Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors...
Transcript of Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors...
![Page 1: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/1.jpg)
Taking the Next Step:
Some Thoughts about SUCCESSION PLANNING
prepared for the Principals,Directors and Managers of NAI Global
Las Vegas
January 2008
![Page 2: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/2.jpg)
After a long flight, it is reasonable to expect a safe landing.
![Page 3: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/3.jpg)
We want to prepare you for the transition of your business through successful exit or succession.
![Page 4: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/4.jpg)
Some sobering statistics:
• Over the next decade hundreds of firms will transfer ownership through sales, merger or acquisition or close their doors altogether.
• Less than 20 % of independently affiliated firms set annual goals.
• Less than 5 % of independently affiliated firms have strategic plans.
Reminiscent of the old law school warning: look tothe left and to the right; in 5 years 1 of you will be gone.
![Page 5: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/5.jpg)
Many of you are approaching a fork in the road with two strategic options:
SUCCESSION or EXIT
![Page 6: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/6.jpg)
You do, of course, have the option of playing it out to the very end.
Nowhere is the old saying truer than here: failing to plan is planning to fail.
![Page 7: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/7.jpg)
Two possible strategies:
SUCCESSION: the ownership and management of your company is transferred to new owners and managers and you maintain somerelationship with the firm. You are, however, slowly phased out by a successor or successors.
This is achieved through the implementation of a 3 to 5 year plan.
EXIT: the ownership of your firm is sold outright. In most cases you disassociate from your business totally.
![Page 8: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/8.jpg)
Note: do not proceed without a personal financial plan!
And start a conversation NOW with yourspouse and children about the future.
![Page 9: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/9.jpg)
This is the first decision of many you need to make about the future:
DO YOU HAVE A NEED TO STAY INVOLVED?
![Page 10: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/10.jpg)
The choice between succession and exit depends on a series of factors:
FINANCIAL
These factors are systemically inter-related.
OPERATIONAL PERSONAL
MARKET
![Page 11: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/11.jpg)
The Financial Checklist:
• determine your assets.
• determine your value
• assess the market (who would/could buy us?)
• assess different sell/buy-out strategies.
![Page 12: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/12.jpg)
$$$$$$ FINANCES $$$$$$
Property and equipmentContractsReceivablesPeopleRelationshipsGood name, good willBrandMarket position
Determine your assets.
![Page 13: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/13.jpg)
The question of valuation:
Rule of Thumb = 4 to 5 times multiple of net revenues
Future cash flow
Are there buyers?
Existing partners
Brokers and employees
Competitors
mergers
acquisitions Networks or
national firms
$$$$$$ FINANCES $$$$$$
![Page 14: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/14.jpg)
The Operational Checklist:
• take a hard look at sustainability
• develop a phased-in plan of delegation
• find balance between being a lame duck and a fifth wheel.
![Page 15: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/15.jpg)
Operations… Operations… Operations
LeadershipPotential partnersKids and other family members
AdministrationSales Staff
the case of the 20:80the case of the missing middlethe case of the empty cooler
Clients
Issues of sustainability
![Page 16: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/16.jpg)
Need to delegate.
Need to find balance.
![Page 17: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/17.jpg)
The Market Checklist:
• how will your clients react?
• are you connected to the next wave market?
• how will your competitors react?
![Page 18: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/18.jpg)
The Personal Checklist:
� are you ready for this?
mentally ready?
financially prepared?
can you let go?
� what does your spouse think?
� what do your heirs think?
Legacy planning.
� START NOW!
![Page 19: Taking the Next Step: Some Thoughts about SUCCESSION PLANNING prepared for the Principals, Directors and Managers of NAI Global Las Vegas January 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062519/5697bfd31a28abf838cac292/html5/thumbnails/19.jpg)
VERY NEXT STEPS
1. Get your personal financial plan in order.
2. Determine what you CAN do with the firm.
2. Make a decision about what you WANT to do.
3. Set goals for where you MUST be in 3 years.
4. Take action.