Family and Business Continuity: Building Success and Planning for the Future

1. Cannexus 2009 National Career Development Conference April 6-8 Marriott Eaton Centre Hotel Toronto, Ontario

2. “Keeping the Family and the Business” • Multi-generational career counseling • Evolutive stages, personal, familiar and entrepreneurial • Directive skills required for each stage • Total planning for success and continuity • Lab-workshop Lic. Alicia Stivelberg

3. Family Business • F.B. are alike • F.B. are unique

4. Continuity

5. Continuity 70% disappears in the second generation 87% disappears in the third generation

6. Two logics Conflict Zone FS BS Society of Feelings Society of Interests Permanent Membership Temporary Membership Subconscious Behavior Conscious Behavior Introvert System Extrovert System Minimize Changes Promote Changes Agreement Zone

7. Case studies Case A Family 2 school-age children Case B Family 2 children at university Parents work together Case C Family Parents work with their son and son-in-law

8. Three Dimensional Model property 1- Family Owner Manager 2- Family Owner 3- Owner Manager 4- Family Manager family business 2 3 1 4

9. Individual goals Financial security Family goals Better lifestyle Company goals Capital

10. Family Business Building a successful business demands a lot of energy, trust, talent, hard work and ... luck. Each successful Family Business is, in a way, ... a little miracle.

11. Family and Family Business Life Cycles Founder Brothers/SistersAssociation CousinsConfederation

12. Example 3 rs R R R • Rivalry • Resentment • Revenge

13. Example 3 rs R R R • Respect for self • Respect for others • Responsibility for all our actions

14. Family and Family Business Life Cycles Founder Young Families Brothers/Sisters Association Cousins Confederation

15. Someday, my son, all of thesewillbeyours!!!”

16. Family and Family Business Life Cycles Young Families Incorporation FB Founder Brothers/Sisters Association Cousins Confederation

18. Family and Family Business Life Cycles Working together Young Families Incorporation FB Founder Brothers/Sisters Association Cousins Confederation

19. Family and Family Business Life Cycles Working together Young Families Incorporation FB Founder Handing over the baton Brothers/Sisters Association Cousins Confederation

20. Work Quality between Parents and Children 55 50 45 40 35 30 25 20 15 Childrenage 35 40 45 50 55 60 65 70 75 80 85 Parentsage

21. Family and Family Business Life Cycles Maturitystage Intermediatestage Working together Young Families Initialstage Incorporation FB Founder Handing over the baton Brothers/Sisters Association Cousins Confederation

22. Evolutive stages - Initial stage

23. Evolutive stages - Intermediate stage - Initial stage

24. Evolutive stages - Initial stage - Intermediate stage - Maturity Stage

25. Evolutive stages of FB • 3 Questions • In which stage would you say your company is? • How difficult would it be to promote the growth? • Do you want your company to continue in the family and pass to the next generation? • P • P • P

26. Change to grow Leadership Crisis Stage 1 Creativity Autonomy Crisis Stage II Management Stage III Decentralization Control Crisis Bureaucracy Crisis Stage IV Coordination Stage V Collaboration Crisis?

27. Change to grow Evolutive stages of a Company Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 BIG Crisis? Bureaucracy Crisis Control Crisis Collaboration Autonomy Crisis Leadership Crisis Coordination Delegation Management SMALL Creativity YOUNG MATURITY

28. Change to grow Evolutive stages of a Company Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 BIG Crisis? Bureaucracy Crisis At each stage of evolution, Follows a revolution stage Control Crisis Collaboration Autonomy Crisis Leadership Crisis Coordination Delegation Management SMALL Creativity YOUNG MATURITY

29. Family Business Evolution

30. Family Real State SUCCESSION Planning for success Mother Father´s sister It is a family concern in several aspects Board of Directors Outlines Owner´s Role Harmony In the Family Father Owner´s rol Daughter Son-in-low Fairness and Equity Family Compensation Relationship Family members Family council Eldest son New Subsidiary SUCCESSION Partner and Minoritary Owner

31. Planning for success Components of F.B. planning 1. The owner´s plan 2. The family´s plan 3. The company´s plan 4. The succession´s plan

32. Planning Process • Economic and Tax Planning. • Preserve of wealth. • Transfer of wealth. • Donations. • Life Insurance. • Valuation of the business. • Structure of the business. • Portfolio of investments OWNER PLAN “Hard” SUCCESSION PLAN • Board of Directors. • Family Council. • Compensations. • Contract of shareholders. • Job position Profiles. • Roles. • Governability. • Equity. • Mission of the Family. • Rules of Employment. • Transfer of leadership. • Communication. • Conflict Management. • Personal Goals. FAMILY PLAN COMPANY PLAN “Soft”

33. Planning for success THE PROCESS What does the owner want? The Succession Plan Feasibility of the intention Financial Security Contracts of Shareholders Family Plan Company Plan Future Leadership Legal Aspects Equity Net worth Execution

34. Planning for success PLANNING TEAM Bank Investment Consultant Banco Insurance Consultant Family Business Consultant Owner and Spouse Asesor Legal Legal Consultant Deño y Esposa Psychologist Family Board of Directors

35. Planning for success The process of planning for succession Analizing the company circunstancies, finacial stability, valuation and business plan Reviewing, assessing, modifying and bringing together personal goals Talking to the owner (Peter) Defining what the owner, family and company want Talking to his wife (Joan) Talking to the family 1st.Step Planning objectives to confirm and achieve feasibility and compatibility 2nd.Step Retirement funds Wealth preservation Management team Oportunities Rules for the practice of Power and shareholders Agreement Developing alternatives To achieve the concept of Fairness by the owner And the family Protecting and Preserving the company for the Next generation Defining the Owner´s finantial Need Clarifying leadership needs and capabilities 3rd.Step Involving the consultant Team, directors, lowyer, Accountant, insurance Consultant, investment, Bank, and so on Involves the Owner and The spouse Family meetings Establish a Family Council Modeling a financial plan with the owner, family, and company perspective Reviewing until finding the best plan Developing a Preliminary plan Comunicating and sharing the preliminary plan, creating consensus and reviewing Modelling the Financial results of the succession 4th. Step Providing the Owner´s financial needs Identifying and planning the future leadership Defining the redistribution of the present and future net worth Developing a shareholder´s agreement, fairness, capital transparency and control of votes. 5th. Step Implementing The plan for the Owner, the family And the company

36. Governance Property Board of Directors Business Management Family Family Council 2 3 1 4

37. Succession Plan Genogram Dublin Family, Owners of Arlington Machinery, Inc. Peter Joan Phill Ariane Jack Randy Susan Arlington employee during 18 years Arlington employee during 10 years Housewife. Her husband is Headmaster of a College. She is starting her Business career in NYC after her MBA To be employed soon by Arlington

39. Thinking Styles Score of the team members

40. TEAM MAP Thinking styles Location of the team members in the structure of four styles of Value Drivers

41. Values structure Choosen Values: First to Third Scores Value Total Theoretical Materialistic Humanitarian Theoretical Power Materialistic Ritualistic Spiritual Humanitarian Individualistic Aesthetic

42. Planning for success

43. Thank you!!! My e-mail is : astivelberg@horwath.com.ar