Succession planning webinar series (april 2013) (2)

Building Blocks of a Succession Plan

Presented by: David Grau Sr., JD

President and Founder, FP Transitions

2©2013 Business Transitions, LLC

Succession Planning for Growth Series

1) Selecting the Right Succession Plan

In this presentation, we will describe 6 specific succession plans that you can use to develop your own business perpetuation and protection strategy. You'll learn how proper succession planning is vital to your growth strategy.

April 2nd 10:00 AM PT

May 7th 1:00 PM PT

2) Building Blocks of a Succession Plan

Your organizational structure, compensation structure and entity structure can support, or cripple, your business growth and exit plans. Find out what path your business is on and how to guide it in the right direction.

April 3rd 10:00 AM PT

3) Next Generation Perspective

How does a succession plan look from the perspective of junior partners, key employees or sons or daughters? How do they invest in the business? What does an internal ownership track look like? We encourage you to attend with your prospective second-generation owners.

April 4th 10:00 AM PT

May 9th 1:00 PM PT


Managing the Equity in Your Practice

©2013 Business Transitions, LLC

G-1: Founding Owner(s)

G-2: Planned Owners

G-3: Potential Owners

Tran

ch

e 1

Tran

ch

e 2

Tran

ch

e 3

Com

bin

ed

Ow

ners

hip

Sta

ke

100

0

Time / Yrs.

5 – 7 years 5 – 7 years 5 – 7 years

4Tr

an

ch

e 4

Transition Point: G-1 should reserve ability to sell externally up to this point. G-2 may elect to bank finance final tranches at the “All Cash” value in the valuation matrix.

5 – 7 years

Owner’s hours worked

Income Perpetuation Strategy


Foundational Elements

©2011 Business Transitions LLC

ORGANIZATIONAL STRUCTURE

ENTITY STRUCTURE

COMPENSATION STRUCTURE

1. 2. 3.


Organizational Structure (Building Enduring and Transferable Businesses)

ClientsClients

AdvisorAdvisor

ClientsClients

AdvisorAdvisor

Corp./LLCCorp./LLC

Sole Prop Sole Prop / Entity


Silo-Based Production Model(Building Enduring and Transferable Businesses)

Clients

Admin, Support Staff

Clients

Admin, Support Staff

Pooled Expenses

Corp./LLC EquityEquity

Individual“Books of Business”

AdvisorAdvisor


Equity-Centric Ensemble

Clients

Advisor Advisor

Pooled Revenue & Expenses

Corp./LLC

Pooled Admin. Support Staff

EquityAdvisor

(Building Enduring and Transferable Businesses)


Organized as Entities

21%

40%

79%

100%

Under $150K $150k - $1M $1M - $10M Over $10M

9


Sole ProprietorshipC-CorporationS-CorporationLLC

36%

17%

Entity Structures

45%

10


Entity Structure Choices

Sole Proprietorship Partnership C-Corporation S-Corporation

LLC(Taxed as a Sole Prop.)

LLC (Taxed as a Partnership)

LLC(Taxed as a C-Corp.)

LLC(Taxed as an S-Corp.)


Compensation

Equity Value

Reward for Investment of Time, Money and Talent

12

The Basic Equation (for Building Enduring and Transferable Businesses)


Aligning Cash Flow and Compensation to Roles

13

Owners’/ProducersAssign All Revenue into Corp. Bank Acct.

$50,000 (Expenses)

$70,000 (Wages, Benefits)

Entity Structure

$100,000

$60,000 Owners’Profit Distributions

$20,000

Equity Value

$100,000


Succession Planning for Growth Series

1) Selecting the Right Succession Plan

In this presentation, we will describe 6 specific succession plans that you can use to develop your own business perpetuation and protection strategy. You'll learn how proper succession planning is vital to your growth strategy.

April 2nd 10:00 AM PT

May 7th 1:00 PM PT

2) Building Blocks of a Succession Plan

Your organizational structure, compensation structure and entity structure can support, or cripple, your business growth and exit plans. Find out what path your business is on and how to guide it in the right direction.

April 3rd 10:00 AM PT

3) Next Generation Perspective

How does a succession plan look from the perspective of junior partners, key employees or sons or daughters? How do they invest in the business? What does an internal ownership track look like? We encourage you to attend with your prospective second-generation owners.

April 4th 10:00 AM PT

May 9th 1:00 PM PT


Thank You For Listening

[email protected]

800.934.3303

15

Succession planning webinar series (april 2013) (2)

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Transcript of Succession planning webinar series (april 2013) (2)