DON’T TALK ABOUT SUCCESSION Discover the Bigger Future Instead © The BDO SuccessCare Program™ Family/ Personal Ownership Business

THE IMPENDING CRISIS 2 3 of every 4 business owners will reach retirement age in the next 1 to 2 car leases Less than 50% have a succession plan Around 80% would prefer to pass the business to family members But only 30% successfully transition through the second generation Less than 10% survive the third generation © The BDO SuccessCare Program™

MEET THOM PENMAEN 3 I have a vision for the future It feels great But it’s not likely to happen There’s too many obstacles Thom doesn’t have confidence that the obstacles can be overcome © The BDO SuccessCare Program™

THOM IS HEADED FOR AN INVOLUNTARY SALE 4 Inside the family / business Outside the family / business Death / ill health Bankruptcy Franchisor Lifestyle changes He Needs to Be More Proactive and Create a Choice InvoluntarilyVoluntarily One Day He Will Sell © The BDO SuccessCare Program™

CONSIDER THOM’S FEARS 5 What if something goes wrong and we lose all we’ve worked so hard for? We need to protect our retirement The kids have different ideas of what’s a necessity and will waste the profits Fear of losing wealth © The BDO SuccessCare Program™

CONSIDER THOM’S FEARS 6 This is my business; I built it This business is my life; I won’t be pushed out! No one can run it as well as I can Every time I even go on vacation, something goes wrong Fear of losing control © The BDO SuccessCare Program™

CONSIDER THOM’S FEARS 7 My son and I don’t see eye to eye How can I choose one child over another? My kids will never be able to work together I don’t want to cause family fights Fear of conflict © The BDO SuccessCare Program™

DON’T PLAN FOR SUCCESSION 8 Succession is negative Succession implies retirement Retirement means to take something out of use © The BDO SuccessCare Program™

PLAN FOR THE BIGGER FUTURE INSTEAD 9 Transition is positive Transition focuses on the bigger future What can you gain by engaging others? © The BDO SuccessCare Program™

THE LINE OF CONFIDENCE TM 10 The Learning PhaseThe Communication Phase Inertia InformationInitiation Implementation Living in the unknown The Bigger Future Fear Uncertainty Procrastination Direction Capability Choice Line of Confidence © The BDO SuccessCare Program™

LEARN ABOUT THE FAMILY BUSINESS HIGHWAY 11 © The BDO SuccessCare Program™

UNDERSTAND DIFFERING OBJECTIVES 12 The 3-Circle Model Image adapted from the 3-circle model by Tagiuri & Davis Emotional Centre Empathy Support Wealth Centre Stewardship Fair and Equitable Wealth Engine Opportunity Competition © The BDO SuccessCare Program™

13 UNDERSTAND DIFFERING EXPECTATIONS Thom 65 Thom 65 Diane 36 Diane 36 Derek 30 Derek 30 Carl 44 Carl 44 Gareth 1 Gareth 1 Tami 14 Tami 14 Neil 24 Neil 24 Brian 36 Brian 36 Cathy 40 Cathy 40 Rachel 5 Rachel 5 Sophie 63 Sophie 63 © The BDO SuccessCare Program™

UNDERSTAND DIFFERING EXPECTATIONS 14 The Radio Age The Computer Age The TV Age Veteran (1925 – 1945)Gen X (1965 – 1980) Baby Boomer (1946 – 1964) The Digital Age Gen Y (1981 – 1999) © The BDO SuccessCare Program™

LEARN HOW TO TRANSITION ALL THE CAPITAL 15 Social Physical Intellectual Enable the continued support of individuals, the family unit and the greater community Provide for the financial independence and lifestyle of retiring and future generations Enhance the success of the individual and the profitability of the business Principles and Values Individual/Family Reputation Personal Relationships Family Traditions Philanthropy Environment Shares Cash Property Equipment Vehicles Education Competencies Product Knowledge Experience and Wisdom Business Relationships Business Reputation © The BDO SuccessCare Program™

ENGAGE IN THE SUCCESSPROCESS TM 16 A B C D © The BDO SuccessCare Program™

17 A. CLARIFY THE BIGGER FUTURE © The BDO SuccessCare Program™

18 IS THERE A COMMON INTEREST? © The BDO SuccessCare Program™

19 B. UNCOVER THE ROADBLOCKS © The BDO SuccessCare Program™

THE DISCOVERY QUESTIONNAIRE 1.Business Planning 2.Business Values 3.Communications 4.Compensation Plans 5.Connectedness 6.Contingency Planning 7.Decision Making 8.Estate Planning 9.Future Uncertainty 10.Guiding Principles 11.Harmony 12.Ownership 13.Succession Planning 20 Where Are You Today? Each family member answers 40 questions to provide their opinions around 13 important areas of their business Where Are You Today? Each family member answers 40 questions to provide their opinions around 13 important areas of their business © The BDO SuccessCare Program™

SAMPLE INDIVIDUAL RESPONSES 21 Areas of Concern Building Blocks © The BDO SuccessCare Program™

COMPARISON BY CATEGORY 22 © The BDO SuccessCare Program™

UNCOVERED THE ROADBLOCKS 23 1.Lack of knowledge around how people enter and exit ownership 2.Uncertainty around future direction of business / lack of direction and process 3.No clarity around roles and responsibilities 4.Conflict arising from poor communication 5.No process to determine compensation 6.Lack of input into major decisions / No decision- making or redress process 7.No identified successor © The BDO SuccessCare Program™

24 C. IDENTIFY CRITICAL SUCCESS FACTORS © The BDO SuccessCare Program™

STRATEGIES THAT ADDRESS THOM’S FEARS 25 Develop a wealth plan with wills, shareholder agreement, insurance Build up wealth independent of the business Identify the right strategic direction and monitor with regular SWOTs Train and develop a strong management team Establish an advisory board 1.Fear of losing wealth © The BDO SuccessCare Program™

STRATEGIES THAT ADDRESS THOM’S FEARS 26 Protect legal control with an estate plan Ensure there is more than one individual trained on each role Establish a structured decision- making process with clear authority, responsibility and accountability Focus on your core strengths and delegate non-energizing tasks 2.Fear of losing control © The BDO SuccessCare Program™

STRATEGIES THAT ADDRESS THOM’S FEARS 27 Develop policies through a Family Charter and Participation Plan Create a “we focus” to build stewardship and transition values Establish a forum for open, participative communication Create a principles-based Shareholder Agreement 3.Fear of conflict © The BDO SuccessCare Program™

28 80% – 90 % IS COMMUNICATION The Communication Vehicle The BDO Business Transition Program enables communication in all three circles... © The BDO SuccessCare Program™

THE BDO SUCCESSCARE ® PROGRAM 29 The Legacy Builder Program TM The Strategic Ownership Program TM The Business Enhancement Program TM Direction and purpose for the next 1000 months Protecting and transitioning the physical assets Building and maintaining the wealth engine Image adapted from the 3-circle model by Tagiuri & Davis © The BDO SuccessCare Program™

THE BDO SUCCESSCARE ® PROGRAM 30 The Legacy Builder Program TM The Strategic Ownership Program TM The Business Enhancement Program TM Image adapted from the 3-circle model by Tagiuri & Davis Family Business Philosophy Communication Vehicle Lifestyle Plans Ownership Plan Wealth Plan Value Enhancement Strategies Management Transition Plan Successor Development Plan © The BDO SuccessCare Program™

THE BDO INTEGRATED TRANSITION PLAN 31 © The BDO SuccessCare Program™

32 TO LEARN MORE… Book a complimentary consultation review the SuccessProcess Ask us to conduct the Discovery Questionnaire for your family or entrepreneurial business Attend our group Changing Lanes Without a Major Collision workshop to develop your roadmap together © The BDO SuccessCare Program™

THE BDO SUCCESSCARE ® PROGRAM Helping You Build Your Bigger Future © The BDO SuccessCare Program™ Family/ Personal Ownership Business Contact: Your Name Your Number