Slide

1. Preparing for Various Scenarios:
Building a Better Business Takes Planning
For the sake of your family and your business – plan for the future
Edward S. Rosenfeld
Director, Growth &
Transition Planning Practice
BG+L
COHORT
SESSION 2

2. 2Proprietary and Confidential, ITAC
WARNING: POSSIBLE BRIDGE OUT AHEAD EXIT RAMP AHEAD
ONE DAY YOU WILL HAVE TO EXIT

3. 3Proprietary and Confidential, ITAC
THE 5 STAGES OF BUSINESS
Build
Stable
Prime
Coast
Decline
LIQUIDATION

4. 4Proprietary and Confidential, ITAC
Build Risk-taking, Conflict
Stable Expertise, Quality, Flexibility
Prime Clear objectives, Strong performance
Coast Tolerance, Complacency, Denial
Decline Stagnation, Loss of Business
TYPICAL FOCUS OF EACH STAGE

5. 5Proprietary and Confidential, ITAC
CONTINUED
GROWTH
Build
Build
Stable
Stable
Prime
Prime
EXIT VALUE
LIQUIDATION
CONTINUOUS INNOVATION

6. 6Proprietary and Confidential, ITAC
Build Big Picture, Systems, Structure
Stable Challenge assumptions, Avoid status quo
Prime Revitalize, Focus on the future
TYPICAL FOCUS OF EACH STAGE

7. 7Proprietary and Confidential, ITAC
Understand
Obstacles / Fears
Understand Your
Highway
Manage Change
and Conflict
Consider Risks Be Future-Focused
FOCUS ON THE FUTURE

8. 8Proprietary and Confidential, ITAC
INVOLUNTARILY VOLUNTARILY
To a family
member
- Death / ill health
- Bankruptcy
- Franchisor
- Lifestyle changes
To someone
outside the
family
THE CHOICE IS YOURS!
ONE DAY YOU WILL SELL

9. 9Proprietary and Confidential, ITAC
TRANSFER WITHIN THE FAMILY TRANSFER OUTSIDE THE FAMILY
SUCCESSION PLANNING
Successor Development
Estate Planning
Financial Planning
Ownership Planning
CLIENT REPRESENTATION IN
Management Buyout
ESOP Employee Stock Ownership Plan
EOT Employee Owned Trust
TRANSITION PLANNING & EXIT MANAGEMENT-
INTERNAL TRANSFER

10. 10Proprietary and Confidential, ITAC
SALE TO
Strategic Buyer
Private Equity
Family Office
Entrepreneur
TRANSITION PLANNING & EXIT MANAGEMENT-
EXTERNAL TRANSFER

11. 11Proprietary and Confidential, ITAC
PARALLEL PLANNING CORE VALUE METRICS
DEEP DIVE
Deep Analysis of Company Strength
- As little as 90 minutes to complete
- No complex financials –just owner’s understanding
of day-to-day operations and company performance
- Concise, easy-to-follow format provides much
needed structure to business conversation
- Analysis provides detailed breakdown of 18 value
drivers, explains where the value numbers originate
and why
- Remove personal perceptions of business value –
results based on real transaction data
Enterprise Value
Potential Value: $1,570,000
Value Gap:
$649,000
Current Estimate:
$920,000

12. 12Proprietary and Confidential, ITAC
The “R” Factor Question
Q. “If we were sitting here in this room one year from now looking back on today’s meeting what would
have to happen for you to be happy with the progress you have made in the last year?
A.
Dangers (D) Opportunities (O) Strengths (S)
1. 1. 1.
2. 2. 2.
3. 3. 3.
PARALLEL PLANNING DOS ANALYSIS CHANGE
AHEAD
Next Steps
1.
2.
3.

13. 13Proprietary and Confidential, ITAC
ENSURE YOUR SALE IS VOLUNTARY
1. Deal with issues – identify, address, resolve
- Burnout / health issues / contingency plan
- Financial performance and profitability
- Marketplace – changes in the industry
- Pride
2. Make it an investment – increase the value
3. Formalize document your business processes
4. Resolve family and/or and partner issues

14. 14Proprietary and Confidential, ITAC
COMMON OBSTACLES TO BUSINESS CONTINUITY
1. Fear of losing wealth
- Successor not qualified
- We’ll lose everything if the kids take over
- We need to protect our retirement
2. Fear of losing control
- This is my business; I built it
- No one can run it as well as I can
- This is my life
3. Fear of conflict
- Choosing between children
- Differing personality and management styles
- Differing goals and vision
- Kids will never be able to work together
4. Partner misalignment

15. 15Proprietary and Confidential, ITAC
MANAGING FEARS
Success Means Change
In general, we fear change - we fear stepping
into the unknown
- Change is a constant
- Change can be managed
- It can be healthy and beneficial rather than
damaging and chaotic
There are tools that you can use to help you
address and therefore manage fear

16. 16Proprietary and Confidential, ITAC
POSITIVE CONFLICT
CONFIDENCE
SUCCESS = CHANGE = CONFLICT

17. 17Proprietary and Confidential, ITAC
THE CONFLICT CIRCLE
TODAY
TOMORROWYESTERDAY
Adapted from the Circle of Conflict
by CDR Associates, Boulder Colorado
Values /
Principles
Moods /
Personality
Structures
Data
Relationships /
History
Interests

18. 18Proprietary and Confidential, ITAC
ARAs
Job Role
(A)uthority
(R)esponsibilities
(A)ccountability
Goals
ORGANIZATIONAL DEVELOPMENT

19. 19Proprietary and Confidential, ITAC
THE 3 CIRCLE MODEL
FAMILY /
PARTNERS
OWNERSHIP
MANAGEMENT
Empathy
Support
Principles/Values
Fair
Equitable
Growth Preservation
Opportunity
Competition
Business Success
Role Confusion
Crossover Conflict

20. 20Proprietary and Confidential, ITAC
TOOLS FOR THE FAMILY / PARTNERS CIRCLE
Business Partnership Charter
- Business Participation Plan
- Regular Meetings
FAMILY /
PARTNERS
OWNERSHIP
MANAGEMENT

21. 21Proprietary and Confidential, ITAC
BUSINESS PARTNERSHIP CHARTER
1 Executive Summary
2 Principles and Values
3 ARAs
4 Monthly Partners’ Meeting
5 Draft Shareholders’ Agreement
6 Meeting Minutes
7 Contracts
8 Progress Reports

22. 22Proprietary and Confidential, ITAC
FAMILY /
PARTNERS
OWNERSHIP
MANAGEMENT
TOOLS FOR THE OWNERSHIP CIRCLE
Ownership Board
- Annual Shareholders’ Meeting
Estate / Wealth Plan
- Outside Investments
- Insurance
- Gifting
- Deferred Compensation Plan
- Trusts
- Wills
- Shareholders’ Agreement
- Contingency Plan

23. 23Proprietary and Confidential, ITAC
FAMILY /
PARTNERS
OWNERSHIP
MANAGEMENT
TOOLS FOR THE MANAGEMENT CIRCLE
Set up an Advisory Board
Always have your business ready for sale to increase
its value
- Vision, good cash flow, good profits, growth, good
products
- A strong management team
- Ensure that the business is more than YOU
Watch the marketplace changes in the industry
Formalize and Plan

24. 24Proprietary and Confidential, ITAC
YOU MUST HAVE UP-TO-DATE
INFORMATION ON HIGHWAY CONDITIONS
UNDERSTAND YOUR HIGHWAY

25. 25Proprietary and Confidential, ITAC
WHAT CONDITION IS YOUR VEHICLE IN?
OWNERSHIP
MANAGEMENT
- Know the goals, vision, and objectives of all family
members and partners
- Build stewardship but have a direction, not just a
dream
- Identify the unique abilities of all family members
and partners and ensure there is no loss of identity
- Ensure a clear definition between family/partners
and business
- Deal with the lack of formality, communication,
clarity around responsibilities and roles
- Resolve conflict and lack of trust
FAMILY /
PARTNERS

26. 26Proprietary and Confidential, ITAC
INTEGRATED TACTICS
FAMILY /
PARTNERS
OWNERSHIP
MANAGEMENT
Communication Tactics
Charter
Family Participation Plan
Family Council Meetings
Communication Process
Conflict Management
Operational Tactics
Growth Plan
Marketing Plan
Contingency Plan
Leadership Training/ Coaching
Compensation
Accountability
Financial Tactics
Wealth Plan
Buy-Sell Life Insurance
Liquidity Planning
ESOP
Key Person Life Insurance
Pension Tax Tactics
Estate Planning
Trusts
Charitable Giving
Life Insurance
Gifting
Business Valuation
Legal Tactics
Shareholder’ Agreement
Wills Trusts
Preferred Shares
Creditor Proofing
Diversification
Real Estate
New Businesses
Acquisitions

27. 27Proprietary and Confidential, ITAC
PEER GROUPS EXECUTIVE COACHING
CEO Peer Group
Next Gen Leader Peer Group
Rising Gen Peer Group
One on one
Management Team
Successor Team
ORGANIZATIONAL DEVELOPMENT

28. 28Proprietary and Confidential, ITAC
EDWARD S. ROSENFELD BIOGRAPHY
Ed has been a management consultant for thirteen years, since growing and selling
his family business to Warren Buffet’s Berkshire Hathaway Corp. For manufacturing
as well as distribution, real estate, retail, media and other companies, he helps
implement programs in business growth, strategic and transition planning,
succession and estate planning, business sale/exit management, organizational
development, marketing and sales team development, coaching and peer groups,
as well as financial planning. An accomplished speaker and writer, Ed has a
certified Black Belt in Innovation Management from The Eureka! Ranch. At Rutgers
University, he taught Management for entrepreneurs and small businesses. In
addition to holding a BA and an MA from Columbia University, Ed is trained as
a mediator, and has completed family business training at the Galliard Family
Business Advisor Institute, the BDO SuccessCare Program, and at the Family Firm
Institute (FFI). He is also co-Chairman of the FFI NYC Study Group.

29. QUESTIONS? “FEEL FREE TO GET IN TOUCH.”
Edward S. Rosenfeld
erosenfeld@itac.nyc
212.579.2613
NYC Itac c/o CWE
83 Maiden Lane, 2nd floor
NY, NY 10038
ContactUs@itac.nyc
www.itac.nyc
29Proprietary and Confidential, ITAC