Learn from David Smorgon OAM, CEO of Pointmade, as he guides you through the process of transitioning a family-owned business, sharing his experiences from Smorgon Consolidated Industries, one of Australia’s largest family businesses.

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7. How to Transition a
Family-Owned Business
Presentation by
David Smorgon OAM
Wednesday 4th December 2019

8. Lets Set The Family Business Scene
70% of Australia’s 2.1 million business are family owned
Mainly, sophisticated, successful and smart – Their Dollars!!
Baby Boomers – Decision Time is Now!

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10. • 70% of Australia’s 2.1 million business are family owned
• Mainly, sophisticated, successful and smart – Their Dollars!!
• Baby Boomers – Decision Time is Now!
• Challenges ahead – Elephant in the Family Lounge Room
• Rich Listers and other Wealthy Families – Fractured Families List
Lets Set The Family Business Scene

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FRACTURED FAMILY
LIST
2019

13. Pointmade’s Principles
Wealth of your family is not your Balance Sheet
It’s each and every family member around your table
You must professionalise the family in the same way as your business
You must devote time, effort and resources into improving the health of your
family as evidenced by the communication and relationships that exist within
the family
Think long term for your family aspirations
Quality of our lives is primarily determined by the quality of our family
relationships!!!
These challenges are mainly relationship and family based – not financial based.
Critical challenges for families arrive from wanting a harmonious, united and
happy family

14. Start now – it’s a process not an event
Build your family pyramid
How to successfully manage generational
transfer of Family Business

15. Governance
Guiding principles
Family culture
Board
Rules
Charter
Communication
Decision Making
Relationships
Vision
Values
Purpose
Our approach
Pyramid of family business success
Every family has a story,
only a few leave a legacy

16. Start now – it’s a process not an event
Build your family pyramid
Connect – Communicate – Build Trust
Coach / Educate your children
Structure and Governance are essential
Family Meetings – Rules – Independent Chair
How to successfully manage generational
transfer of Family Business

17. How to successfully manage generational
transfer of Family Business
Summary:
Prepare a succession plan
➢ Comprehensive – family / ownership / management
➢ Strategic – plan business / family view
➢ Feasible - realistic

18. Unique Traits and Challenges Within
the Family Business Sector

19. 6 DON’TS
3
Don’t train or educate
their children about
wealth or business
5
Don’t deal with
conflict. They keep
conflict in the
cupboard
6
Don’t understand the
importance of good
governance
Don’t understand that
succession is a process
not an event4
Don’t spend time on
family issues just
business issues1
Don’t discuss wealth with
their children on a regular
& effective basis2
My experiences from having been involved with family businesses for more than 40 years and having met
over 300 high net worth individuals and families over the past 7 years have confirmed some major issues.
Generally families:
Every family has a story,
only a few leave a legacy

20. 70% of Wealth Transitions Fail
And the origins lie within families themselves
Fail due to
inadequately trained
heirs
Fail for a range of
reasons - tax, legal
or poor advice
Williams & Preisser,
“Preparing Heirs”
60% 25% 15%
Every family has a story,
only a few leave a legacy
Fail due to breakdown
in Communication and
Trust within the family

21. 1. Succession Planning raises unpleasant family issues.
2. Succession forces people to confront their mortality.
3. People are too busy doing day-to-day tasks.
4. The owner fears suffering loss of control.
5. The owner fears that a succession plan will reduce options.
6. They don’t know how to plan.
Reasons People Avoid
Succession Planning

22. How to prevent family tensions and
differences from becoming conflicts
Conflict is a disagreement perceived as a threat to the needs, interests, and concerns
resulting from individual that differ in attitude, beliefs, or values.
The difference between a disagreement and conflict are the negative and lingering
emotions – anger, fear, guilt, shame and jealousy
Family Meetings – unpack your suitcase
Can we get parties to agree that is not as important to be right as it is to reach
genuine understanding and agreement to move forward.
Role of the trusted, independent Chair/Advisor
Can we get parties to agree to process to understand themselves before we try and
solve problem.
Set up family structures and processes

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