You are a successful owner. You motivate your employees, manage projects and utilize the resources available to you in your business and networks. You are entrepreneurial, always looking for new ways to grow and transform your enterprise. You have a long range vision of success for your business and personal future. Do you also apply these same passions and principles to planning your own exit from the business?

1. Will You Succeed at Succession? Nov 4, 09

2. For today What makes family business unique? Family Business 101 The Succession Checklist Resources Final exam

3. If you learn only two things today… Start planning now! Involve others.

4. Perceptions…

5. What is a family business? Any business where the family has effective control over the strategic direction of the business; The business contributes significantly to the family’s wealth, income, or identity; Future plans consider succession of the business to the next generation.

6. What makes family business unique? Presence of family Owners dream to keep in family Overlap of Family Ownership Employment Unique sources of competitive advantage

7. Unique challenges facing family business Unqualified family members in key positions within the company. Communication of business issues is difficult enough, however layered with challenging family matters, often communication completely breaks down. Marriage and divorce plays a key role in family business success and failure. Involvement of family members not employed by the company. Family members in ownership versus management positions.

9. GENERATE49% of GDP in U.S. and more than 75% in most other countries

10. EMPLOY 59% of private sector U.S. workforce and more than 85% of working population overseas

12. LNT 2007 Family to Family Family businesses are thriving Succession issues immanent Perception not reality All in the family? Income diversification 3-10

13. 2007 American Family Business Optimistic about growth Lack a sense of urgency about planning Selecting women leaders Higher ethical direction Traditional management toolkit Common family values Trust of advisors 3-11

14. 2008 LNT NW Family Business Survey Incorporating needs of stakeholders leads to greater success Succession planning still needed Lack income diversification Family business boards add value to the firm 3-12

15. 2009 Barclay’s “In Safe Hands?” Possess certain attributes Philanthropy and close relationship with society Family relationships are a double edged sword External management can be a powerful tool Planning for next gen is critical 3-13

16. 2009 KPMG Family Business Australia Structures and mechanisms in place Strength & resilience is a “strength” Growth & progression is steady

17. 1-15 Entrepreneurs and Business Owners “Business owners make up 17.9% of the population, yet account for 25% of all income and own 56% of all wealth.” Source: Quadrini, V. (September 2, 1999). “The importance of entrepreneurship for wealth creation and mobility.” Duke University, Fuqua School of Business.

18. Family Business Facts Most current family businesses in the U.S. were formed after World War II. Fully 91% of family business CEO’s are age 42 or older, and 11% are 71 years or older. 42.7% of family-owned businesses will change hands-to be transferred to other family members or sold to others-in the next five years.

19. 1-17 Good news…bad news…or just news? In their first 5 years of operation, approximately 85% of entrepreneurial and family-owned companies disappear Among those that survive, only 30% are successfully transferred to the second generation of the founding-family owners Only 12% survive under current ownership to the third generation Less than 45% make it to the 4th generation

20. The Three Circle Model Vermont Family Business Initiative

21. The Developmental Stages of the Ownership System Cousin Consortium Sibling Partnership Controlling Owner Vermont Family Business Initiative

23. 25% of senior generation family business shareholders have not completed any estate planning other than writing a will.

25. Why are family businesses important? Vermont is primarily made up of small businesses, many of which are started by entrepreneurial families. Family businesses are deeply embedded within the social and economic fabric of their surrounding community. Family businesses are committed to continuity.

26. Oldest family business in the U.S.?

27. Oldest family business in US Oldest family business still operating in the US: Zildjian Cymbal Co., Norwood Mass. Founded in 1623 in Constantinople. Moved to the US in 1929. Currently in 14th generation of ownership. Craigie Zildjian is the first woman to lead her family’s business.

28. Largest family business (revenue)

29. 1-26 Examples of Family-Controlled Businesses Wal-Mart New York Times Wall Street Journal Washington Post American Greetings Bigelow Anheuser-Busch L. L. Bean Gap Timken Ford Motor Fidelity Investments Marriott Hallmark Levi Strauss Kohler Nordstrom Perdue Farms Smucker’s SC Johnson

30. Some family businesses in Vermont

31. Goals – Business owner Time line Financial consideration and reality Lifestyle choices Manage the plan.

32. Goals – Business leader Employees Partners/investors Business continuity

33. Clearly define stage of business How does it relate to owners exit goals? Early/founder – planning tool Growth – Added value and contingency Mature – Continuity and legacy Decline – Graceful exit

34. Business Valuation Provide honest information Choose an accredited valuation analysis Cost - $5,000 - $10,000 4 - 8 weeks to complete

35. Assemble your transition team Professional advisors Family Peers Boards of advisors

36. Explore options Keep in family Gifting Trusts Buy-sell Outright sale Internal sale

37. Contingency plans Death Disability Key-person Loss of business value Failure to secure sound management or transition team

38. Identify successor & future management Key positions Tools needed to succeed Develop skills Ample time Communicate plans

39. Develop actual plan – written & documented Stick to goals and time line Share with others Manage the plan Personally Professionally

40. What will you do when you exit? EXIT!!! LEAVE!!! GET OUT OF THE WAY!!! OR….

41. …START A NEW BUSINESS!

42. FINAL EXAM

43. TWO THNIGS START TODAY INVOLVE OTHERS

44. What is the Vermont Family Business Initiative? Founded in 1996 in the UVM Business School. Provides a series of family business forums throughout the state. Currently 30+ member business in Vermont, from Bennington to Newport. Family owned and closely held.

45. Additional resources Family Business Daily Feed www.twitter.com/fambiz2point0 Family Business Wiki www.familybusinesswiki.org Family Business Town Square www.familybusinesswiki.ning.com/ Family Business Magazine www.familybusinessmagazine.com

46. Contact Dann Van Der Vliet www.uvm.edu/familybusiness 802-656-5897 Daniel.vdv@uvm.edu www.facebook.com/vbc.vfbi www.twiiter.com/fambiz2point0 Presentation is available at: http://www.slideshare.net/dvdv