Family Business Consulting Creating Synergy Between the Family

Family Business Consulting: Creating Synergy Between the “Family Strategy” and the “Business Strategy” Webinar Thursday, June 24, 2010 1: 00 -2: 40 pm Eastern Time Joe Schmieder Senior Associate

Webinar Agenda Topics • Family Business Dynamics – Balancing Family and Business Interests • Governance – Blending Family Influence with Business Ownership & Management • 2 Key Planning Processes – Conducting Strategic Business Planning AND Succession Planning Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Family Business – Global Impact • • 80%+ of all businesses > 50% of Gross Domestic Product (GDP) in U. S. >75% of GDP in most other nations 80% of workforce in U. S. 75% of working population in world >65% new jobs generated in U. S. 17 million family-owned businesses in U. S. ~7 -8% greater performance Sources: Poza, Ward, Mc. Kinsey, World Bank, Citi Bank Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Family Business Perspective GOOD TO GREAT TO GONE! Good Great Gone Survival Rates • 1 st Generation • 2 nd Generation – 33% • 3 rd Generation – 12% • 4 th Generation – < 4% • 5 th Generation – < 2% Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Four-Generation Genogram Owner-Managed Family Partnership Sibling Partnership Cousin Consortium Family Syndicate Adapted from John Ward Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Who is Family? Sue Angry @ Sue Copyright 2010 – J. Schmieder The Family

Two Sets of Owners In The Family Business Family Members Working In Biz Family Members NOT Working In Biz HARMONIZE Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Ken ‘ 33 Sandy Marilyn Joe ‘ 36 Joseph P. Otillia Karen ‘ 40 Don ‘ 46 Pam Johnson Family Genogram Mary Jim ‘ 47 Colleen Pete Eric Holly Amy Mike Eve Len Larry Ajay Lisa Scott Ron Kalli Larry ‘ 51 Jan Kay Star Coral Asha Krista Nicole Jerry Scott Tony Amir Kyle Brandon Shannon Travis Sammi Janette Kevin Amir Asia Savanah Ryan Jessie Erin Sally Doug Angelic Sebastian Denotes working in business Benjamin Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Adjusting to Traditionalist (1900 – 1945) Generational Viewpoints --- Up to 4 generations in the workforce! Generation X (1965 – 1980) Copyright 2010 – J. Schmieder Baby Boomers (1946 – 1964) Millennial (1981 – 2015? ) The Family Business Consulting Group Inc® www. efamilybusiness. com

Balancing the interests of Family and Business Health of business impacts satisfying needs of family and shareholders. Health of family impacts strength of leadership and governance of business. Needs of biz Copyright 2010 – J. Schmieder Needs of fam The Family Business Consulting Group Inc® www. efamilybusiness. com

Two Opposing Positions Support family involvement ▫ View family as an asset ▫ Promote successor development ▫ Facilitate application of FB best practices Resist family involvement ▫ Business and family should be separate ▫ Believe they must protect the business from the family Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Pure Family First Companies • Hiring family is good, family employee failure seen as growth. • Family should be in all leadership positions. • Strategy, management and finance influenced by number of family in the business and their skills and interests. • Loyalty is usually a key value. • Non-family management “adopted” or considered outsiders. • Employees usually report feeling like family. • Generally not cutting edge or performance oriented. RESULT - USUALLY DECLINE! Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Pure Business First Companies • Looks like a public company • Family employees get no special privilege • Pay is to market, merit determines how far you get. • Few family conflicts present • Family often disconnected from the business • Only stock holders are afforded power • Usually only those in the business can own stock RESULT - USUALLY SOLD! Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Where should we be? Family First Copyright 2010 – J. Schmieder Business First The

Foundation of Family Business Planning Investments & Insurance Estate Plan Leadership Transition Retirement Plan Ownership Transition Business Values, Vision and Mission Family Values, Vision and Mission Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® Jennifer Pendergast, FBCG www. efamilybusiness. com

Parallel Planning Core values Values Guiding Principles Family commitment Strategic thinking Strategic commitment Family vision Shared future vision Business vision Enterprise continuity plan Formulating plan Business strategy plan (Ward & Carlock) Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Alignment - Values, Vision, Mission Family Business Values Underlying principles that guide family decisions & actions. Values Underlying principles that guide business decisions & actions. Vision Picture of the family’s desired future. Vision Picture of the business’ desired future. Mission Core purpose: What we want to accomplish together as a family. Mission Core purpose: What we want to accomplish together as a business. “Building a visionary company requires 1% vision and 99% alignment. ” Jim Collins Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Sample - Existing Values Family • Honest, ethical, and moral behavior • Respect • Trust • Integrity • Humility • Generosity • Live by the Golden Rule: Do unto others as you would have them do unto you. Copyright 2010 – J. Schmieder Business • Safety • Honesty and integrity • Respect for others • Environmental responsibility • Quality and excellence • Family and community The Family Business Consulting Group Inc® www. efamilybusiness. com

Sample - Existing Vision Family Business To successfully operate our family owned business so that it passes from generation to generation. Copyright 2010 – J. Schmieder World leaders in commercial construction solutions. The Family Business Consulting Group Inc® www. efamilybusiness. com

Sample - Existing Family, Business Mission Family: Our mission as a family is to help each other learn and grow in ways that promote happiness in ourselves and those around us, and to be responsible stewards of our family business, so that we might leave the world a better place for future generations. Copyright 2010 – J. Schmieder Business: Our family-owned company will grow as a leading manufacturer and distributor of [widgets] by providing our customers with quality products and superior service for a fair price and profit. The Family Business Consulting Group Inc® www. efamilybusiness. com

Family Mission Statement “We honor the past by preserving family traditions and the legacy of Biltmore Estate; we live for the present by encouraging open communication, mutual respect, and a commitment to family unity and to the family business; and we plan for the future ensuring that our family and its heritage are Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Webinar Agenda Topics • Family Business Dynamics – Balancing Family and Business Interests • Governance – Blending Family Influence with Business Ownership & Management • 2 Key Planning Processes – Conducting Strategic Business Planning AND Succession Planning Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Managing & Balancing 3 Roles In A Family Business Ownership Governance refers to the ability to optimally discipline and control the nature of the relationship between family members, shareholders, and managers in such a way that the enterprise prospers. Copyright 2010 – J. Schmieder Management Family The Family Business Consulting Group Inc® www. efamilybusiness. com

Types of Ownership Board of Directors Management Copyright 2010 – J. Schmieder “Legal” Owner Categories Majority & Minority Voting & Non-Voting General Partners & Limited Partners Trustee The Family Business Consulting Group Inc® www. efamilybusiness. com

Another Perspective on Types of Owners Operating Owner – An owner/manager or employed owner involved in the day-to-day operations of the business. Governing Owner – A full -time overseer but not involved in operations – like a chairman of the board. Involved Owner - Not employed in biz but takes a genuine interest and is attentive to all its issues. Copyright 2010 – J. Schmieder Passive Owner – Merely collects dividends. Makes no conscious decision to stay an owner. Investor Owner - Like a passive owner, but if satisfied with returns, makes a conscious decision to retain ownership. Proud Owner – Not knowledgeable about the business or engaged in it, but still proud to be an owner. The Family Business Consulting Group Inc® www. efamilybusiness. com

Benefits of Family Business Ownership For Families Provides a cohesive focus that brings family together Offers family members a shared sense of responsibility Serves as a source of family pride Gives the family a means of putting values into action Helps family members develop leadership skills Makes life more interesting Builds wealth Copyright 2010 – J. Schmieder For Business Enables a company to outperform & outlast others Provides support through the deep caring of a team of people aligned in values & goals Assures continuity through long-range vision & family’s desire to pass the biz to future generations Enjoys a corporate culture grounded on conscious values Receives the trust of the community based on its identification with the family The Family Business Consulting Group Inc® www. efamilybusiness. com

3 Proven Factors To Family Business Continuity Success • Active Board of Directors • Family Meetings • Planning – ▫ Strategic Planning ▫ Succession Planning Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Sample Governance Structure Shareholders Family Council Board of Directors Owners Council Advisory Board President & CEO VP Marketing & Sales Copyright 2010 – J. Schmieder VP Operations The Family Business Consulting Group Inc® VP Admin www. efamilybusiness. com

Business of the Family Business of the Business Family Shareholders Family Governance Meetings Family employment policy committee Family foundation committee Copyright 2010 – J. Schmieder Family education committee Strengt h from balance of three Board of Directors Management Next Generation committee Family vacations / assemblies planning committee The Family Business Consulting Group Inc® (© 2005 Mc. Clure) www. efamilybusiness. com

Where Do Boards Fit? As Family & Ownership grow in numbers & complexity – oversight function of board becomes more important, to give comfort to owners that their interests are protected and well managed. Owners Council Owners Board of Directors Family Council Copyright 2010 – J. Schmieder Business As the business grows and becomes more complex – role of Board in providing sophisticated advice becomes more important… The Family Business Consulting Group Inc® www. efamilybusiness. com

Where do Boards Fit? OWNERS • Board serves at pleasure of owners BOARD • Elected by owners • Hold business leaders accountable BUSINESS LEADERSHIP • Responsible for day to day management of company Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Board & Exec Team Split Roles Exec Team = Strategy Development & Execution Board = Oversight • Approve company’s mission and vision • Approve annual business plan • Select, evaluate and plan the succession of the CEO • Evaluate CEO performance • Evaluate board’s performance • Ensure effective organizational planning • Approve and participate in making key strategic initiatives • Serve as a court of appeal Copyright 2010 – J. Schmieder • Protect shareholders and stakeholder interests • Profitably grow and continuously strengthen the business • Prepare business plan • Achieve plan objectives • Build an effective organization ▫ Integrate family where appropriate • Implement financial controls • Effectively communicate to Board • Create a positive, progressive culture The Family Business Consulting Group Inc® www. efamilybusiness. com

Committees of the Board l Audit – l Compensation (& Evaluation) – l Financial Review Set compensation for CEO, incentive plans, oversight on other compensation Nominating & Governance – Copyright 2010 – J. Schmieder Location of new, independent directors The Family Business Consulting Group Inc® www. efamilybusiness. com

Strategic Involvement of Board l l l l Any major decision that has a significant financial impact or on-going obligation Key strategic issues that require multiple inputs – Major growth opportunity needing significant resources – Acquisition, Geographic expansion, Divestiture, etc. Major organizational change (structure &/or key personnel) Crisis management Weak performance (results) Overall decline in value of business Other high risk/reward issues Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Evaluating an Active Board Weak Evaluation Criteria Meets Peak 1. Focuses on Strategy/Policy 2. Helps Invent 3. Provides Expert Advice 4. Knowledge of Business 5. Preparation/Attendance/Punctuality 6. Initiative (Proactive) 7. Integrity/Confidentiality 8. Participation (Balanced) 9. Works Well With Others 10. Overall Evaluation Source: 5 Steps to Board Success Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Governing Family Business Continuity Objective Oversight Strong Leadership Family Management Copyright 2010 – J.

The Purpose of Family Meetings • Strengthen the family build trust • Clarify family values, expectations and hopes • Manage in/out group dynamics • Prevent and resolve conflict Copyright 2010 – J. Schmieder • Provide a forum to navigate family business matters • Define and reinforce appropriate roles for all • Prepare the next generation for future roles The Family Business Consulting Group Inc® www. efamilybusiness. com

Are We Ready for Family Meetings? Readiness signs We may need help! • Next generation approaching working age • Emotions rising • Safety threatened • Open or unresolved conflict • Family employee advancement • Succession nearing • Good will and trust • Cut off by family member • Icebergs hitting ship • Icebergs spotted Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Family Meetings 1/3 FUN 1/3 FAMILY BUSINESS Games INFORMATION Dinners Plant tours Tournaments 1/3 FAMILY DEVELOPMENT Estate review Talent shows Team Building Business/Financial overview Role Clarification & Planning Meet with directors Policy creation Skill training Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Time for a Family Council? What is a Family Council? Consider when… • Family expanding • Standing body • May be representative • Guided by Charter • Rules for functioning Copyright 2010 – J. Schmieder • Growing ownership complexity • Need organization to maintain multi-year agenda The Family Business Consulting Group Inc® www. efamilybusiness. com

Family Assembly All Family Members Executive Council (Officers) Family Council Chair-Elect Secretary Committee Chair Family Meetings Family Council Committee Members Exec. Council + Committee Chairs Committee Chair Education Committee Chair Communication Committee Chair Philanthropy Committee Members Copyright 2010 – J. Schmieder Committee Members The Family Business Consulting Group Inc® Committee Members www. efamilybusiness. com

Roles and Responsibilities of a Family Council 1. Build trust among family members 2. Become educated about our responsibilities as a family 3. Explore our commitments to each other and to the business 4. Provide a forum to address family concerns 5. Make decisions on matters that impact the family 6. Assure that we relate appropriately to the business 7. Prepare for ownership and management transition 8. Make decisions on matters that impact our family business Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Family Council Connections Family j k Board of Directors Family Council l Copyright 2010

45 Balance Family Governance (Family Council) Ownership Governance (Board) Business Management Copyright 2010 –

Webinar Agenda Topics • Family Business Dynamics – Balancing Family and Business Interests • Governance – Blending Family Influence with Business Ownership & Management • 2 Key Planning Processes – Conducting Strategic Business Planning AND Succession Planning Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Most Value – Inside the Family Business Copyright 2010 – J. Schmieder The Family

Most Value – Diversity = Financial Security? Copyright 2010 – J. Schmieder The Family

The Family Business Triangle™ Balancing three needs in a family business system Need for Cash De Visscher & Co. , LLC © Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

CPA Plan One-Page Template 1 -Page Strategic Plan Summary 2009 DRAFT (1 -10 -09) Business Description (today) - Office furniture dealer specializing in _________, and focused primarily in the territory of _______ Confidential W eaknesses trengths O pportunities to exceed plan T hreats to making plan 1 1 2 2 3 3 4 4 5 5 6 6 7 7 Critical for Success in '07 Date: January 2009 Purpose Core Values/Beliefs Forever S. W. O. T. Analysis S Targets & Strategies Now to 30 Years Out 2007 Strategic Goals 2007 Indicators 2007 Monthly Purpose Target Markets Product & Service Strategy Promotion Strategy Sales Distribution Strategy Pricing Strategy Measurable Strategic Goals Dashboard Measurements Vision Target Market Influencers BHAG Positioning Financial Summary External Impacts on Business Trends Balance Sheet Profit & Loss ($000) Competitive Situation Brand Sales Assets COS Current GM Long-Term GM % Total SG&A Op Prft Liabilities + Equity Op Prft % Current Int Exp Long-Term Net Prft Equity Total Capital Needs for '08: $____ Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Why One Page? • • Complexity >>>to>>> Simplicity! Use-ability! Communicate-ability! Puzzle Challenge! S. W. O. T Trends Vision Goals Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® Strategies www. efamilybusiness. com

GLADE®, OFF!®, PLEDGE®, RAID®, SCRUBBING BUBBLES®, SHOUT®, WINDEX® and ZIPLOC® Monday, March 01, 2010 SC Johnson Named Fourth Most Innovative Company in 2010 Company is Recognized by Fast Company’s Annual List RACINE, Wis. , March 1, 2010 – SC Johnson ranks fourth in the Consumer Products category on Fast Company magazine annual Most Innovative Companies list. Fast Company’s team analyzed information on thousands of businesses across the globe to identify companies that use creative models and have progressive cultures. The companies that made the list were commended for their real-world impact, far-sighted risk taking and innovative execution. Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Caselet Design Furniture Installation Family Business Welcome Gen-2 wants to diversify Screen criteria for new Opportunities Core Competencies Markets Geographic Competition Size of Opp Interior design High Healthcare > $1 million Within 500 miles < 3 major -level relationships Education Office (800 km) players Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Design Architecture Products Technology Products Furniture Welcome Interior Construction Services Facility Management Interior Enhancements Floor Coverings Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Family Dynamics – Why Not Plan An Exit? • Ponce de Leon syndrome • Family politics and infighting – avoid conflicts ▫ Fair is not always equal; Equal is not always fair • Confusion about succession planning options • Confusion or misunderstanding over tax and financial implications • Fear that exit / succession discussions will scare non-family executives away Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Readiness - The Difference Leadership Ownership Responsible for guiding & leading a business Control of the stocks and assets of a business What comes first in a successful transition? Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Succession Steps 1. 2. 3. Family & Business Foundational Strategies – Values, Vision, Mission Business Strategic Direction & Plan Organization & Governance Structure Leadership 1. Ownership Leadership Succession Scenarios 2. Skill Requirements 3. Training & Development 4. Performance Review Process 5. Selection Process 6. Selection & Transition Copyright 2010 – J. Schmieder 1. 2. 3. 4. Financial/Life & Estate Plan Strategic Business Plan Ownership Options Readiness of Leadership & Ownership Transition 5. Business Valuation 6. Exit Plan The Family Business Consulting Group Inc® www. efamilybusiness. com

Kadle Family Business Senior Generation Sorted by AGE as of 9 -14 -09 Melvin(61) CFO / Controller Bill (60) President & CEO Career Goals & Expectations Marilyn (58) Sales Mgr Timeframe Transition the admin/finance leadership role Phase out of day-today by age 65; possibly scale back to part time, provide some consulting or project work Develop succession plan that includes phase out from day-to-day work Key is to have plan in place Over 3 -4 year period move out of day-today Continue in current role until retirement at age 63 ~5 years Copyright 2010 – J. Schmieder Potential Training Effective transitioning of skills to next gen Develop potential internal successor(s). Ownership Redemption program set up with insurance Co to buy back shares Next gen to have opp to buy shares Stays w/ those in biz Effective transitioning of skill set to next gen For people working in biz Keep family involved Make fair Gift some The Family Business Consulting Group Inc® Stays in family Exec mgmnt earns reward for annual performance www. efamilybusiness. com

Succession Scenarios - Example 2009 G 3 -1 2010 2011 2012 2013 2014 2015 2016 Chief Financial Officer Transition out of day-to-day mgmnt G 3 -2 President & CEO > > NF-EXEC Vice President, Sales & Marketing > > NF-EXEC Location 1 Operations Manager >>>> > >Chairman Transition out of day-to-day mgmnt Start transitioning from day-to-day mgmnt H/c benefits to 65 >>> ? ? ? Open to transition that works for XXX (Daughter graduates from college) NF-EXEC General Manager - Location 3 > > for rest of career > > ? ? ? Maybe take on more responsibilty as G 3 -1 AND G 3 -2 transition out day-to-day NF-YOUNG EXEC Location 2 Operations Manager >>>>> ? ? ? Assist w/ G 4 -5's successor Possibly take on role as Operations Mgr for XXX Open to other roles - sales? HR / Fin (A/R) Increasing admin (Fin, IT) responsibility Admin leadership role? ? Learning more about XXX customers, products, business systems (IT) RR Operations Facility/P&L Resp Company ldrshp role Mkt & Sales roles (VP Sales? ) Learning more about various company aspects - admin, legal, accounting, etc. Sales - servicing existing cusomers G 4 -1 G 4 -2 G 4 -3 Move to "new" sales calls - business dev; mkting role Learning more about operations, product training Admin G 4 -4 Bldg Coordinator Inventory>>>w/h mgmnt Copyright 2010 – J. Schmieder Matrerials Manager? Operations Sales The Family Business Consulting Group Inc® www. efamilybusiness. com

Primary Ownership Transfer Options Third Party Transition Family Transition Insider Transition Gift Employees Strategic Sell Partner Financial Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Caselet 1 President/Owne r Dad Classic Small Family Business Office Manager (Owner) Mom Marketing & Sales Manager Billy – son 1 Service Manager Arthur – son 2 • Senior generation (parents) own the business and work in the business • Have 3 children ▫ 2 sons work in business (1 capable) ▫ 1 daughter a teacher • Parents prefer to leave equal amount of estate to children • What can they do? Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

62 Caselet 2 Family deciding what to do with business Shareholders Board of Directors (6) 2 from family 1 2 from family 2 1 CEO (non-family) 2 outsiders Corporate Management Non-Family CEO 1 Family member on mgmnt Team Family debates: • Should we sell now or further develop? • Should we take some chips off the table? • Should we make deeper investments & plan to hold for multiple generations? • Could one family buy out the other? Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Strategic Family Ownership Scenarios A. Continue As Is B. Sell Minority stake Trust ~56% Fam 1 ~22% Fam 2 ~22% Family >50% Outsider 2049% Outsider >50% Family <50% Outsider 100% Value - 09 • Enterprise $50 – 52 M • Shareholder $42 – 45 M $50 – 52 M $42 – 45 M Ownership C. Sell Majority stake D. Sell Total Company Capital for Growth • Rely on family & banks. • Trade mix of product offering • Slower growth potential Some $$ from outsider; possibly some from reduced dividend and bank Majority$$ from new outsider N/A Risk of Family Assets High– most of family assets tied to XXX Fam Biz Moderate –some diversification of family assets Moderate to Low – Majority of assets spread to selected investments Low – All family assets spread to variety of investments Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Strategic Family Ownership Scenarios B. Sell Minority stake A. Continue As Is C. Sell Majority stake D. Sell Total Company Pros • Full control • Leverage capital & synergy w/ partner • Realize full return -Complementary products, technology and use funds to diversify -Greater distribution -Customer production line integration • Reduce risk - Take some chips off table and still participate in some upside Cons • Unable to grow all areas at once • High risk w/ XXX market • Governance becomes an issue – board seat for minority s/h. • Lose control. • Possible career options for son in biz Estimated Shareholder Returns Annual div ~$800 k ($400 k/fam) Likely need to adjust div for some period (2 -3 yrs). Return realized in future sale, some div. If sold to. Trust, could net ~$7. 5 M/fam yielding $375 k/fam @ 5%; plus realize some future enterprise gain. Assuming sale of $50 M, could net $18 M/fam yielding $900 k/fam @ 5% Enterprise Value growing Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com

Strategic Family Ownership Scenarios A. Continue As Is B. Sell Minority stake Investment Banker Input “Keep making B/S stronger. Liquidity is key issue today. ” (We are nearly tapped out under the Bank arrangement. ) • “Remote possibility. Might find a friendly willing to structure deal. ” • Either outsider buys part of family stock or contributes capital, diluting share value. Fee Structure N/A • $100 k up front • $15 -25 k monthly fee (may be credited against success fee) • 3. 5% on first $10 M of Enterprise Value • 1% on EV >$10 M • Estimate a deal fee of around $800 k Copyright 2010 – J. Schmieder C. Sell Majority stake D. Sell Total Company • “ 15 -20 potential strategic & financial buyers. No one paying for future benefit (premium) today. ” • Question today is timing. • Likely candidates would be closelyheld xxxx companies in strong cash position that have axxxx platform and see synergy gained from xxx acquisition. The Family Business Consulting Group Inc® www. efamilybusiness. com

Yesterday>>>>>Today>>>Tomorro w 1960 2010 2020 How will your family business adapt to changing times?

Parallels & Paradoxes - Questions FAMILY BUSINESS Managing these parallels & paradoxes well can create a strong synergy between the “Family Strategy” and the “Business Strategy!” Copyright 2010 – J. Schmieder The Family Business Consulting Group Inc® www. efamilybusiness. com