Family Businesses Exit Strategies Harry Kras Family Business Resource Centre

What is a Family Business? 70% of Australian businesses Smallest to the largest Family owns and works together Combines 2 basic drivers – work and love Greatest strength and the weakness

Keys to Family Business Success Norman Smorgon’s 6 family business success factors… 3 P’s + 3 C’s Planning, Planning & Planning Communication, Communication & Communication

We all know the numbers! The Baby Boomer Stampede is upon us We see the response! Succession is rarely planned Lack of Planning = Lack of Success Potential for CHAOS The Succession Planning Dilemma

‘All Good Things Come to an End’ Exit Options Outright sale Sell to employee Liquidate  Realisation of wealth Succession within the family  Transfer of wealth Whatever the choice – planning is critical

What do Diet, Exercise, & Succession Planning have in common? Great ideas … but NOT today! Succession Planning

Succession Planning It’s not a question of IF but WHEN … control chance?’ ‘The only question is whether you want to take control of the process or leave it to chance?’

Why? Succession and retirement are confronting issues! Financial Security Resistance to Change Retirement = Death Other Stakeholders Marital Relationships Succession Planning

Succession Impacts on the Family

‘The Final Test of Greatness’ Leadership Succession Ownership Succession Passing the baton - current leader and successor are runners in a relay race Ready, willing & able successors A leader who is excited by new challenges

The Power (Leader) V The Passion (Successor) Starting the Conversation

Starting the Conversation ‘People do things for their reasons not mine…’

NowSuccession ? Running successful business Exciting challenges Head of business & family Financial security In control of destiny Having fun Uncertainty re successor Sense of purpose Why change? Why change? Change is inevitable Remain in control Impact on future direction Mentor successors Avoid turmoil Pride in next generation Create an exciting future Evolution not revolution Create a legacy Create a legacy Starting the Conversation

The Current Leader Creating space Financial security Meaningful purpose Developing the next passion Good health & companionship

The Successor Ready, willing & able Develop skills Outside experience Respect for past accomplishments Working with siblings From dictatorship to democracy

The Good, The Bad & The Ugly FBA public events The Grollo Story Daniel Grollo – Age 39 and ‘currently working on his succession plan’ Peter Brown Wines Eliza Brown – ‘it’s selfish to leave things a mess’

Successful Successions Planning 1. It’s never too early to start planning your exit strategy 2. Whether your exit strategy is sale or succession, business growth is the vital 3. Preparation of successors is essential – ‘ready willing and able’ 4. Planning succession is part of life planning - develop your passions 5. In a family business you must discuss the ‘undiscussables’

Summary You don’t have to do it on your own… Family Business Australia – Family business aware adviser Family Business Resource Centre – or call Download free Family Business Diagnostic Questions?