Continuity in Multi-Generational Families

Transcription

1 Continuity in Multi-Generational Families November 30, 2017 Judi Cunningham MA, FEA

2 Agenda Encouraging Continuity Cox Family Enterprise Center Typical Lens on Succession Planning Sunny Family Case

3 Who is the Cox Family Enterprise Center? Research Events Programs and Courses Family Business Clinic Who We Serve 1. Undergrad and graduate Students 2. Enterprising Families 3. Family Offices, Non-Family Executives & Professional Advisors 4. Researchers

4 Meet Frank in

5 Late 2006 Frank is Diagnosed with Cancer and given 6 months to live

6 In Triads Discuss: What are all the things that Frank needs to take care of to ensure a smooth succession? Who needs to help Frank complete this?

7 Elements of Succession Estate Planning Tax Planning Trust (49% to 3 Children) 51% to wife) Family Sought Counselling to Cope with Family Feelings Management Succession Are they done? Is succession complete?

8 Typical View of Succession Planning Transitioning of the Shares and Leadership of a Business to the Next Generation, While Minimizing Tax Impact

9 Typical Characteristics of Succession Planning Business and asset focused An event or short term process with concrete outcomes Transaction based with a legal/accounting underpinning with product sales Defined by advisors & led by advisors Typically done with one or two family members A checklist approach

10 The Most Important Challenges Which are Not Being Addressed Lack of a common vision between interested parties Lack of a communication framework for all parties involved Difficulty of dealing with conflict, particularly around sensitive issues Unwillingness for all involved parties to support the succession Owners are ambivalent about planning for transition and/or reluctant successors Managing business profitably through change Sources: Williams & Preisser (2003). Grant Thornton, (2012)

11 What Families Say They Need Greatest challenges are non-technical, people based issues Skills beyond professional qualifications are required in order to be effective Team playing can deliver better value for clients Source: Society of Trust and Estate Practitioners, 2013

12 Daughters come into the business Leadership is in question Jack is finishing college We are all owners now, we have to make decisions together Jack is not Dad Mom is heavily involved in operations (as always) but now it is disruptive. Hiring non-family employees Trying to replace Dad waiting for Jack Sisters are frustrated Lack of alignment around what is next.

13 Sunny Family Today

14 In Triads Discuss: What should Kat and Wendy do about Jack? What would you advise them to do?

15 Common Sense vs. Family Theory Someone is the problem Change him Get rid of it Fix the problem How to break the cycle

16 Succession: the event What really happened? 2007 Dad dies 2016 Jack is ready and back

17 Let s zoom out: the process of Succession Planning There are Triggering Events That Call for More Attention and Activity Precipitating event Precipitating event Precipitating event Time

18 Continuity of. Encouraging Continuity Precipitating event Precipitating event Time Precipitating event It is about the whole, not just some points in time. It is the Continuity of a business families life that we as advisors need to be equipped to deal with

19 Zoom Into the Timeline: A 4 Strand Rope with a Core BUSINESS WEALTH CORE: FAMILY OWNERSHIP GOVERNANCE

20 Q&A familybusiness.kennesaw.edu