life-changing liquidity events · horizon capital management, llc life-changing liquidity events -...

Life-Changing Liquidity EventsA Wealth Management Guide to Managing Yourself through One

� Business Transition� Public Offering� Inheritance

J. David Pattie, PresidentHorizon Capital Management, LLC

August 2010

Horizon Capital Management, LLC Life-Changing Liquidity Events - 2

My Sincere ThanksThis White Paper involved contributions from many experts in their fields who selflessly gavetheir time and wisdom in interviews.

I would not have been able to write this alone; the following people gave depth and credibilityto this process and I offer them my sincere gratitude.

Steve Ballen - Founder Ballen & Company

Ken Bellavia - Executive, Chicago Board Options Exchange

Terry Desmond - Executive, Governmental Business Systems

Joe Ginsburg - Partner and Founder at Levin Ginsburg

Mark Horita - Managing Director, The Peakstone Group

Ray Horn - Partner, Meltzer, Purtill, & Stelle LLC

Bruce Leech - Founder, CrossCom National and "evolve"

Brad Seaman - Managing Director, Tricor Pacific Capital, Inc.

Julie Sendelbach - Founder, RGH LLC and Elite Coach with CEG Worldwide, LLC

Mike Stuart - President and Founder, The Stuart Legacy Alliance, LLC

Steve Thayer - Partner and Chairman of Commercial Practice Group, Handler Thayer, LLP

- J. David Pattie


Table of Contents

Executive Summary 5

Introduction – Before the Event 6

The Five Primary Financial Goals 10

The Obstacles 11Opportunities Disappear Over Time 11Not Knowing What You Don’t Know 11People Often Work Under False Assumptions 13Lack of Preparation 14Elevating Inexperienced Professionals 15Fluid Laws and Regulations 17

The Solution – A Wealth Management Approach 18The Discovery Meeting 20The Professional Network Meeting 21Ongoing Reviews 21The Three-Phase Wealth Management Process for Liquidity Events 22

Conclusion: Get Yourself Ready 23


“Plan for the future, because that is where you are going

to spend the rest of your life.”- Mark Twain

(1) Pricewaterhouse Coopers, April 2010(2) Hoover’s(3) Avery and Rendall (4) Johan Norberg, Senior Fellow, Cato Institute(5) evolve, Chicago, IL

Facts:� There are 80 million baby boomers. People

55 or older own 30% of all businesseswith employees; PWC finds that 50% ofbusiness owners plan to sell their businesswithin the next 10 years.

1

� In the US in 2009, there were 66 InitialPublic Offerings (value $25 billion). In thefirst quarter of 2010, there were 28 IPOs(value of $4.5 billion) versus 2 (value $0.7billion) in the first quarter of 2009.

2

� Baby Boomers may receive over $10 trillionover their lifetimes from their parents ininheritance and gifts.

3

� Fifty percent of the wealth ever createdhas been created in the last 30 years.

4

� Of the small/midsized businesses that successfully change ownership, 75% oftheir owners will be dissatisfied after thesale.

5


Executive Summary� Liquidity Events, whether arising from a Business Transition, an IPO or an Inheritance,

bring together all facets of financial planning

- Investment Management

- Estate Planning

- Tax Mitigation (estate and income)

- Insurance

- Charitable Giving

- Business Succession

� Differences in outcomes (Client dis/satisfaction, tax costs, in/effective wealth transfer, in/vulnerability to lawsuits, stress/comfort, etc) can be vast and largely depend on successful management of the Liquidity Event process.

� Successful management of the Liquidity Event process requires:

- A thorough examination of the Client’s needs and goals (the Clients themselves may not be clear on these and frequently need guidance)

- A competent team of Expert Advisors (CPA, Private Client Attorney, Financial Advisor, Insurance Specialist, Valuation Specialist, etc.)

- A clear conveyance of the Client’s needs and goals to the proper Expert Advisors

- Ample time for Expert Advisors to execute Advanced Planning techniques before the Event

� “Wealth Management”: 1) Discovers the Client’s goals, 2) Identifies the required Expert Advisors and conveys the Client goals to them, and 3) Offers a “feedback loop” that reviews changes in the Client’s profile

- Capital Preservation and Growth

- Tax Efficiency

- Assurance of desired lifestyle and retirement

- Effective transfer of Wealth to chosen heirs and causes.

- Protection of Wealth from lawsuits and fraud

- Comfort and Peace of Mind


Before The EventIf “simplifying the complexities that come withbeing successful” is your financial “missionstatement”, then an impending Liquidity Eventrepresents that mission’s ultimate application.

In perhaps no other situation do all theaspects of prudent financial management mixwith the need for advice from experts in somany areas as when a person is anticipatingreceiving a substantial amount of capital.

Perhaps a business which you’ve foundedand helped to grow reaches a point in itsmaturation (or yours) which justifies a sale ora public offering. Maybe you’ve made anintelligent targeted investment in a privatecompany reaching its own Liquidity Event. TheEvent even could be an impending inheritance.Your financial circumstance is changing—how do you react to it?

As the Liquidity Event approaches, your firstreactions will likely be centered on the freedomand security that are so often associatedwith money. Initial thoughts are likely toinclude:

� What kind of lifestyle can I afford?

� How much “cushion” will this allow me?

� What might this mean for my/our retirement?

� What might this mean for my/our children?


� How has my tax situation changed?

� How do I coordinate this holding with the other important components of my wealth?

� If the Event results in a large single holding — How do I address potential wealth concentrations (the “twin fears” of selling and then watching it skyrocket versus holding and watching it drop)?

� How do I best consider this new wealthto be a legacy for my children or other dependents? How and when do I optimally transfer the wealth to them?

� If the asset producing the Liquidity Event still has significant future appreciation, in whose name should I place that asset for estate tax reasons?

� How does this holding fit with my overallwealth transfer plan?

� How do I best preserve this wealth?

� How does charitable giving enter into my decision? If it’s important, how do I guide the transfer to do the most good and yet protect my own needs?

� How important is privacy to me and how do I protect it?

� What key steps must I take before the event (and how long) to mitigate taxes?

� How do I determine the various areas of expertise I need?

� What is my timeline: What do I need to do and when do I do it?

The reality is that the above considerations don’t cover the topics necessary for a successfultransition into the next economic phase of your life. Other, “deeper dive” issues need to beaddressed:

DISSATISFIED BUSINESS OWNERSONE YEAR AFTER TRANSITION.

25%satisfied

75%dissatisfied

evolve


Case Study #1Brad Seaman is a Managing Director and Head of the Chicago Office forTricor Pacific Capital, Inc. a Private Equity firm with offices in Chicago and Vancouver.

We interviewed Brad to discuss the challengesfaced by people in the private equity arena.He began to tell his story and then grabbedthe interview agenda that I had prepared andplaced it in the middle of the conference table.He flipped it over and sketched a diagram ofhis challenge on the back “The problem is,and I think about this all the time…”

His picture was of two triangles. The firstwas upside down – inherently unstable andstruggling to balance on its tip. He dividedthat triangle horizontally into three sections.The first — in the small lower tip of the triangle— was labeled “conservative”, the second,somewhat larger middle section was labeled“public markets” and the third, dominantportion of the triangle was labeled “risky,high-beta, leveraged, illiquid”

The second triangle was the inverse of thefirst, footed solidly on its base. The dominantlower portion was labeled “public markets,liquid, legacy”, the upper, much smaller portion,was labeled “risky, illiquid.”

“The problem is that we’re all here” Bradexplained of his colleagues in the privateequity world as he tapped the tipsy left triangle.Then he moved his pen to the right triangle,“but we SHOULD be here.”

In the Trenches:Consider Terry Desmond of GovernmentalBusiness Systems, a privately held firm dealingin election equipment. He came upon aLiquidity Event as the result of an unsolicitedbid from a larger competitor. He learned theimportance of working with the experts, andthat when you pay attention to the details, theresults will be positive. “We learned that, boy,you’ve got to really be mindful about how youwork this all out,” noting that it “worked outterrific for all of us.”

Risky, High Beta, Leveraged,

Illiquid

Conservative/Cash

Public Markets,

Liquid

Public Markets,

Liquid

Conservative/Cash

Risky, High Beta, Leveraged

Illiquid

Business Owner - Current Business Owner - Desired


Bruce’s Liquidity Event happened in 2004when he sold a majority stake of CrossCom,which now had 400 employees and revenueof $60-70MM/year, to a private equity firm.

Bruce’s experience was not what he expected,citing both business and personal reasonsthat cause 75% of business owners to claim,12 months after a sale, that they are dissatisfiedwith the outcome.

Bruce emphasizes the often-ignored personalaspects of a business owner going through a Liquidity Event. “The day after the sale, Iwas completely insignificant.” “A lot of guyswill get that 3am wakeup and realize thattheir entire identity is about to change, andthey’ll pull the deal off the table.”

Bruce blames a lack of planning for much ofthe unnecessary dissatisfaction of owners,the fact that they “didn’t know what they didn’t know.”

“Start planning earlier. Some people thinkthis is a 12 month process. I really wouldadvocate that it’s a couple year processbecause there may be some tax planningthings that you want to implement ahead oftime; there may be some gifting strategies,”

Bruce’s passion for the needs of businessowners going through a transition led him,and co-founder Dave Jackson (another successful former business owner who wasdisillusioned with the transition process), to found “evolve”, a membership firm thatprepares business owners for a successfultransition.

Case Study #2Bruce Leech founded Cross Communications, an installer and servicer ofphone systems in 1981. In 1985, the company was awarded the opportunityto replace phone systems in 1,200 Walgreens across the country. Theopportunity set the course for (now) CrossCom National to become a totalin-store data and voice system solution for retailers.


The Five Primary Financial Goals of PeopleFacing a Liquidity Event*: Research validates that people who have successfully navigated a life-changing LiquidityEvent have effectively mastered the following five measures.

� Preservation and Growth of Capital

� Wealth Enhancement (mitigation of income and estate taxes)

� Wealth Transfer (smooth transfer of wealth to heirs)

� Wealth Protection (ensuring that your wealth won’t be unjustly taken from you)

� Charitable Giving

(*) CEG Worldwide


The Obstacles:By all accounts, a Liquidity Event resulting from a business transition, an IPO or even possibly an inheritance should represent success. All too often, the results are disappointing — sometimes deeply so.

What challenges get in the way of a successfully managing a Liquidity Event?Opportunities Disappear Over TimeSurveys find that “taking care of heirs” and“tax mitigation (both estate and incometaxes)” are among the affluent’s top fivefinancial concerns.

The opportunities for proper wealth transferand tax planning can be tremendous if theproper professionals are brought in earlyenough. However, as a Liquidity Eventapproaches, opportunities to use sophisticatedplanning tools deteriorate.

� Gifting Plans

� Intentionally Defective Grantor Trusts

� Grantor Retained Annuity Trusts

� Charitable Remainder Unitrusts

� Family Limited Partnerships

In addition, wealth protection techniquessuch as offshore Trusts may be beneficial.These instruments require professionals witha high level of technical expertise and, doneproperly, can be an extremely effectivedefense against having your wealth takenunjustly from you (e.g. lawsuits). However, itis also important that the need for protection beidentified well in advance and the techniquesapplied BEFORE a threat becomes real.

Not Knowing What You Don’t KnowMost of us who have reached a certain levelof success in our lives tend to spend most ofour time in the “known” — areas where wehave a level of expertise and command ofthe facts necessary to make decisions.

Facing a Liquidity Event can turn thatassumption on its head.

The labyrinth of “rules” surrounding a busi-ness transition, public offering or even aninheritance can be confusing. Tax Laws,estate laws and the rules of engagement witha buyer can be fluid and frustratingly arcane.For the vast majority of us, one shot is allwe’ll ever have (and that’s if we’re extremelyfortunate) to get it right and mistakes can’tbe corrected.

Knowing to whom to turn as a “point person”can be difficult and there is often a naggingfeeling of “not knowing what you don’tknow.”


Pearls of Wisdom:

“Having a strong team is as important

in wealth management and business

transitions as it is in running a business.”

- Mark Horita, Managing Director with The Peakstone

Group, a private investment and advisory firm. Mark cites

the importance of being able to bring in experts from

various disciplines such as valuation, business succession

and business preparation (for a sale). He stresses the

importance of using professionals who have strong

business relationships and thus, “deep benches” of

experts to call upon.

In the Trenches:“You’d be surprised how many guys (businesssellers) in their 70’s have estate plans thatassume their kids still have to go to college”

Joe Ginsburg — Partner and Founder at Levin Ginsburg,

a law firm serving the legal needs of businesses and

individuals. Joe has 31 years’ experience providing

counsel to many private businesses in the area of

succession planning and to many owners in estate

planning in anticipation of Liquidity Events.

Joe emphasizes the relationship — not thetransaction — in his business, feeling stronglythat a holistic approach to serving Client needsis best for his Clients and therefore, his firm.

Pearls of Wisdom:

“Begin with the end in mind. Ideally, the

time to plan for a Liquidity Event is when

you enter the arrangement that might lead

to one.”

- Steve Thayer, Partner and Chairman of Commercial

Practice Group with Handler Thayer, LLP, a legal firm

serving affluent families, family offices and privately-

held companies.


People Often Work Under False Assumptions

In the Trenches:Ray Horn, Attorney and Partner with Meltzer,Purtill & Stelle LLC, emphasizes the importanceof fully understanding the “catalyst” that led theBusiness Owner to consider selling the business.Knowing “why” the business is for sale (desirefor retirement, need for capital, health issues,success, etc) can be a vital part of understandingthe Client’s overall transactional and personalneeds and goals.

Many times people on the team, or even theClient themselves, may be working under falseassumptions. Only through a full examinationof the goals of the Client can professionalsoperate in tandem.

Indeed, unless the Client has thoroughly considered their own goals clearly, theythemselves may very well not understandexactly what they’re trying to accomplish with a business transition.

Are they seeking a clean break from theirbusiness or are they merely trying to pass on the day to day responsibilities? If they’reselling to their children, do they really want tomaximize the price received for the company,or might a lower price, or payment over time,be more in line with their personal goals andtheir estate plan.

If receiving an appreciating asset, might theywant full title or might a discounted giftingstrategy or trust structure minimize theirestate tax obligations while still allowingthem their desired lifestyle?


Lack of PreparationProfessionals who deal with Liquidity Eventsnearly always cite “lack of preparation” asamong the most common challenges.

All of us are vulnerable to sacrificing the“important” for the “urgent.” Add to this theconfusing nature of managing investments,mastering the tax code, and treading throughthe estate laws and the result is that fewpeople enter a Liquidity Event prepared. Asevidence, according to Forbes.com, 65% ofAmericans do not have a will.*

Often the issue arises suddenly — unexpectedhealth issues (or death) cause an owner (or his estate representative) to necessarilyaccelerate asset liquidation and make decisionsbased on necessity and expedience ratherthan goals and values.

Strategic tax planning opportunities, smoothand targeted transfers of wealth, and solidprotection plans for the sale of a business, anIPO or an inheritance are optimized when, andonly when, the event is anticipated andpreparation is made well ahead of time.

In the Trenches:“I got a call from a Client who had just soldtheir business and wanted to know how theycould minimize the taxes from the transaction”said one CPA we interviewed. “I had to tell himthat the opportunities for tax planning werepretty much over; that he should have contactedus long before the deal.”

* Forbes.com 3/1/10


The other most common error among thosewho come into, or anticipate coming into,wealth is continuing to use the professionalswith whom they are comfortable and have along term relationship but who are “generalists”in their field. Instead, “specialists” are oftenwarranted for the successful execution of aplan that anticipates the transition of a business,an IPO, or an inheritance.

Just as it is the case that your family doctor,no matter how trustworthy, is not the right candidate to perform surgery on you, it’s verylikely that you’ll need to seek the guidance of specialists in a number of areas such asinvestments, estate planning, tax, insurance,and perhaps other areas such as businesssuccession, valuation, and even life coaching.

In the Trenches:Joe Ginsburg also emphasizes the importanceof not relying on professionals that your currentneeds have outgrown, noting a number of caseswhere his Clients have wanted to maintain relationships with the attorney, accountant ormoney manager that they’ve maintained trustedrelationships with for years. These professionals,often generalists, may or may not have the specific expertise called for in situations wherethe business has matured , the complexitieshave grown, and a transition is necessary. Joeand his firm have developed techniques thatencourage trusted advisors to be part of theprocess, providing their insight, while allowingtheir client to utilize professionals such as Joe,with focused expertise to guide them through atransition process; which for most BusinessOwners is one of the single most importantevents in their business career.

In the Trenches:Steve Ballen, founder of Ballen & Company,Inc., a boutique tax and accounting firm servinghigh net-worth individuals, small businessesand their high net-worth owners, countersthat long-term relationships should neither be

forgotten and may play a crucial role in helpinga person managing the complexities of aLiquidity Event to “manage their experts.”Long term advisors, who have earned the trustof their Client, can act as a buffer and confi-dante by offering their learned judgment duringwhat can be an enormously complicated andstressful time.

Elevating Inexperienced Professionals


Case Study #3We interviewed a (now retired) business owner who experienced first handthe dangers of elevating an inexperienced professional.

“John” co-owned a successful private businessalong with two partners when they wereapproached with an unsolicited bid from amuch larger firm. In readying themselves forthe transaction, they called a friend of one ofthe partners and asked him to be their leadattorney for the deal.

The Partners were confident that they hadbuilt great momentum and potential into theircompany and felt that the new owner, withtheir additional capital and resources, wasdestined for continued success. They happilynegotiated that much of the purchase pricebe received in an “earn out” (A contractualprovision stating that the seller of a businessis to obtain additional future compensationbased on the business achieving certainfuture financial goals.)

After the close of the transaction, it becameapparent that the earn-out was drafted muchdifferently than John and his Partners hadintended. Despite the fact that the acquirerachieved much of the anticipated sales success,the Partners, in fact, received nothing from theearn-out, which they had estimated wouldrepresent approximately 50% of their overallcompensation for the sale of their firm.

The attorney conceded his error and feltawful. However, the error was done andthere was no correcting it after the fact.


Fluid Laws and RegulationsAs of this writing, the laws surrounding manyestate and tax issues are unresolved andunder fierce debate. Even the “experts”must remain diligent to stay on top of the

constant changes. Estate planning documentsmust be reviewed often and be drafted toremain as flexible and efficient as possible.


The Solution – A “Wealth Management” ApproachIn order to successfully manage yourself up to, through, and beyond, a Liquidity Event, you are going to want a system that is Consultative,Comprehensive, and Customized. You are going to want “Wealth Management,” which consists of the following components:

� Investment Consulting

� Advanced Planning

- Wealth Transfer

- Wealth Enhancement (tax mitigation)

- Wealth Protection (keeping your assets from being unjustly taken from you)

- Charitable Giving

- Business Succession Planning

� Relationship Management (both with the Client and with a team of expert professionals)

True Wealth Managers will not merely manage a portfolio that will allow your newfound wealthto fund your goals and reach your chosen destinations with minimal obstruction from taxes, litigants or the courts. A wealth manager will also help you articulate your goals, which mayinclude:

� Preserving and prudently growing your capital

� Funding your lifestyle and your retirement

� Mitigating Taxes

� Protecting your wealth from unjust loss (lawsuits, identity theft)

� Leaving a legacy for your children and other loved ones

� Endowing charitable causes


Research by CEG Worldwide, a top researchand consulting firm in financial services forthe affluent, shows that while many Advisors

use the term “Wealth Management”, few truly offer consultative, comprehensive andcustomized solutions.

The Business Model of Financial Advisors - Exhibit

THE BUSINESS MODELS OF FINANCIAL ADVISORS

46.3%Self-described

wealth managers

53.7%Describing themselves

as other thanwealth

managers

93.4%Investment

orientedadvisors

6.6%Wealth

managers

N = 2,094 financial advisors CEG Worldwide – 2007.

Many Advisors Call ThemselvesWealth Managers

Few Advisors Are Actually Wealth Managers


The Discovery MeetingThe most important step in any journey is thefirst. It sets the pace and direction underwhich you travel.

Similarly, the most important meeting in awealth management process is also the first,called the Discovery Meeting. It too sets thepace and direction for the relationship. Thepurposes of the Discovery Meeting are 1) todetermine if the Wealth Manager can have asignificant positive impact on the potentialClient’s life, and 2) if so, to build a detailed“Total Client Profile” that will drive the planningprocess.

A sample of the crucial areas covered in theDiscovery Meeting:

ValuesWhat’s important to you about money?

What in particular is important to you aboutthat value?

Is there anything more important than that value?

GoalsWhat are your top accomplishments so far?

What are your professional goals?

What are your personal goals?

Ideally, where would you like to be when youare 45?, 55?, 65? 75?

What are your quality of life desires (houses,boats, cars, travel)?

In dollar figures, how much money do youneed? Want?

When you think about your money, whatconcerns, needs or feelings come to mind?

RelationshipsWhat do you want to do for your children?

What do you want to do for your parents?

What do you want to do for the world at large?

How do you want to be remembered?

AssetsWhat is your source of income (business,employer, other)?

How do you make money today?

How do you save or set aside money to invest?

What are your investment holdings?

What life insurance do you have?

What property do you have (real, artwork,jewelry, collectibles)?

How are your assets structured/owned now?

ProcessHow involved do you like to be in managingyour finances?

How many face to face meetings would youwant over the course of a year?

How often do you want an overall review of your financial situation and performancerelative to your goals?

AdvisorsWho are the important advisors (CPA, Attorney,Insurance Specialist) that you work with andhow would you like to continue to work withthem?

Which of these advisors are you less thansatisfied with and would like to be introducedto another expert?

Ongoing ReviewsOf course, even with the best plan, life “happens” and may change the assumptionsunder which you’ve formulated your wealthmanagement plan: marriages, divorces, births,deaths, new partnerships, estrangements,adoptions, new charitable causes.

That’s why your Wealth Manager will meetwith you to regularly review your values,goals and relationships that form your wealthmanagement foundation. Your Wealth Managerwill help you assess necessary changes inyour plan and call in the necessary expertiseto re-formulate your plan appropriately.


The next meeting that sets the WealthManagement process apart from that of the majority of financial advisors is theProfessional Network Meeting.

In this meeting, the Wealth Manager uses the“Total Client Profile (TCP)” developed frominformation gathered in the DiscoveryMeeting. The TCP is brought before the“Professional Network” — a panel of expertsin estate planning, tax and insurance. If thesituation warrants, other experts in successionplanning, valuation, or charitable foundationscan be brought in as well.

The profile is analyzed to identify “high level”advanced planning opportunities in wealthtransfer, wealth protection, tax mitigation,and charitable giving. These opportunitiesare brought back to the Client in the form ofa Wealth Management Plan. The WealthManager can work with the Client’s currentprofessionals or can introduce the membersof his network to execute these opportunitiesaccording to the Client’s desires.

The Professional Network Meeting


The Three Phase Wealth Management Process for Liquidity EventsWealth management professionals can helpyou achieve your goals because they use ahighly consultative process. By clearly defin-ing where you are and where you want to be,the wealth manager can begin the process ofbuilding the bridge between the two.

Our research indicates that there are threedistinct phases of a Liquidity Event, eachwith its own expertise required.

Ideally, the flow of the Wealth ManagementProcess will be executed as follows:

3–36

Mon

ths

Befo

re E

vent

Liqu

idity

Eve

ntPo

st E

vent

Discovery Meeting • Values • Relationships • Goals • Concerns

Total Client Profile

Professional Network Meeting

Investment Plan(unfunded)

Continue Investment Plan

OngoingReviews

Fund Investment Plan • Investment Accounts • Trusts • Charitable Outlets

Review changes in: • relationships • health • family status

Wealth Management Plan • Business Succession Issues • Wealth Transfer Issues • Wealth Protection Issues • Tax Mitigation Issues • Charitable Giving Issues


Conclusion: Get Yourself ReadyPeople facing Liquidity Events have a wonderful opportunity for their newfound wealth to fund the critical goals in their lives.

For most, with this opportunity comes theresponsibility to fund a legacy portfolio thatwill preserve and grow their capital, to carefullytarget their beneficiaries in the face of fluidestate laws, to anticipate the income andestate tax consequences of their decisionsand to protect their wealth from unjustthreats.

The decisions surrounding a Liquidity Event— for better or worse — have consequencesand few, if any, people have the informationnecessary to make these decisions on theirown.

The Wealth Management experience canbring those crucial sources of expertise toyou. The “deep dig” of the Wealth Managerwill explore the issues that get to the core ofwho and where you are today and where youwant to take your life.

Why is money important to you? Does it allowyou to live a certain lifestyle? Do you need itto stay healthy? Who are the important peoplein your life? Is there something you’ve alwayswanted to do for your children, parents, yourcommunity, your alma mater, your church, ora charity you hold dear? For whom do youconsider yourself a benefactor?

Where are you now and where are yougoing?

Wealth Management builds the bridgebetween the two.


In the Trenches:“People need to be comfortable, to know you

and trust you.” - Ken Bellavia, Executive withthe Chicago Board Options Exchange as wellas an owner of a seat on the exchange. The

Exchange went through an initial public offering in June 2010.

Pearls of Wisdom:

“How do you gain trust? Trust is NOT

gained by trying to convince a business

owner that you’re an expert. It’s gained

by asking a Client great questions that

allow you to become an expert in THEIR

needs.”

- Dave Pattie, Founder and President

Horizon Capital Management, LLC.

Pearls of Wisdom:

“They (the Clients) don’t care about the

Wills and Trusts. The genesis of this

(Mike’s firm) was ‘can we create something

that provides a process for people to get

their legacy down on paper so that they

can recognize that it’s not just the money

and property that they care about…’”

“I think that business owners want to tell

their story – because all of them have a

story and they want it to be a legacy that

lasts for generations”

- Mike Stuart, President and founder of The Stuart

Legacy Alliance, LLC, which has been helping people

with proven estate planning and business exit strategies

since 1981.


About J. David PattieJ. David Pattie is Founder and President of Horizon Capital Management, LLC.

Throughout his career, David has followed two passions: small business/entrepreneurship andfinance. After receiving his MBA from the University of Michigan in Ann Arbor he spent sixyears in commercial banking at Continental Bank in Chicago where he worked with small businesses and private equity groups.

In 1994, he followed his passions to the securities markets to trade options on the ChicagoBoard Options Exchange as an independent Market Maker. While trading his own capital, heco-founded a boutique firm which trained and capitalized other traders.

In 2005, he decided to put his deep understanding of the various risks in the financial marketsto use for other high-end investors, and formed Horizon Capital Management (HCM).

The firm prospered, and in 2009, David left the Chicago Board Options Exchange to devotehis full attention to HCM. With the help of CEG Worldwide, a top coaching and consulting firmfor financial advisors, HCM has expanded and evolved into a comprehensive wealth managementfirm for a select group of high-net-worth clients.

David lives in Lake Forest, Illinois, with his wife, Jenn, and their two children.

About Horizon Capital Management, LLCHorizon Capital Management, LLC, is a fee-only registered investment adviser headquarteredin Lake Forest, Illinois, and one of the few firms nationwide that can offer full wealth managementservices to high-net-worth families and individuals.

Our Clients are successful small business owners and entrepreneurs: professionals who havean equity stake in their business/compensation. They have unique challenges such as highlyvariable income, highly variable cash flows/liquidity, complex ownership structures and specifictax legislation and opportunities. We have the knowledge and experience to help them.

We use a highly consultative process to define our clients’ values, relationships and currentfinancial situation, and to discover their goals based on what’s important to them.

We work with a network of experts in investment consulting and advanced financial planningto build a bridge from where our clients are now to where they want to go. Our experts areleading specialists in investment management, tax mitigation, wealth transfer, wealth protectionand charitable giving

One Westminster Place, Suite 100ALake Forest, Illinois 60045

Direct: [email protected]

www.horizoncapitalmanagement.com

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