1. Copyright © 2014 - Blum & Savlov, LLP Family Owned Businesses: A Survival Guide Presented by: Jeff Savlov, CFBA Family Business Consultant – Blum & Savlov, LLP Shenandoah University 6th Annual Harry F. Byrd, Jr. School of Business 2014 Business Symposium - March 23, 2014

2. Copyright © 2014 - Blum & Savlov, LLP Family – Sweet & Loving

3. Copyright © 2014 - Blum & Savlov, LLP Family – Sweet & Loving?!?!

4. Copyright © 2014 - Blum & Savlov, LLP Family Is Complex All On Its Own… Family

5. Copyright © 2014 - Blum & Savlov, LLP 3-Circle Model of Family Business Systems Family Ownership/ Governance Business 1 2 3 4 5 6 7 8 Taguiri & Davis

6. Copyright © 2014 - Blum & Savlov, LLP Dynamic Tension “Conflict” is normal in any family – can be healthy! Combining family and business (a family’s emotional life and economic life) leads to “dynamic tension” between: – Family and business – Individual family members and other family members – Family branches – One generation and the next – Family in the business and family outside – Working family non-owners and working family owners

7. Copyright © 2014 - Blum & Savlov, LLP Generations Founders of the business

8. Copyright © 2014 - Blum & Savlov, LLP

9. Family/Emotional Life + Business/Economic Life = C OMPLEXITY

10. Copyright © 2014 - Blum & Savlov, LLP Research Only 30% of family businesses survive into the second generation (70% “fail”) 12% make it to the third generation 3% last into the 4 th generation and beyond *Joseph Astrachan, Ph.D., editor, Family Business Review

11. Copyright © 2014 - Blum & Savlov, LLP Research “Preparing Heirs” (Williams and Preisser, 2003, p.17) Quote research: 70% of wealth transitions fail Williams & Preisser looked at REASON for failures! Collected data on 3,250 families post-transition

12. Copyright © 2014 - Blum & Savlov, LLP Research 85% of failures are due to: Lack of COMMUNICATION and TRUST ( 60% ) Failure to PREPARE the next generation ( 25% )

13. Copyright © 2014 - Blum & Savlov, LLP Main Points Emotional life + economic life = great complexity Dynamic Tension needs to be managed Be proactive – do not wait until June Healthy, formalized communication is essential Prepare the next generation – never too early Governance = decision-making, rules& roles, accountability

14. Copyright © 2014 - Blum & Savlov, LLP Best Practices – Simple Yet Difficult Family Meetings Strategic Planning Active Board *Joseph Astrachan, Ph.D., editor, Family Business Review

15. Copyright © 2014 - Blum & Savlov, LLP Family Meetings A voice does not equal a vote – (but having a voice really goes a long way!) Agenda & parking lot Working family Non-Working family Family owners (Family Shareholders) Fun family time!

16. Copyright © 2014 - Blum & Savlov, LLP Strategic Planning Every business benefits Family Business vs. Business Family Values, Vision and Mission Develop the next generation – Challenge, risk – Formal development plans – Mentors (non-family helpful) Future – Leadership – Ownership

17. Copyright © 2014 - Blum & Savlov, LLP ACTIVE Board/Governance Culture of accountability and transparency Fiduciary or Advisory Board Governance = formalizing decision-making Create policies – Entering business – Conflict management (dynamic tension) – Process for investing in members’ endeavors – Joint investing – committee to oversee

18. Copyright © 2014 - Blum & Savlov, LLP Help When You Need It: Family Business Professionals Continuum from technical to process facilitation Large array of people offering services Ask friends and professionals for referrals Ask questions of potential professionals – Can our family be your client? – How do you integrate your technical knowledge with family dynamics? (and vice versa) – Examples of family client engagements that worked out and did not work out

19. Copyright © 2014 - Blum & Savlov, LLP Organizations for Families The Family Business Network – “By Families For Families” – 6,000 members worldwide University-based Family Business Forums – Virginia Commonwealth University

20. Copyright © 2014 - Blum & Savlov, LLP Blum & Savlov, LLP Family Business Consulting Tel: (732) 296-8047 Fax: (732) 284-4257 Email: jsavlov@blumandsavlov.com Jeff Savlov, Principal Blum & Savlov, LLP 47 Raritan Avenue, Suite 130 Highland Park, NJ 08904

21. Copyright © 2014 - Blum & Savlov, LLP Conflict & Context 50% Sales 3 brothers grew up in business G4 G5 Cousins