A Presentation By

1. “Preserving an Endangered Species… The Family Business A Presentation By Gordon Wusyk Of Predictable Futures Inc. - The Business Family Centre

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

3. FAMILY BUSINESS SUCCESSION PLANNING . . . “70% of all Family Businesses never make it to the second generation And 90% fail to reach the third.”

4. 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 Educationand Research at the University of Waterloo (1999)

5. 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

6. All about PERSPECTIVE

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

8. 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

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

10. 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

11. Neglect one… Family Business and risk destroying the whole system Ownership

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

13. IMPORTANT PLANNING DECISIONS Are Often Made One At A Time … But Even A Series Of What Seem To Be Quite Reasonable Decisions, Taken In Isolation, Can Produce A Result That Is Unacceptable When They Are Combined …

14. What You Wanted

15. What You Got

16. 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

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

18. 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… Conflict is healthy…Unresolved conflict is not

19. 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

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

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

22. A Game Plan.. Or it’s GAME OVER

23. Role of the Family Business Consultant Ownership/Governance System Lawyers Accountants Estate Planners Family Business Consultants Business Systems Business/OD Consultants Family Systems Family Therapists

24. WISH BONE JAW BONE BACK BONE

25. 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