Transitioning Within a New Market

1. Presenter:
S. Mark Brumbelow, Senior Manager - PYA
TRANSITIONING WITHIN A NEW MARKET

2. Agenda for today
 Outlining Succession Planning Basics
 Identifying Key Players in the Process
 Setting Goals for Achievement
 Exploring Tax Opportunities

3. $10,000,000,000,000?

4. $10,000,000,000,000!!

5. Succession
Planning Basics
 Who

6. Succession
Planning Basics
 Who
 What

7. Succession
Planning Basics
 Who
 What
 Why

8. Succession
Planning Basics
 Who
 What
 Why
 When

9. Succession Planning – Who is Impacted?
 Business owners
 Large business executives
 Vendors and other stakeholders

10. Succession Planning – Who is Impacted?
 Business owners
 Large business executives
 Vendors and other stakeholders
 Sons and daughters

11. Succession Planning – What?
 Direct involvement from executive leadership
 Systemized accountability for development of
future leaders
 Early identification of leadership candidates
 Broad internal commitment to self-improvement

12. Succession Planning – Why?
 Get skills in place
 Make appropriate investment decisions
 Maximize company value for transition
 Minimize tax burden arising out of transition

13. Succession Planning – When?
 The sooner the better

14. Succession Planning – When?
 The sooner the better
 Continuous

15. Succession Planning – When?
 The sooner the better
 Continuous
 Never too late

16. Effectiveness of Succession Planning
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Graphic Representation of the Options / Urgency Paradigm
Options Urgency Effectiveness

17. Key Players -
Who Is Involved?
 Owners
 Key operational leaders
 Invested employees

18. Key Players -
Who is Involved?
 Owners
 Key operational leaders
 Invested employees
 Human resources
 Outside advisors

19. Goals for Transition
 Role definition
 Process owners
 Network of strategic advisors
 Jobs skills listing
 Expanded candidate list
 Development plans
 Investment strategies

20. Who is doing what?
 Planning future strategy
 Recruiting
 Training program design
 Coaching and mentoring
 Developing investment and structure
 Setting cultural tenor and atmosphere
 Designing compensation and incentive plans
 Promoting future vision
 Implementing non-financial initiative
 Recognition and performance monitoring

21. Title Industry Example
 Consolidation – TitleOne Corporation
 Focus on the big picture – TitleOne
 Turn the focus inward
 Buyer’s bargain

23. Let’s
Talk
Tax

24. Transition – Tax Opportunities
 Small Businesses
 Transfer of ownership and responsibility to new generation of
owners
 Long-range cash flow considerations for retiring executives /
owners, and the resulting tax impact
 Protection of closely held nature of the business
 Large Businesses
 Incentive compensation opportunities and potential pitfalls
 Non-compete agreement consideration and valuation

25. Transition – Tax Opportunities
 Organizational structure could impact options
 Pass-through vs. corporate structures
 With enough time, you can plan around structure issues
 Cash flow opportunities
 Gain deferral could be available to seller
 Eases cash burden on buyer
 Don’t stumble on “Hot Asset” rules
 Gifting and other estate planning strategies

26. Transition – Tax Challenges
 Valuation of your business – your personal value vs. your business’s
value
 Organizational structure could impact options – especially in the
short-term
 Family dynamics can influence decisions – and those dynamics can
change
 Future owners and future operational leaders might be different
people

27. Summary
 Get a plan in place
 Align your plan to your business
 Identify successors
 Develop your alliance network

29. PERSHING YOAKLEY & ASSOCIATES, P.C.
800.270.9629 | www.pyapc.com
S. Mark Brumbelow,
Senior Manager
(800) 270-9629
mbrumbelow@pyapc.com