Generations
The Good, the Bad and the Ugly
Welcome to the Winter Generations Newsletter relating
to Succession, Exit Planning and Maximization of your
Business Value. We are fortunate to have 3 excellent
guest authors with significant expertise in the
Succession and Exit planning area and we think that you
will enjoy their insights.
We, at Collins Barrow, feel that succession planning and
the related topics are important to our clients and have
developed our Generations Succession Planning
Process to assist in these ownership transitions and
business continuity plans. If you have any questions or
comments, please feel free to contact your local Collins
Barrow office.
Michael A. Bondy CA, CFP, TEP, CAFA
National Director of Succession Planning
mbondy@collinsbarrow.com
1 The Good, the Bad and the Ugly
2 Six Steps to Increasing the Value of
Your Business
3 2007 International Farm Succession
Conference
1 Continued on Page 4
Founders. Successors. They all have worries,
concerns and fears. Just as founders may look
forward – many with more than a little
apprehension – to their life after a transition
takes place, successors are mixed with
optimism, energy and their own set of anxieties.
Without open communication and a planned,
measured approach to the ultimate transition,
expectations by both are less likely to be
aligned.
What is succession? How do we know when it
has happened? What are the signs it has
occurred successfully? It is much more than a
transfer of ownership or promotion of someone
to senior management. Time and proactive
effort should be dedicated to the transition of
things like knowledge, wisdom, capability,
confidence, relationships, family values and
business values, passion, purpose, and
professionalism.
Succession is a process rather than an event.
How does a family ensure a gradual, well-
structured succession plan? It happens as
control and decision making authority are
transferred to a successor. The entire process is
predicated on one significant factor; the
founder or current leader has the desire and
recognizes the need to move on. It also
assumes he or she has confidence in an
identified successor.
This can be done in many ways, and the
methodology chosen and followed will have a
profound influence on the ultimate sustainability
of the enterprise. Here are the brief stories of 3
families:
The Good
The Joyeux family has invested a lot of time,
effort and attention in the orderly transition of
the family business from one generation to the
other. The founders are enjoying a very happy
sojourn away from the business, living off their
dividends. The successors have stimulated
growth while continuing the founders'
momentum. Everything is booming – the
business, the family, and the individuals within
the family.
WINTER 2008
The Bad
Pierre Malcontent founded his family business
over 50 years ago, driving it from a simple
home-based business to a nationally respected
manufacturer. Pierre had his fingers in
everything. His creative touch drove sales while
his manufacturing intuition provided valuable
solutions to clients' needs. He always intended
to pass on the business to his children but
never quite got around to the details.
Unfortunately, Pierre passed away and his three
children are caught in a dilemma, not quite
ready to take over. Times are very uncertain for
the business and for the family. Tensions are
high; conflict is sure to follow.
The Ugly
John Strong was a great buddy of Pierre's, and
a lot healthier. He and his wife Mary just love
their business. Years ago, they asked their
children to take over so they could enjoy their
retirement. After all, they didn't want to end up
like Pierre. They still hold the bulk of the
common shares and return every two weeks
from their vacation hideaway. They love to
attend the board meetings, providing input on
how the business ought to be run, and then take
off to their next vacation destination.
Can things really go as well as for the Joyeux
family? Are there actually founders like Mr.
Malcontent who would put a lifetime's work at
such risk? Don't Mr. & Mrs. Strong have it right?
It's time to ask yourself: "which story best
reflects my business and my family?" Whether
you are transitioning into the big chair, or
transitioning out, it's gut check time.
The good
A measured, gradual and defined transition is
the best way to transfer control and decision-
making. It is an effective way to have a
successful and seamless transition. One option,
illustrated below, allows for the inclusion of a
non-family CEO. There are often cases where
the founder is ready to exit, or needs to exit, but
the next generation successor is not yet
prepared or qualified to take over.
 Six Steps to Increasing the Value of Your Business
Consulting to more than 150 business owners over
the past fifteen years has provided a few insights
into the need for business owners to focus on
increasing their business value, not just increasing
sales, revenues and profits. There are six key
steps to this process.
1. Establish your need and level of urgency
Whether you are selling, growing, or passing your
business on to your children, staff or a third party,
building value is essential to achieve greater
success for everyone involved – especially for you
the owner. So why do you need your business to
be more valuable? Do you need more money when
you retire? Do you need more growth options or
selling options? Are you building your business so
that it can be sold for the highest price possible?
If any of these reasons apply to your needs, it
becomes that much more critical for you to build
measurable value in your business.
2. Invest sufficient time, money and effort for
proper returns
What time can you invest in planning out your
growth and exit strategy? What other resources –
money, people, effort – will you commit to this
process? Will those commitments be sufficient to
achieve the results you need? If you always get
what you pay for, then it makes a lot of sense to
invest what you can now for a valuable payoff later.
There are two groups of assets that build value:
intangible assets (patents, trademarks, goodwill,
brand assets, etc.) and tangible assets (real
estate, inventory, equipment, etc.). Smart and
successful owners that have built and sold their
businesses understand how to invest time, money
and effort in a way that makes their businesses
valuable enough to a buyer – rather than to the
owners themselves – that they get a lucrative
payout. Since tangible assets grow value linearly
and intangible assets grow value exponentially,
significant value enhancement occurs with the
latter group.
3. Intangibles increase value exponentially
You can realize all the value for which you have
worked so hard by paying close attention to how
you will be paid for your goodwill upon the sale of
your business. Many owners do not receive the full
value of their businesses due to mismanagement
of their intangible assets. However, one practical
strategy that business owners have been
incorporating into their strategy, operations,
management and brand is a company's Unifying
Philosophy (UPh®) statement. This is just like your
own proprietary business DNA that is formally built
and trademarked. Imagine an all-in-one strategic,
operational and marketing statement that
Winter 2008
synchronizes all the functions, staff and marketing
of your business, and that also enhances your
business value over time the more you implement
it. The UPh is a formal and systematic version of
the "Hedgehog concept" that Jim Collins
discusses in his book Good to Great.
4. Grow your business and its value with the
help of experts
As owners, we understand how to build a business
but we may not necessarily understand fully what
it means to make a business valuable. Even
though your business is worth whatever someone
is willing to pay you, you still need the help of
experts to show you how to build premiums in your
business value and to identify who will pay you the
most for your business. You must retain a team of
experts who have proven skills and insights on
increasing the value in your business.
Here are 3 steps in establishing your Ideal Value
Team and getting the most out of them:
i) Retain a Value Quarterback. Choose a non-
biased advisor, a seasoned specialist, to
'quarterback' the entire process and keep
your interests as top priority. This person
must be willing to build a team – many
advisors who lock out other experts are not
good Value Quarterbacks and therefore do
not ensure all the interests of the business
owner are protected.
ii) With your Value Quarterback, build your
team. A good Value Quarterback will have
close alliances with value specialists who
have time-tested experience working with the
owner's current advisors. Your Value
Quarterback should have your trust and your
big picture clearly presented to your advisors
as conflicts often surface and need to be
facilitated by the Quarterback.
iii) Disengage poor advisors. Your team is only
as strong as the weakest advisor. Many
owners hold on to advisors due to their
extensive history, friendship or cheap rates.
Beware that these advisors, although
beneficial until now, may not be the best ones
to help you get to the next level. Smart
owners upgrade their accounting, legal, and
financial advisors as their business needs
and demands grow. Remember, your future
rests in the quality of your counsel – powerful
business people have powerful advisors. As
Bruce Wright wisely states in his book, The
Wright Exit Strategy, "your current advisors
have brought you to where you are and may
not have what it takes to take you where you
want to be."
2
5. Start building business value now
Building value and getting your business ready for
sale requires a minimum of three to five years. It is
thus wise to get started as soon as possible so
that you can get time on your side.
6. Know what makes your business valuable (if
you were to sell it)
Determining this, first, will help you identify all the
factors and assets that can increase value. It will
also reveal those things your business lacks or is
not doing to produce or enhance value. How much
is your business worth and what will make it worth
more? Start with a preliminary business valuation
with the help of a Certified Business Valuator to
identify the value drivers, or lack thereof. Work with
the rest of your newly formed expert team and
start increasing your business value.
Take action now.
The wisest business people always know their exit
strategy before they sign the deal. As Stephen
Covey suggests, "begin with the end in mind." It's
tragic when you realize it's too late to change the
course of your future. Save yourself the misery and
do what it takes to build value in your business
now. After all, isn't prosperity – whether wealth,
lifestyle or fulfillment – the very reason you are in
business in the first place?
The consequence of failing to act now is that a
potentially large part of your hard-earned money
will be taken out of your pocket and given to
someone else.
To review your business value potential with our
Brand Assets Checklist or to receive a discussion
paper on how to increase business value
successfully with your Unifying Philosophy (UPh)
statement, email info@businessbyphilosophy.com
and visit Success Stories at
www.businessbyphilosophy.com.
About the author
Harish Chauhan is an international business
strategist, educator, and author of Unconventional
Business. Since 1991, Chauhan has helped over
150 private and family-owned businesses achieve
extraordinary performance and well-being. His
internationally renowned Unifying Philosophy
(UPh®) strategy system improves leadership and
staff alignment, goodwill value, shareholder
wealth, and business succession. As Business by
Philosophy founder and owner, his clients include
firms from the "PROFIT 100" and "Canada's 50
Best Managed."
2007 International Farm Succession Conference
The International Farm Succession Conference
was held in Ottawa in August, 2007. This
conference was a follow-up to the earlier National
Conference on Family Farm Succession held in
Winnipeg in 2002 and provided some interesting
insights to the state of farm succession worldwide.
This article summarizes some of those insights.
In 2002, approximately 2% of farm producers had
a Succession Plan. That percentage has now
increased to between 7% and 10%. The 2002
Conference provided an opportunity for
producers, advisors and academics to discuss the
issues and share expertise. The Canadian
Association of Farm Advisors (CAFA) was founded
subsequent to the 2002 Conference and its growth
across this country has helped brand CAFA
members as trusted and capable advisors.
The various speakers at the 2007 Conference from
Canada, the United States and England presented
various approaches to several difficult issues,
which are outlined below:
1. What are the components of a Succession
Plan?
In effect, a Succession Plan consists of a strategic
business plan, an estate plan, a retirement plan
and the preparation of successor. This can also be
referred to as a Business Continuity Plan.
2. How can we, as advisors, better understand
the interrelationships between family and the
business?
The conference speakers emphasized that we
must be aware of the Three Circle Model,
consisting of the Ownership Circle, the
Management Circle, and the Family Circle.
a) Control – the ability of the founder to
relinquish it
b) Trust – must be unconditional
c) Emotional Security – must feel comfortable
with the plan
d) Respect – acknowledgement of contributions
e) Protection – avoidance of inappropriate
family member influence and the threat of a
breakdown
4. Succession Planning List of Priorities
Once we understand these points, we can create
a Succession Planning List of Priorities:
1) Preservation of the family farm – Is the
business viable?
2) The older generation – how to generate
sufficient retirement income for them.
3) All children – how to develop equitable
treatment for all children as the in business
heir preserves and grows the business.
4) Transfer taxes – Is the plan workable from a
tax perspective?
If you can't get past Item 1), you may be talking
about an exit strategy.
The conference speakers also discussed what the
"Big Three" issues have been since they last met in
2002. First, there is now a new demographic of
farm successors who have a new vision of their
purpose and a greater concern about work/life
balance. Second, there is the presence of Farm
Consolidators with increasingly large operations.
This tends either to cause the older generations to
gift 40 - 50 % of farm value (thereby raising the
issue of equity for non-farm children) or it leads to
a lot of farms being sold [to third parties] rather
than transferred [to family members].
• availability of programs
• availability of credit
• funding of retirement
3) Failure to Apply Business Tools to Farm
Transfers
• lease purchase agreements
• joint ventures
• buy/sell agreements
4) Increasing Asset Values –
consolidation/appreciation of assets (land
values, quota, etc.)
The 2007 Conference made it clear that, in
Canada, we are at the cutting edge of the work
being done in the area of farm succession. Much
more remains to be done however. With 327,000
producers in Canada and perhaps 30,000 who
have completed Succession Plans, this remains a
challenging yet fertile area for advisors to apply
their skill, knowledge and expertise to assist our
farm clients as they move through the 21st
century.
About the author
George Sinker, LLP, has practiced law in Strathroy
in Southwestern Ontario since 1975. He conducts
a solicitor's practice with emphasis on agri-
business, estate planning, succession planning,
real estate and estate administration. George can
be contacted at gsinker@bellnet.ca.

But it is the Family Circle that is unique to family
farm business. "The most critical issues facing
business-owning families are family-based issues
more than they are business-based issues." We
must appreciate that succession planning is a
series of "baby steps," and we must acknowledge
that the family circle casts a broad shadow. Clients
can be educated to manage the family component
by creating a family council, holding family
business meetings and adopting codes of
conduct.
The conference speakers agreed that
communication remains a major stumbling block
for many family farm businesses.
3. Family issue indicators
We must understand the following unique aspects
of family business:
The Conference included a producer panel
consisting of several families who had
experienced a transfer. This panel provided
insight into the quality of the advisors that these
various producers had used, and emphasized the
benefits of an interdisciplinary approach rather
than simply several professionals working in a
vacuum.
The final plenary session dealt with gaps in the
process. These gaps can be summarized as
follows:
1) Fair vs. Equal – how should sweat equity
contribution be valued? Equal as of what
date? When the successor began in the
operation or at the parents' deaths?
2) Retirement Bottlenecks, such as:
• the importance of choosing a successor
• the effect of government policy on
retirement

3 Winter 2008
 Continued from Page 1
own choice or not – the business, the
successor(s) and the family have not been
given the opportunity to learn or to thrive without
the senior generation.

Proper succession and a good transition are all

about the orderly transfer of control and
The Bad authority to a trusted successor. It is a change
to trusted and competent new leaders, trained
to make decisions about such things as
Lengthy delays will both frustrate and
strategy, capital expenditures, operations,
undermine succession, with the important risk
marketing and other factors critical to the
of damaging long-term business success. The
business operations. It is a process that
senior generation, unwilling to let go and unable
requires planning!
to train and prepare the successor, hangs on
until a time when it may be too late. The so
Founders and senior family leaders should be
called cold turkey transition is most often the
involved in directing and helping the next
result of poor or no planning and the
generation to learn through personal and
unexpected exit of the founder. Clearly, no time
professional training and development,
is spent preparing the founder, the successor,
delegation with accountability, and the sharing
the family or the business for post-transition life.
of experiences. Successors in turn will come to
Collins Barrow Office Locations: understand that privilege and opportunity come
with responsibility and obligation – to
Banff Hearst Sarnia themselves, to the business, and to their family.
Bobcaygeon Kapuskasing Stratford
Open, honest communication with an eye on
the bigger future ahead will help create energy
Brockville Kingston Strathroy and alignment.
Calgary Leamington Sturgeon Falls
It's not too late. You can start this process today.
Cambridge Lindsay Sudbury
About the author
Canmore London Vancouver

Carleton Place Manotick Vaughan

Jeff Noble, BA, CMC, is creator of NOBLE Advice,
a specialist practice consulting to
Chatham Montreal Waterloo entrepreneurs and advising business families.
A fourth-generation business family member,
Chelmsford North Bay Winchester
Jeff is a highly skilled facilitator and trusted
Edmonton Orangeville Windsor advisor to leading business families. Jeff can be
reached by telephone at 519.761.2464 or
Elora Ottawa Winnipeg jp@nobleadvice.com / www.nobleadvice.com.
Exeter Peterborough The Ugly
Graphics: The Family Business Advisor, April
Halifax Red Deer 2003
On again, off again is hard on the business and
very damaging to family relationships. What's
Contact Information:
worse, when dad finally exits - whether by his
Internet: www.collinsbarrow.com
Collins Barrow regularly publishes Generations for its clients and associates. It is designed to highlight and
Email: info@collinsbarrow.com
summarize the continually changing succession and business planning scene across Canada. We
Careers: careers@collinsbarrow.com recommend that professional advice always be sought before taking specific planning steps.