S. Mark Brumbelow gave a presentation on succession planning basics. He outlined identifying key players in the succession process such as owners, executives, employees and advisors. Goals for transition include defining roles and developing candidates. Tax opportunities include gain deferral for sellers and eased cash flow for buyers through organizational structure. Challenges include valuation, structure impacts, and family dynamics. The presentation emphasized starting succession planning early, aligning it to the business, and developing an alliance network.

1. Presenter:
S. Mark Brumbelow, Senior Manager - PYA
TRANSITIONING WITHIN A NEW MARKET

2. Agenda for today
 Outlining Succession Planning Basics
 Identifying Key Players in the Process
 Setting Goals for Achievement
 Exploring Tax Opportunities

3. $10,000,000,000,000?

4. $10,000,000,000,000!!

5. Succession
Planning Basics
 Who

6. Succession
Planning Basics
 Who
 What

7. Succession
Planning Basics
 Who
 What
 Why

8. Succession
Planning Basics
 Who
 What
 Why
 When

9. Succession Planning – Who is Impacted?
 Business owners
 Large business executives
 Vendors and other stakeholders

10. Succession Planning – Who is Impacted?
 Business owners
 Large business executives
 Vendors and other stakeholders
 Sons and daughters

11. Succession Planning – What?
 Direct involvement from executive leadership
 Systemized accountability for development of
future leaders
 Early identification of leadership candidates
 Broad internal commitment to self-improvement

12. Succession Planning – Why?
 Get skills in place
 Make appropriate investment decisions
 Maximize company value for transition
 Minimize tax burden arising out of transition

13. Succession Planning – When?
 The sooner the better

14. Succession Planning – When?
 The sooner the better
 Continuous

15. Succession Planning – When?
 The sooner the better
 Continuous
 Never too late

16. Effectiveness of Succession Planning
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Graphic Representation of the Options / Urgency Paradigm
Options Urgency Effectiveness

17. Key Players -
Who Is Involved?
 Owners
 Key operational leaders
 Invested employees

18. Key Players -
Who is Involved?
 Owners
 Key operational leaders
 Invested employees
 Human resources
 Outside advisors

19. Goals for Transition
 Role definition
 Process owners
 Network of strategic advisors
 Jobs skills listing
 Expanded candidate list
 Development plans
 Investment strategies

20. Who is doing what?
 Planning future strategy
 Recruiting
 Training program design
 Coaching and mentoring
 Developing investment and structure
 Setting cultural tenor and atmosphere
 Designing compensation and incentive plans
 Promoting future vision
 Implementing non-financial initiative
 Recognition and performance monitoring

21. Title Industry Example
 Consolidation – TitleOne Corporation
 Focus on the big picture – TitleOne
 Turn the focus inward
 Buyer’s bargain

23. Let’s
Talk
Tax

24. Transition – Tax Opportunities
 Small Businesses
 Transfer of ownership and responsibility to new generation of
owners
 Long-range cash flow considerations for retiring executives /
owners, and the resulting tax impact
 Protection of closely held nature of the business
 Large Businesses
 Incentive compensation opportunities and potential pitfalls
 Non-compete agreement consideration and valuation

25. Transition – Tax Opportunities
 Organizational structure could impact options
 Pass-through vs. corporate structures
 With enough time, you can plan around structure issues
 Cash flow opportunities
 Gain deferral could be available to seller
 Eases cash burden on buyer
 Don’t stumble on “Hot Asset” rules
 Gifting and other estate planning strategies

26. Transition – Tax Challenges
 Valuation of your business – your personal value vs. your business’s
value
 Organizational structure could impact options – especially in the
short-term
 Family dynamics can influence decisions – and those dynamics can
change
 Future owners and future operational leaders might be different
people

27. Summary
 Get a plan in place
 Align your plan to your business
 Identify successors
 Develop your alliance network

29. PERSHING YOAKLEY & ASSOCIATES, P.C.
800.270.9629 | www.pyapc.com
S. Mark Brumbelow,
Senior Manager
(800) 270-9629
mbrumbelow@pyapc.com