and interdependent.

A change in any one partof the system can have an impact on other parts of the system.


Develop the Successor

Independence

Competency

Communication

Estate Planning


Defining Responsibilities and Expectations

Financial Acumen

Strategy Development

Dad/Mom just won’t leave!

Monarch General Ambassador

Governor Inventor Transition Czar

Ernesto Poza, Family BusinessConfidential Family Business USA

Current Generation

Next Generation

Transition may go fine….

Current GenerationGracefully stepping back

Next GenerationCompetently stepping up

Sib

lin

g

Co

op

era

tio

n?

Next Generation Siblings

Family Business Disrupters

N %

Financial 15 23%

Health 13 20%

Relationships/Conflict 25 39%

Aging 12 19%

Alter Ego 11 17%

Addictions 29 47%

Mental/Mood Disorder 30 47%

Confidential Source ReGeneration Partners

❖ Must Have Common Goals

❖ Key Roles MUST be Filled with Competence

❖ Must have good

communication

Family BusinessBest Practices


❖ Develop Family Mission Statement

❖ Establish Sound Governance

❖ Hold Regular Business Meetings

❖ Hold regular family business meetings



❖ Policies And Systems – i.e. Financial, Handbook, Ethics, Vacation, etc. (64% of Entering FB Members Do Not Have Qualifications Or Experience For Their Job)

❖ Disciplined Approach

❖ Agreements – Up To Date Shareholder, Buy/Sell, Succession (30% Have Written Succession Plan)

❖ Board – Independent Advisors

❖ Regular Meetings – Transparency

Governance


Improved Communication

Develop Your Own “Family Employment Policy”

Who gets to work here

What are the rules and expectations when you join

Pay and promotion



Establish a Written Management Succession Plan



1. Treat all kids fairly2. Non-family employees3. Family cohesion4. Estate Planning

SUCCESSION: Top 4 Concerns


THANK YOU! Questions?


Working with your family can be a joy.

It can also be a nightmare if not handled right

Preparing your business for the next generation · 33% will Successfully Pass Into “next” Generation 45% of CEOs That Plan Retire in 5 Years have thought about Succession 31%

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