Predictable Futures Presents:

1. Predictable Futures Presents: Family Business Succession: It’s all about planning Preserving the Endangered Species Presented by: Gordon Wusyk President and CEO of Predictable Futures Inc. the Business Family Centre Canadian Construction Association Conference Hawaii 2006

2. If you think… RETIREMENT & DEATH Are “OPTIONAL” EVENTS You’re in the WRONG room!!

3. Family Enterprise in Canada • Canada’s family businesses employ 4.7 million full-time and 1.3 million part-time workers • Total annual sales of Canada family-owned businesses: $1.3 trillion • Most family enterprises are highly dependent on their current leader • Major leadership change in Canadian family businesses • 27% of family business leaders will retire in next 5 years • 29% will retire in 6-10 years • 22% will retire in 11-15 years • Most have no contingency plan covering the death or the disability of their leader • Only 29% have a succession plan • Unlike US counter part, Canadian family business owners see the generation of wealth as the primary role for the business. Keeping business in the family is a lower priority • Source: BDO Dunwoody/ Compass Report on Canadian Family Business (2003 & Survey of Canadian Family-owned Business by Deloitte& Touche for Tax Education and Research at the University of Waterloo (1999)

4. From ‘FAD’ to ‘FIELD’ of study • Research over the last 25 years provides new understanding of family business & their issues • Growing number of family business advisors coming from a variety of disciplines • Family Firm Institute: Founder in 1983 by 22 professionals, now has 1200 members • Certification program now available for professionals • Clients are more knowledgeable and sophisticated than 10 years ago: • Families have access to many different educational opportunities • Families have access to many networks: • PFI • Family Business Network (FBN) • CAFÉ • BFF • ABFI • CEFE • FFI • Clients now expect advisors to be well informed Source: CALU May 2005 – Evolution of the Family Business Field

5. The Enigma of the Business Owner The Four Part Personality* 1) The Owner • ROI • Growth • Income • Exit strategy 2) The Aging Male/Female • Physiologically • Psychologically 3) The Best Employee • First in, last out 4) The Manager • Hires • Fires • Organizes

6. The 7 F’s of Balance Family Fitness Fun Friends Faith Finances Firm

7. All about PERSPECTIVE

8. Family/Personal Relationships Tax Planning/ Minimization “Death Tax” Liabilities Estate Equalization Wealth Management “Game Plan” Legal Documentation Retirement Strategies Creditor Protection Protection From Family Law FAMILY BUSINESS SUCCESSION PLANNING A “Multi-Dimensional” Process Your Family Your Business

9. Roots/ Principles • M Make Things Happen • A Achieve Significance (vs. Success) • X X out the Negatives • I Internalize Right Principles • M March to a Mission • I Integrate all of Life • Z Zero in on Caring for People • E Energize the INNER Life • R Re-align Rigorously • S Stay the Course

10. Family Business Valuation –Same notes different melodies • The Government – “Silent” Partner • Deemed dispositions (fictions) & liquidity • Wives, sons and daughters • Section 69 (the Family Trap) • The Estate Freeze & Price adjustments • The small business exemption • Employees: employment, leadership & retirement • The Executor – Fair Market Value – “Legal Fictions”

11. Family Business Valuation • The Liquidator: Wind up or going concern? • The Business Founder: Value with/without him • Special Buyer • The CBV • Going concern? • Sale of assets? • Sale of shares? • Multiples? • Tax issues? • Normalization? • Maintainable earnings?

12. The Interdependence of our Family,our Ownership and our Business Entities Family Business Ownership

13. Perspective of Each Entity • Needs / Priorities: • Strategic Planning • Market Value Compensation • Results (targets) • Profits (retained earnings) • Competent, Competitive Staff • Systems for Management • & Control • Marketing • Quality Product/Service • Accountability • Regular Reviews • Solvency • Cash Flows • Entrepreneurial Perspectives • Fast, Efficient Decisions Business

14. Family Perspective Needs / Priorities: • Nurturing • Communications • Affection and Love • Equality of Affection • Individual Needs • Personal Development Family

15. Ownership Perspective • Needs / Priorities: • Return on Investment • Return of Investment • Equity Growth • Stewardship of Assets • Reputation of Owners • Diligent Management • Timely Reporting • Responsible Board • Selection Ownership

16. Neglect one… Family Business and riskdestroyingthe whole system Ownership

17. The Family Goals: Support Family members Rules: Informal expectations Evaluation: Rewards for who you are – unconditional Succession: Caused by death, divorce or illness Relations: Deeply personal, of primary importance Authority: Based on family position of seniority The Business Goals: Profits, revenues, efficiency & Growth Rules: Written & Formal w/rewards & punishment Evaluation: Support conditional on performance Succession: Retirement, promotion or departure Relations: Semi Personal or impersonal, of secondary importance Authority: Based on formal position in the organization’s hierarchy The Natural Conflict…

18. If you don’t have PROCESS you have a PROBLEM

19. The Process 1. Clarification of founder’s dreams of the future 7. Building the Legacy – review of estate plan • Clarify family member’s personal vision – for business & at a personal level 6. Choosing and Training the New Owners 3. Aligning the business strategically to support family & founder’s dreams and goals 5. Choosing The New Leader 4. Prepare the successors

20. A Game Plan.. Or it’s GAME OVER

21. WISH BONE JAW BONE BACK BONE

22. How to Contact PFI Predictable Futures Inc The Business Centre Suite 1211 10104 103 Ave Edmonton, AB T5J 0H8 www.predictablefutures.com solutions@predictablefutures.com