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FOR MARKETING PURPOSES BY UBS
April 2012
UBS Wealth Management
BOOKING CENTER SWITZERLAND
From Entrepreneur to Wealth Manager: Professional, Personal and Financial Challenges of Business Sales
FOR MARKETING PURPOSES BY UBS
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One who cares is one who listens.
1. Introduce UBS Group and our capabilities in Central and Eastern Europe
2. Understanding the entrepreneur, his company and his family
3. Overcoming the professional, personal and financial challenges of business sales
4. Your point of view – Conclusions
Today's Objectives
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Table of Content
• UBS Group and our capabilities in Central and Eastern Europe
• Holistic understanding of the Entrepreneur, his business, his family
• Professional, personal and financial challenges of business sales
• Conclusions
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UBS – one of the leading financial firms
• UBS draws on its 150-year heritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. UBS employs about 65,000 people around the world
• We combine our Wealth Management, Investment Banking and Asset Management businesses with our Swiss operations to deliver superior financial solutions and manage CHF 2.2 trillion in invested assets
• UBS is present in all major financial centers worldwide. It has offices in over 50 countries, with about 37% of its employees working in the Americas, 37% in Switzerland, 16% in the rest of Europe and 10% in Asia Pacific
Please refer to the disclaimer at the end of this presentation
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About UBS – Wealth Management at the core
Wealth Management & Swiss Bank
Focuses on delivering comprehensive financial services to high net worth and ultra high net worth individuals around the world as well as private and corporate clients in Switzerland. Our Wealth Management business unit provides clients in over 40 countries with financial advice, products and tools to fit their individual needs.
Wealth Management Americas
Provides advice-based relationships through financial advisors who deliver a fully integrated set of products and services specifically designed to address the needs of ultra high net worth, high net worth and core affluent individuals and families in the US as well as in Canada.
Global Asset Management
A large-scale asset manager with businesses diversified across regions, capabilities and distribution channels. It offers investment capabilities and investment styles across all major traditional and alternative asset classes. These include equities, fixed income, currency, hedge fund, real estate, infrastructure and private equity investment capabilities.
Our business is built on strong relationships
InvestmentBank
Provides securities and other financial products and research in equities, fixed income, rates, foreign exchange and precious metals. It also provides advisory services and access to the world's capital markets for corporate and institutional clients, governments, financial intermediaries, alternative asset managers and private investors.
Please refer to the disclaimer at the end of this presentation
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UBS Capabilites in Central & Eastern Europe
Advisors ♦ Switzerland: A strong workforce of dedicated client advisors
with language capabilities ♦ Russia Advisory Office: Launched
HUNGARY MOLDOVA
SERBIA
CROATIA
MACEDONIA
ROMANIA
BULGARIA
POLAND BELARUS
UKRAINECZECH
SLOVAKIA
ALBANIA
LITHUANIALATVIA
ESTONIA
RUSSIA
MONTENEGRO
BOSNIA
SLOVENIASWITZ.
ICELAND
Representative Offices ♦ Prague♦ Moscow♦ Budapest♦ Kiev♦ Warsaw
Dedicated Research♦ Over 120 analysts cover the region
Product offering
♦ Booking centers in Zurich, Geneva, London and Singapore
♦ Market related products, tailor-made for Eastern European clients by our numerous market and product specialists
Please refer to the disclaimer at the end of this presentation
Being one of the leading wealth managers for Eastern Europe provides access and opportunities for our clients
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Table of Content
• UBS Group and our capabilities in Central and Eastern Europe
• Holistic understanding of the Entrepreneur, his business, his family
• Professional, personal and financial challenges of business sales
• Conclusions
FOR MARKETING PURPOSES BY UBS
Wealth Planning - you and your wealth
Please refer to the disclaimer at the end of this presentation
Wealth accumulation Wealth preservation
RetirementEarly retirement
Advancement of inheritance
Well established company
Setting up a company/Career
Wealth transfer
Heirs/succession
MarriageFamily
Age9080706050403020
Assets
Cost of living
IncomeEUR
No matter what phase of life you are in, we are here to help you meet your financial goals
• In emerging markets there is a general shortage of qualified professional managers
• Thus, business owners often face difficulties finding a potential CEO who could take over day-to-day management
• The Inheritors' dilemma is how to create an effective individual identity strong enough to separate from, yet integrate with, the massive power of wealth
• Wealth brings freedom in choices of lifestyle but also a sense of obligation to society
• For a family business it is to be understood
– Owner and ownership structure
– Management, by owner or outsiders
– personal and financial needs of the owner
– Needs/ goals of the family members
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The Role of a Private Banker
Maximize the value of your
business
Manage your financial assets
Create lasting family wealth
Understanding begins with listening to you, focusing on your personal situation
When we talk about your financial future, we consider all the relevant information about your situation
Three interconnected worlds
Please refer to the disclaimer at the end of this presentation
♦ Your assets and liabilities
♦ Your stage of life
♦ Your attitude to risk
♦ Your investment horizon
♦ Your cash flow requirements
♦ Your ongoing personal needs
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Table of Content
• UBS Group and our capabilities in Central and Eastern Europe
• Holistic understanding of the Entrepreneur, his business, his family
• Professional, personal and financial challenges of business sales
• Conclusions
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Aspects of a Liquidity Event
• Sale of a business or liquidation of a position in a business or partnership
• Sale or disposition of a concentrated or illiquid asset. The sale of concentrated stock positions, real estate or other holdings may also amount to a liquidity event, usually when it represents a primary or majority share of net worth
• Financial windfall. A less frequent form of liquidity event occurs when an individual receives a large financial position that significantly alters his or her financial state
A liquidity event refers to the conversion of an illiquid asset, a business, a building, into a liquid form such as cash. We need to consider several aspects
Liquidity event
• Economic outlook
• Industry outlook
• Tax outlook
• IPO and M&A cycle
• Personal goals
• Life stage/Age
• Family goals
• Wealth/Financial goals
External aspects
Internal aspects
To be considered
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Roadmap for a Successful Company Sale
Business
As private bankers we support the entrepreneur in the 3 worlds but…
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• Focus all your energy on getting the best deal
• Monitor business cycle to identify good timing for sale
• Build team of trusted advisors• Fine-tune business model
• Prepare employees and managers for transition phase
• Bring M&A advisory team on board and start looking for potential buyers
• Prioritize needs and goals• Understand roles and goals of
family members
• Do not interfere with new management if you still occupy a position in the firm
• Reassess work aspirations
• Use personal activities to remove stress and relax as much as possible
• Prepare family members for transition phase, consider more formal family governance
• Think about your role after the sale
• Settle into your new role and pursue lifetime goals
• Go on a long vacation or take lots of time off with family and friends
• Develop strategic asset allocation to fit financial goals
• Invest your money along your personal financial plan
• Structure wealth, possibly transfer ownership to heirs
• Invest assets to protect them against losses before sale
• Delegate management and oversight responsibilities for financial assets
• Do not be distracted by your investments. If need be, park them in safe assets
• Separate accounts for taxes, consumption and investments
• Educate yourself about wealth management
Family Investments
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Behavioral Biases of Entrepreneurs
… the strengths as an entrepreneur lead to weaknesses as investors
Typical entrepreneur' behavior...
...translates in behavioral bias...
... leading to typical mistakes as investor!
Belief in one's ability helps overcome difficulties
Overconfidence Increased stock picking activity and excessive trading costs
Keep faith in business during difficult times
Optimism Overly concentrated portfolios with excessive risk
Owners have power to control business operations
Illusion of control Portfolio trades at the worst moments in time
Spot new opportunities from few recent observations
Representativeness Trend following
1
2
3
4
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The importance of Strategic Asset Allocation
Strategic Asset Allocation: The appropriate mix of asset classes based on long-term market assumptions (10+ years) given an investor's objectives and risk tolerance. The optimal portfolio depends on the preferences and the risk profile of the investor. Sub-optimal
portfolio
Optimal portfolio
Efficient frontier line
Risk
Retu
rn
Strategic Asset Allocation of an initial and optimized portfolio.
The efficient frontier line represents the portfolios with the lowest risk for each given return level. These portfolios are called "efficient" portfolios.
Equity
Bonds
Real Estate
Cash
Sub-optimal portfolio
Optimal portfolio
Equity
Bonds
Commodities
Real Estate
Cash
Hedge Funds
Private Equity
Please refer to the disclaimer at the end of this presentation
For illustrative purposes only
1
The most important decision, in the long term, is the Strategic Asset Allocation, as it accounts for up to 90% of asset returns
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The best-performing asset classes change over time
For illustrative purposes only. Markets are subject to change and returns may vary. Performance figures refer to the past and past performance is not a reliable indicator of future results. Source: UBS Quantitative Investment Solutions.
Please refer to the disclaimer at the end of this presentation
Historical annual returns of selected asset classes 2000 – 2010
Liquidity Real estateBonds Hedge fundsEquities
Highestreturn
Lowestreturn
2000 2001
Commodities
Diversification and a dynamic, market-driven investment process are key
Market understanding
When analyzing historical annual returns on various asset classes, differences in annual returns become very clear
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2
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Profit from Market Movements with a Tactical Asset Allocation (TAA)
Interest rate cuts
Bonds outperform as economy slows
Stocks do well when economy initially recovers
Stocks are still attractive (positive earnings effect). Commodities usually perform well when output gap disappears
Cash is a safe haven when growth slows from the above trend, and rising unit costs trigger a (wage) price spiral (inflation risks)
Interest rate hikes
Market cycle
For illustrative purposes only
Please refer to the disclaimer at the end of this presentation
Phase 2Equities
Phase 3Equities & Comm.
Phase 4Money Market
Overweight equitiesUnderweight cash
Neutral equitiesUnderweight bonds
Overweight cashUnderweight equity
Phase 1Bonds
Overweight bonds
3
Ultimate goal of a Tactical Asset Allocation is to profit from short-term investment opportunities without significantly altering the long-term risk profile
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Take the guesswork out of investing
By identifying the most important and promising short- and mid-term trends, UBS's global research offers you:
• in-depth analysis of key topics that might shape our future
• objective and private-client-focused investment ideas
• advice on recommended positioning across all asset classes
By combining research expertise and first class investment ideas, we
• translates these key investment topics into specific investment ideas that suit your personal circumstances
• informs you about the different ways to stay up to speed with financial developments
Specific solutions for each themeSingle instruments
Structured products
Managed solutions
Bonds 5%Cash 5%
UK Equity 19%
Manager C
Man
ager
A
Manager B
Commodities 7%
Private Equity 15%
Real Estate 10%
Hedge Funds 10%
US Equity 10.5%
Manager C
Manager AM
anager B
European Equity 4.4%Japan
Equity 2.5%
EM Equity 1.6%
Bonds 5%Cash 5%
UK Equity 19%
Manager C
Man
ager
A
Manager B
Commodities 7%
Private Equity 15%
Real Estate 10%
Hedge Funds 10%
US Equity 10.5%
Manager C
Manager AM
anager B
European Equity 4.4%Japan
Equity 2.5%
EM Equity 1.6%
Funds
Themes cycle
Sell
Buy
Hold
Please refer to the disclaimer at the end of this presentation
For illustrative purposes only
Sell
Buy
Hold
4
Investment decisions should rely on sound information and a well-founded world view
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Table of Content
• UBS Group and our capabilities in Central and Eastern Europe
• Holistic understanding of the Entrepreneur, his business, his family
• Professional, personal and financial challenges of business sales
• Conclusions
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What is UBS bringing?
Our experience• 150-year tradition of serving the wealthiest
individuals and families across the world
• Conducted 248 M&A deals in past 5 years, EUR 51bn in value
• One of the world's best capitalized bankswith a Tier 1 ratio of 19.7%
Our advice• Our investment process orchestrates and
consolidates our vast market know-how for you
• Access to all asset classes
• We deliver sustainable absolute performancefor your investments
• Enjoy seamless access to the capabilities and universe of an integrated bank with global reach and local presence
Our long term commitment• Focus on building long term relationship
• Accompany families for many years
Global awards in 2012• Best Global Private Bank for individuals with 1 million to 30
million USD
• Best Global Bank for "Family Office Services"
• Best Global Bank for "Inheritance and Succession Planning"
• Best Global Bank for "Philanthropy Services"
Awards across products in 2012• Best Global Bank for "Range of Investment Products and
Advisory Services"
• Best Global Bank for "Structured Products"
• Best Global Bank for "Commodities Investment"
• Best Global Bank for "Luxury Investment"
Acknowledgment• Best Private Banking Services Overall ranked by
Euromoney Awards
– #1 in 2012 and 2009, #2 in 2010-2011
• #1 Pan European Equity House for the 8th year in a row
You benefit from exceptional advice and an outstanding wealth management offering
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Q&A
Dr. Giuseppe De FilippoHead South Eastern Europe
Tel. +41-44-237 43 57 Email [email protected]
Thank You
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DisclaimerUBS AG (UBS) as a Swiss bank and its Hungarian Representative Office are not licensed to provide financial or investment services in Hungary. Products and services are available and provided by UBS outside Hungary
This document and the information contained herein are provided solely for information purposes, they are not to be regarded as investment research, and they are not to be construed as an offer or as a solicitation of an offer to buy or sell any securities or other financial instruments in Switzerland, the United States or any other jurisdiction. Please note that UBS retains the right to change the range of services, the investment products and the prices at any time without prior notice and that all information and opinions indicated are subject to change. Further, asset classes, asset allocation and investment instruments are indicative only. No investment decision relating to securities of or relating to UBS AG or its affiliates should be made on the basis of this document. All investments carry a certain degree of risk and the attention is hereby drawn to such risks which can be substantial. The market in the certain securities may be illiquid and therefore valuing the investment and identifying the risks may be difficult. Some investments may be subject to sudden and large falls in value and on disposition may pay back less than invested. The client should consult the UBS client advisor on the nature of each investment and carefully consider whether such investment is appropriate for the client's situation. Further, tax treatment depends on the individual client’s circumstances and may be subject to change in the future. UBS does not provide legal or tax advice and makes no representations as to the tax treatment of assets or the investment returns thereon, either in general or with reference to a specific client's circumstances and needs. Clients should obtain independent tax advice on the suitability of products, assets or investment instruments before investing and as they may consider appropriate. This document contains statements that constitute "forward-looking statements", including but not limited to management’s outlook for UBS’s financial performance and statements relating to the anticipated effect of transactions and strategic initiatives on UBS’s business and future development. While these forward-looking statements represent UBS’s judgments and expectations concerning the matters described, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from UBS’s expectations. These factors include, but are not limited to: (1) future developments in the markets in which UBS operates or to which it is exposed, including movements in securities markets, credit spreads, currency exchange rates and interest rates; (2) the effect of the current economic environment or other developments on the financial position or creditworthiness of UBS’s customers and counterparties; (3) changes in the availability of capital and funding, including any changes in UBS’s credit spreads and ratings; (4) the consequences of the recent Swiss court decision relating to the provision of certain UBS client data to the US Internal Revenue Service, including possible effects on UBS’s 2009 settlements with US authorities and on its businesses; (5) the outcome and possible consequences of pending or future actions or inquiries concerning UBS’s cross-border banking business by tax or regulatory authorities in various other jurisdictions; (6) the degree to which UBS is successful in effecting organizational changes and implementing strategic plans, and whether those changes and plans will have the effects intended; (7) UBS’s ability to retain and attract the employees that are necessary to generate revenues and to manage, support and control its businesses; (8) possible political, legal and regulatory developments, including the effect of more stringent capital and liquidity requirements, constraints on remuneration and the imposition of additional legal or regulatory constraints on UBS’s activities; (9) changes in accounting standards or policies, and accounting determinations affecting the recognition of gain or loss, the valuation of goodwill and other matters; (10) limitations on the effectiveness of UBS’s internal processes for risk management, risk control, measurement and modeling, and of financial models generally; (11) changes in the size, capabilities and effectiveness of UBS’s competitors; (12) the occurrence of operational failures, such as fraud, unauthorized trading and systems failures, either within UBS or within a counterparty; and (13) technological developments. In addition, actual results could depend on other factors that we have previously indicated could adversely affect our business and financial performance which are contained in our past and future filings and reports, including those filed with the SEC. More detailed information about those factors is set forth in documents furnished by UBS and filings made by UBS with the SEC, including UBS’s Annual Report on Form 20-F for the year ended 31 December 2010. UBS is not under any obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise. Refer to UBS's annual and quarterly financial reports, including the Annual Report 2010 for additional information. These reports are available at http://www.ubs.com/1/e/investors/topics.html <http://www.ubs.com/1/e/investors/topics.html> . No representation or warranty is made or implied concerning, and UBS assumes no responsibility for, the accuracy, completeness, reliability or comparability of the information contained herein relating to third parties, which is based solely on publicly available information. UBS undertakes no obligation to update the information contained herein. UBS specifically prohibits the redistribution of this material in whole or in part without the written permission of UBS and UBS accepts no liability whatsoever for the actions of third parties in this respect.
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