preparing your business for the next generation · 33% will successfully pass into “next”...
TRANSCRIPT
Preparing your business for the next generation
Henry Hutcheson
President
Confidential Family Business USA
➢ Consultants to Family and Privately-Held Businesses
➢ Objective: Preserve Wealth and Maintain Family Harmony
➢ Background in Psychology, Business, Family Business(Olan Mills)
➢ Family Business Correspondent➢ Author: Dirty Little Secrets of Family Business➢ Adjunct Professor Campbell University
Confidential Family Business USA
Available through:Hudson BooksellersBarnes & Noble.comAmazon.com
Publisher: Greenleaf
Available: March 22, 2016
• Founding• Door to Door• Studios/Demographics• Telemarketing
• Family Business• 1st to 2nd
• 2nd consolidate• 3rd (Hutcheson)
• New 3rd
Confidential Family Business USA
Good Newsor
Bad News?
“He and four siblings
are locked in legal battle
with their father.”
Pablo Alvarez of Vega Siliciawinery.
July 20, 2014 (Ian Mount)
Vega Sicilia’s wine is triumphant, but its ruling clan’s bickering has been leaving a sour taste.
THE RIFT— a family dynasty fights
over the future of Luray Caverns
By Ken Otterbourg March 14, 2013
Worth about $20 million, it is a family business run by a family that can’t get along.
They’ve been in U.S.
District Court in
Harrisonburg, where the
three youngest siblings
sued two of their older
sisters
Inside An $8 Billion Family Feud: Who Poisoned The Orkin Fortune?
Today RPC boasts a market cap hovering above $4.6 billion.
Kids suing Father and
Uncle
One lawyer has already
made $1 million
Forbes 9/29/2014 @ 6:00AM
Good News
FIAT Capitalism
6 November, 2013 | By David Bain
The fifth-generation owner/manager of the 26th biggest company in the world wants capitalism to change.
“One of the benefits of family
businesses is they focus on all
stakeholders.”
John Elkann Chairman of Fiat
Perpetual Family Business
America’s Richest Families – All Family BusinessesForbes July 21, 2014
❖ 80 to 90 Percent of all Businesses
❖ 78% New Jobs
❖ 62% Employment, 64% GDP ($6 T)
❖ 1/3 all “Fortune 500”
❖ FBs Outperform Non-FBs---Why????
The Scope
Confidential Family Business USA
▪ 33% will Successfully Pass Into “next” Generation
▪ 45% of CEOs That Plan Retire in 5 Years have thought about Succession
▪ 31% Have No Estate/Transfer Plans
▪ 85% Have ID’d Family Member Successor (Danger)
▪ 25% Have Woman CEO – 31% Plan To – 3% Fortune
▪ 60% of CEOs Plan To Die In Office
▪ 86% Believe Their Business Will Remain Family Owned
The Facts
CASE
Confidential Family Business USA
Family Business SYSTEM
Family Business
Ownership
A family business system is an interactive system and is interrelated and interdependent.
A change in any one partof the system can have an impact on other parts of the system.
Confidential Family Business USA
Develop the Successor
Independence
Competency
Communication
Estate Planning
Confidential Family Business USA
Defining Responsibilities and Expectations
Financial Acumen
Strategy Development
Dad/Mom just won’t leave!
Monarch General Ambassador
Governor Inventor Transition Czar
Ernesto Poza, Family BusinessConfidential Family Business USA
Current Generation
Next Generation
Transition may go fine….
Current GenerationGracefully stepping back
Next GenerationCompetently stepping up
Sib
lin
g
Co
op
era
tio
n?
Next Generation Siblings
Family Business Disrupters
N %
Financial 15 23%
Health 13 20%
Relationships/Conflict 25 39%
Aging 12 19%
Alter Ego 11 17%
Addictions 29 47%
Mental/Mood Disorder 30 47%
Confidential Source ReGeneration Partners
❖ Must Have Common Goals
❖ Key Roles MUST be Filled with Competence
❖ Must have good
communication
Family BusinessBest Practices
Confidential Family Business USA
❖ Develop Family Mission Statement
❖ Establish Sound Governance
❖ Hold Regular Business Meetings
❖ Hold regular family business meetings
Family BusinessBest Practices
Confidential Family Business USA
❖ Policies And Systems – i.e. Financial, Handbook, Ethics, Vacation, etc. (64% of Entering FB Members Do Not Have Qualifications Or Experience For Their Job)
❖ Disciplined Approach
❖ Agreements – Up To Date Shareholder, Buy/Sell, Succession (30% Have Written Succession Plan)
❖ Board – Independent Advisors
❖ Regular Meetings – Transparency
Governance
Confidential Family Business USA
Improved Communication
Develop Your Own “Family Employment Policy”
Who gets to work here
What are the rules and expectations when you join
Pay and promotion
Family BusinessBest Practices
Confidential Family Business USA
Establish a Written Management Succession Plan
Family BusinessBest Practices
Confidential Family Business USA
1. Treat all kids fairly2. Non-family employees3. Family cohesion4. Estate Planning
SUCCESSION: Top 4 Concerns
Confidential Family Business USA
THANK YOU! Questions?
Confidential Family Business USA
Working with your family can be a joy.
It can also be a nightmare if not handled right