1. Presented To CFMA November 7, 2013 By John Hughes, M.A. President, Ollum Consulting, LLC

2. Succession is a process for balancing continuity and adaptation. Succession as process is part of a strategic perspective on the organization, it’s leaders and its people. Succession is a learning based growth process for both individuals, teams and organizations. Effective succession processes are systemic rather than linear. Continuity of leadership is important to all organizations.

3. How long do they want to work? When do they want to scale back their time commitment? What do they want for the future? For self? For the company? For the employees? For owners? For the family? What plans do they already have?

4. Start-Up Expansion/Formalization Maturity (Driven by personal goals) (Driven by what's best for the business) (Business designed around the leader) (Business more organized but experienced as being "like a family") (Leaders and Managers conform to the business) (Tension)  Intuitive/Opportunistic Direction  Hard Work  Trial and Error  "Jack of all Trades"  "One Man Band"  Outside Expertise  Financial Discipline  Structure and Accountability  Entrepreneurial/Managerial Tension  Market-Driven Strategic Planning  Goal Setting  Structure & Systems  Accountability/Reward  Management Development and Team Building Stages of a Closely Held Business

5. Ownership Leadership Governance Family

6. How will the next CEO be selected? Will the person be family or non-family? Internal or external? How will candidates be developed? What role will current leader take? What will the transition look like? Does the leadership structure need to change? What roles do not have successors in place? How deep is your leadership pipeline? How good is the company at developing leaders?

7. Family How will ownership be transferred? How will shares be distributed or ownership designed? (active vs inactive stockholder) How will shareholders be trained? Do you have a shareholder agreement?

8. Non Family How will current owner bought out and by when? How are shares valued? How are shares acquired? How will shareholders be trained?

9.  Promotion of Business Continuity  Income for Senior Generation  Equitable Treatment of all Heirs  Tax and Financial Considerations  Family Awareness

10. Active Shareholders Only Active and Non-Active Shareholders Non-Active Shareholders Only Sale of the Business

11. Transition to a professional board or advisory board How will Shareholders be represented? (family/non- family) How can the board support the transition? Help founder/owner maintain appropriate role and boundaries. Help manage the business and the new leader. Support the development of the new leader Oversee strategy

12. Shareholders (Ownership) Employee Management (Leader & Managers) Directors (Governance)  Elect directors  Approve sale of the business  Approve recapitalization and issuance of shares  Select Chief Executive Officer  Set policy (not day-to-day operations)  Approve plans and budgets  Hold management accountable  Develop and propose plans  Implement Board policy and plans  Oversee day-to-day operations  Carry out assigned tasks

13.  Estate Plan  Preserve Wealth  Transfer Wealth to Heirs  Philanthropy  Minimize Taxes

14. Family must redefine the purpose of the business and its relationship to the family. Mission and values should be revisited and updated if needed. Strategy should integrate the goals of the outgoing and incoming leaders. Strategy should overlap the transition.

15. No plan Current owner/leader not able to let go. Next generation of leaders not prepared. Ownership transfer not plausible/no way to buy out owner. Family Dynamics Tyranny of the urgent over the important Homeostatic Cultural Forces Singularity of Perspective Not knowing what we don’t know

17. Emotion Based Loyalty & Belonging Continuity & Harmony Emotion Based Loyalty & Belonging Continuity & Harmony Task-Based Competence & Commitment Growth & Change Family Business

18. FamilyBusiness Functional

19. Disruptive FamilyBusiness

20. Family Employee Owner Family Owner Family Owner Employee Owner Family Employee Decision making Money Information Interactions

21. REACTIVERESPONSIVEGENERATIVE INTENTIONAL DIFFERENTIATE PARENT to CHILD DIFFERENTIATE SIBLING to SIBLING PARENT to CHILD DIFFERENTIATE COUSIN to COUSIN SIBLING to SIBLING PARENT to CHILD LEADERSHIP/OWNERSHIP SUCCESSION BUSINESS/FAMILY DIFFERENTIATE BUSINESS/FAMILIES DIFFERENTIATE Roles Mission Strategy Values Roles Mission Strategy Values Board Culture Leadership Development FC Culture Constitution Leadership Development Personal Meaning Sense of Belonging Business & Financial Acumen

22. (Prof. Wendy Handler, Babson College) Stages of "Letting Go" Operator (No Role) Senior Generation Younger Generation Monarch Helper Delegator/ Overseer Manager Consultant Leader

23. Start-upEntrepreneurial Managerial Professionally Managed Starting Growing MaturingRenewing Back of Replacement Succession Succession Napkin Planning Planning Management Immediate Needs Single Position Crisis Management Reactive Short Term Needs Critical Positions Risk Management Responsive Long Term Needs Key Leadership Roles/Pools Talent Reviews Development Plans Responsible Strategic Focus Active, On-Going Process Pivotal Talent Pools at All Levels Leadership & Organization Development Generative

24. John Hughes, Ollum Consulting, LLC jhughes@ollumconsulting.com 763-432-2306