Seeking Succession

Manager Want a Cookie?

2007-07-11T13:30:00.000-04:00

“I just need a cookie once in a while.”

“Cookie? Speak English man! I don’t follow what you are saying” responded the brusk, in your face owner to his key manager.

Surprisingly reflecting confidence to speak his mind the key manager responded, “I just need you to tell me I’m doing a good job, you like what I am doing, you appreciate me; something affirming and encouraging.”

“Good God man, this isn’t kindergarten! After patting you on the head do I need to burp you too,” responded the owner sarcastically. “If you need a scoutmaster you are at the wrong place. You perform big, I pay you big. The average dude would die for your job. That’s our relationship and if you need more from me such as hanging out with your wife and kids, I am just sorry but I don’t have time for that touchy feely crap. Just do your job, make your big bucks and don’t expect any more from me.”

The room went silent as the visibly deflated key manager just stared at the owner with astonishment. After a few moments he turned his eyes to me with an expression of futility. I had nothing to offer the young man who had been struggling with continuing in what appeared to be a great job making fabulous money. I had been mentoring him for several years as he tried to reconcile working for my client who was Mr. “don’t wine and dine me, bottom line me.” As an extraordinary manager and leader the young man was at the top of his game. He was empowered to be “da man” and run the business without any interference from the owner as long as he delivered the profits that had become routine and uninspiring to an idealistic young man looking for more than a job than just the big check.

“Boss you have just made my day. I read you loud and clear. It’s about the money. I get it, I get it,” he emphasized. Just as I was thinking the conversation was concluding a chill ran up my back as I recognized a very never before seen wetness growing around the young man’s humble eyes. As he gathered himself to continue speaking I could tell something was up.

“The pity is you don’t get it and I am not average. The pity is you don’t understand that the emotional drain required to motivate and lead an organization that produces like this business, deal with the vendors and deal with the customers. For me to do this, I need more than money. I also need a cookie. And if you don’t have the interest, the time or the humility to give a beggar a cookie, you can stick your money where the sun doesn’t shine. And then with a big smile he finished is statement with, “and no doubt this is the best day of the nest of my life.”

The manager purposefully stood up, walked over to his desk and began gathering his belongings as the astonishment transferred to the owner. When the owner recognized what might be happening he began to nervously wave his hand at him saying repeatedly, “now come back over here and sit down. We can work this out.”

However, the young man was undaunted by the pitiful 70 year old’s pleading. Just before stepping out the door he said, thank you for the opportunities you have provided. You are right money is important to us non average managers but money is not the whole package. I am going to find me another job that includes and occasional cookie. A manager has got to have an occasional cookie.

Trust Problems

2007-02-14T16:53:00.000-05:00

Estate planning is an integral part of business succession planning. I am commonly asked what are the most common problems encountered in estate planning trusts. There are so many problems with trust administration it is difficult to find a place to start or where to stop. For lack of a better plan, let’s consider what I have found to be the top five trust administration problems:

Problem: there is no way to change provisions of a trust that are outdated or ineffective. Cloths go out of style and so do trusts. Upon the death of the grantor of a revocable trust, the provisions of the trust can not be changed. Similarly, upon adoption of an irrevocable trust, the provisions can not be changed. However, the world turns, things happen, society morphs and laws change. Unfortunately, most of that last over ten years lack the versatility to be updated to adapt to changing or unanticipated circumstances. I am not talking about doing things that would make the grantor turn over in his/her grave. I am talking about just providing refinements to trust operation, taxation or payout that were not even applicable when the trust was formed. No matter how much minutia is drilled into the document, various forms of obsolescence are inevitable to long term trusts. Antidote: provide within the document a “trust amender” or “amender committee” that has the authority to amend the trust to address changing circumstances. In skip generation trusts, it is wise to also provide for succession of those who are given the power to amend the trust.

Problem: the beneficiaries do not have the power to remove the trustee. Oh Mama this can be a doozie because trust officers are not known to be the most ambitious or pro active financial servants. Consequently, if job security is no concern, their attitudes and initiative can progressively decline to the point that after realizing that jumping on their desks does not work you may want to file suit. Unfortunately this is generally not a good idea because the fine print in the trust agreement usually states that you must reimburse the trustee for the legal expenses incurred in the delivery of their services. Catch 22 gives this problem top billing. Antidote: always provide within the trust document a “trust protector” who has the power to remove the trustee.

Problem: the trust officers are given the responsibility to manage a private business or special use real estate. Banks/trust officers know fixed income instruments. Portfolio managers know stocks, bonds and the various derivatives there of. Most individuals who have not put their heart and soul in a private business do not understand it. Conclusion, banks, trust officers and capable and talented individuals do not have a clue as to how to manage a private business or special real estate. Consequently when these parties are asked to manage a business we generally see a movement to liquidation (let’s move the money into something we understand) or a steady decline in the productivity of the business. Antidote: Do everything possible to keep these special assets out of trusts. When deemed necessary, put these assets in sub trusts and designate specialists including family members or key managers who know what they are doing to manage these assets.

Problem: the trust distributes to children/beneficiaries at specified ages. As a result of this flash of cash, thirty to forty year olds indulge dependencies, make bad decisions or just go money crazy. And why not? In most cases these heir do wells have no financial education or experience that prepares them for handling significant assets. Their expertise is in patience and restrained consumption. Having controlled themselves until the trust vesting provisions were satisfied, they figured it was their time to be self indulgent. The net result is more often than not financial ruin for the irresponsible and unwarranted pressure on the responsible as they are called upon to bail out their siblings. Antidote: establish criteria for principle distributions that include history of steady employment, proof of no alcohol or drug dependencies and at least three years prior service as a co trustee to learn the fundamentals of financial management and investments. Where there is no conformity to these reasonable criteria, keep the assets under the management of a professional trustee.

Problem: the beneficiaries are surprised, shocked or dumbfounded by the terms of the trust. The parent or love one never took the time or never had the gumption to disclose how the beneficiaries were going to be treated under the trust. The reactions of the beneficiaries run the gamut from my Dad did not love me to my sibling turned my Dad against me or the attorney designed these trusts just so he could have a job and drain my parent’s estate. Irrespective of whether any of the accusations are true, being disrespected by being kept in the dark leads children to be skeptical, argumentative, litigious and even belligerent. Antidote: respect your beneficiaries by sharing how your trust is going to impact them. Listen to their reactions that beyond being self serving may give you insight into how your estate should be divided and how your trust should be administered. Don’t let your reluctance to deal up front with a problem child create problems for your other children.

Copy Right: The Rawls Company

Vision Conflict and Business Succession

2007-01-25T08:51:00.000-05:00

Loyd H. Rawls

January 21, 2007

A clear, concise, well communicated, self-affirming vision is a critical component to the creation of an unstoppable family business succession plan.  However, just establishing a vision in this complicated world is not enough because in the business succession realm, this vision involves teamwork. Unfortunately those whom we endear, those whom we love, those whom we depend upon to continue our businesses and those who depend upon us for their careers can complicate our circumstances and the achievement of a succession vision that on a good day has many moving parts and on a bad day can appear mind boggling. In the midst of complications with family, key managers, lenders and vendors succession can become such a hassle that a business owner may want to isolate himself. Unfortunately this isolation is completely counter productive to the achievement of a vision that requires a team effort. Within the realm of business succession planning, the vast majority of these succession problems are cause by vision conflict. Allow me to explain this frustrating predicament and the remedy.

Vision conflict is a team problem and notably the nemesis of synergy. Team work and synergy require a unified vision by all members of the team. Any divergence from a well articulated vision erodes synergy. Vision conflict occurs when the leader/owner/operator and supporting family members and key managers use assumption to support their individual visions. Due to any number of real or imagined reasons, family members or key managers do not feel comfortable expressing their expectations of other team members. When assumptions are the foundation of significant miscommunication we have vision conflict. Consequently team members and their goals become the victims of unreasonable expectations. Expectations are unreasonable fundamentally because interdependent team members have not openly and freely expressed their expectations and engaged in the discussion, debate and compromise required to deem expectations as reasonable.

Team vision conflict is resolved by adopting Operating Covenants between higher powers (owner/operator) and lower powers (employed family/key managers/vendors). There is a natural reluctance within the family business to express expectations of others. The process of adopting Operating Covenants alleviates erroneous assumptions and gives everyone who could crash the team and/or impact the fulfillment of a unified vision the peace of mind that all members of the team are pulling in the same direction. During Operating Covenant process everyone would communicate, refine (where necessary) and ultimately affirm reasonable expectations of each other that will give the owner/operator and all those associated with the succession vision the confidence and freedom to engage in team endeavors without reservation that they are not being respected and/or their needs are not being fulfilled.

The purpose of Operating Covenants is to bring formality to the acknowledgement of reasonable expectations. This formality facilitates effective interaction which notably includes accountability, between otherwise complex relationships involved in a team initiative such as business succession planning. The process of formality recording reasonable expectations provides the foundation for confidence and freedom to make a commitment to a team initiative. Expressed reciprocally, the purpose of Operating Covenants is to preclude unreasonable expectations that become embedded obstacles to efficient and effective communication and ultimately evolve into vision conflict.

Operating Covenants are pursued at the pleasure of the higher power because he/she believes that clarifying expectations is in everyone’s best interest. Obviously, the owner as the highest power within a family business could conclude that he/she does not need to waste time on silly covenants.  This owner recognizes that he or she could just dictate to everyone that “it’s my way or the highway.”  Although dictating to some degree would relieve erroneous assumptions, team leaders must be aware that team conformity and commitment are internal elections. It is easy for one to say they are a team member and they will do as they are told while on the inside they are committed being an organizational terrorist. Dictatorial, positional leadership may accomplish short-term goals, but long term leaders inclined to dictate should be aware that passive resistance will only follow while the leader is present and strong-willed resistance will just disengage ASAC (as soon as convenient).  Both forms of passive or active vision conflict under the best circumstances result in internal withdrawal from the succession commitment and under the worst case circumstances result in obvious sabotage of the leader’s vision.

I suggest that the preferred course of action is for all members of a team to confirm acceptable/reasonable expectations that will motivate everyone to choose to work together. Vision conflict does not happen over night and it is not resolved overnight. The development of Operating Covenants is a deliberate process that begins with private meetings with a facilitator to allow everyone to have an opportunity to release their genuine feelings regarding expectations. In many circumstances, family members or managers must be given time to articulate their feelings regarding the unreasonable expectations they have struggled with in the past before they can look to the future. The process allows all operators to have an opportunity to express their perspectives that are probably the foundation of unreasonable expectations. The process of discussing, refining and ultimately reducing expectations to writing, leads to enlightenment as to what is unreasonable and the reasonable. The exchange of feelings and ideas with an experienced facilitator in private filters out the bulk of the unreasonable expectations that otherwise expressed face to face with the other party would create team and/or family confrontations that could have long range deleterious impact.

When all parties are confident in their expectations of others, enlightenment continues as the presumed reasonable expectations are exchanged, again in private with the facilitator. Reaction to expectations in private allows for more emotional filtering that avoids unnecessary confrontation with family members or key managers. The facilitator who has experience dealing with dysfunctional family and management dynamics helps manage reactions and coach all parties in the direction of more reasonable expectations.  After one, two and even up to three exchanges, with the confidence that eighty to ninety percent of the expectations would be considered reasonable, the family members and/or managers are brought together face to face to work off the edges and confirm that the expectations are worthy of a covenant and that everyone will do everything possible to fulfill and accept cross accountability when a reminder is needed that someone is operating outside of the reasonable expectations.

Reasonable expectations and the willingness to accept cross accountability is the silver bullet to team synergy. Communicating, discussing and agreeing upon the ownership, operating and family interaction expectations enables intense, motivated business operators to maintain productive relationships during the predictable periods of stress that accompany business operations. Operating Covenants relieve or preclude Vision Conflict.

Sibling Partnerships

2006-12-13T09:03:00.000-05:00

Sibling Partnerships: If you are a part of a sibling partnership in business or anticipate being in one in the near future, please understand that your relationship, just like any other relationship, will require a significant amount of effort to make it an effective one. Effective sibling partnerships will not happen by default. Natural behavior is to be competitive, self promoting and self serving. It takes a purposeful, dedicated effort to achieve win/win with siblings and there are many factors that lead to the effectiveness of sibling partnerships. Here are ten fundamental suggestions as to how you can establish and sustain an effective working relationship with one or more siblings:

Make a personal decision to rise above sibling rivalry by recognizing that you are no longer competing for your parent’s approval. You are now in business together fighting for the success of your business. If you divert your energies from this focal point you will bear part of the cost. You should now be more interested in earning your sibling’s approval, not your parent’s. If the disconnect with your sibling runs deep, admit it, and seek professional help together.

Engage in Family Strategic Planning to establish a “shared vision” of your future together. The process of building a shared vision will either reinforce your relationship or highlight the areas in which you need professional help. A shared vision or dream that you are both pursuing will provide a foundation for individual accountability that will assist you through difficult times.

Agree upon a Leadership Model. It doesn’t matter whether you take the more traditional route of one sibling being the leader, or the more contemporary co-CEO approach, as long as you have agreed upon the basic model and how it will work. It should be understood that the co-CEO approach is more complex due to the ongoing opportunity of unreasonable assumptions.

Create behavior and attitude Covenants that will confirm how you will interact with one another, how you will communicate, make decisions together, resolve conflict, hold each other accountable, support one another with respect to the senior managers and employees, etc. Then, regularly review these agreements because mistakes are predictable but success is achievable with continual reaffirmation of your commitment.

Establish a Supporting Outside Board. If necessary, agree to have outside independent advisors to facilitate debate and provide a resolution to deadlock that is not perceived as win loose. Siblings who perceived they have lost a power play rarely forget and generally spend too much time on getting even.

Develop a comprehensive Family Business Employment Policy. Don’t allow nephews and nieces to just come to work in the family’s business. Make sure family members understand that working in the family’s business is special because all family members are in the spot light and they are role models for good or bad attitudes and behavior.

Document all agreements regarding compensation, responsibilities, stock transfer capability and the disposition of stock in the event of death, disability or retirement. Assumptions regarding these important contingencies are opportunities for a crisis within a family. Addressing the contingencies is work but having documented agreements is a giant step towards avoiding disagreements.

Acknowledge that you can agree to disagree. An expectation that siblings are going to agree on everything is pure fantasy. How you handle your disagreements will in large part determine the success of your partnership. Disagreement is OK as long as there is an understanding that some one is responsible for the final decision.

Address the impact of spouses on harmony and teamwork. Far too many sibling issues are really an in-law issue. If an in-law is back stage pulling the strings, you had better address the involvement of the in-law or just reconcile yourself to having ever increasing dysfunction.

Agree upon an Exit Strategy. Due to differences in age, motivation and health, one sibling will retire or want to retire prior to the other(s). However, concerns about maintaining lifestyle, relinquishing control or leaving underperforming children unprotected can greatly complicate the retirement. An agreed upon exit strategy for siblings can alleviate many of these concerns.

Approximately fifty percent if the family businesses involve siblings. If you, your children, your partners or your bosses are in the beginning stages of a sibling partnership, give thought to these suggestions or suggest that they do so. Putting these Best Practices in motion will serve to provide you with a firm foundation for future growth of the partnership and the business. If you have been in a sibling partnership that has gone awry realize that it’s never too late to pull it together. It will require coming out of your comfort zone, but with resolve and determination you can forge unity and maybe even harmony. You may need the services of an outside facilitator to help you work through the issues but just like your marriage, it is worth the investment. In the end, remember that it takes commitment to make family an asset in business. Family can be an asset by bearing up under the load and supporting each other through difficult times.

Brand Bible?

2006-10-11T12:58:00.000-04:00

Loyd, what do you think of the concept of a brand bible?

What should e determined immediately is if "brand bible" is just being used as a cute term for core policies and procedures or do they really mean "Brand Bible."

The concept of using the term brand bible conveys that this document is the foundation or reference for belief, trust and faith. Inherent with the behavior, attitude, attained skills, knowledge and experience that are associated with belief, trust and faith there is the assumption that the business will grow in power, strength and resilience. However, this is faulty logic if there has been no process through which the brand bible has been proven as the source of strength as in Bible. In the absence of a profession of belief and faith by the rank and file employees and managers who are integral to the strength in the mystical powers of branding the use of the term bible is very assumptive. Actually, a safer presumption would be that all those exposed to the brand bible the first time will have doubt or even cynicism. I believe that in order to be successful in a branding initiative, we must convert the precepts of a brand bible into Organizational Covenants to achieve the strength that everyone anticipates. In other words, organizational believers should preach brand beliefs and then have organizational alter calls regarding how those beliefs are going to drive behavior. The Bible is based upon on two fundamental Covenants that have created unimaginable strength. A business will need a many more covenants because the business “higher power” does not have the same horse power as the Devine Higher Power.

As you and I know, attaining these Organizational c=Covenants will require a tremendous faith, effort and commitment. Unfortunately, just like the Devine Covenants, much of the effort of Organizational Covenants will be wasted because generously 50% of the current employees are statistical turnover casualties. "The road is wide but the gate is narrow." We don't need everyone to buy in to branding immediately. We just need to identify our zealots, build our house upon them and give them the forums to preach and walk their talk. Long term expressions of faith in Organizational Covenants combined with a commitment to role model brand bible behavior by a Remnant of a constantly growing brand believers will generate the power, strength and resilience needed to create a sustainable competitive advantage. More over, in order to achieve realize the potential strength of a brand bible, the business must have a higher purpose than just making money: we must impact lives!!!!

Maybe a mini mission for a branding imitative would be "Brand Believer." After we have the believers we can then proclaim our brand manual to be a Brand Bible.

Succession Planning Build Value

2006-09-18T11:01:00.000-04:00

Succession Planning Builds Value
Loyd Rawls
September 18, 2007

The valuation of a business is an assumption of future productivity based upon the perception that the multiple value drivers at play within a business will continue.  An appraisal (of value) is simply an analytical assumption of the future productivity of current value drivers supported by historical performance combined with assumptions as to how those value drivers can be or will be impacted by future circumstances.

Businesses have both social value and economic value.  For the purpose of explaining how succession planning impacts value we will dwell upon classic economics. The current economic value of a business lies in the demand for products or services provided, the assembly and distribution cost of those services relative to sales price, the adequacy of financial resources to support product development, assembly and distribution and the managers and leaders who are responsible for overseeing the business.

These are components of current economic value because the marketplace fully understands that all of these value components are depreciating. Products and/or services will become obsolete. Assembly and distribution of products will become inefficient and/or ineffective. Facility and technology demands will consume cash resources. And most important, as has been an unfortunately predictable cycle, leaders and managers who have astutely integrated the development of products, sale of products, management of cash resources and the infusion of winning attitudes will move on, retire, become distracted or lose their edge.  Consequently any presumption of financial value is temporary and conditional. At some point these value drivers will expire unless they are being assessed, refined and as necessary, regenerated.

The process of succession planning addresses all issues impacting the continuation of a business through the next generation. Of course, “all issues” includes value drivers which are part of the fundamental components of The Succession Matrix.  With resolute understanding that the predicate to succession is continuing success, succession planning assesses the value drivers that will be support the commitment of the next generation to continue the success required to perpetuate the business. This assessment predictably demands refinement to products and processes and a commitment to providing the financial resources needed to support those products and processes. Furthermore, succession planning demands a challenge to the assumed progression of leadership and management because the foundation of Succession Successsm is confidence that the next generation leaders will have the competency, capacity and commitment to not only maintain the current business value but also reach full value potential.

In summary, Succession Planning builds value because the succession planning process focuses on achieving Succession Successsm.  The process for achieving Succession Successsm, by its very nature confirms, refines and where necessary regenerates the drivers that constitute business value.

Surgical Update Regarding Challenging News

2006-09-01T09:09:00.000-04:00

I am pleased to reportgood news regarding my prostate surgery that took place on August 15th. Notably I survived. There were a few moments that I felt I would have to get better to die but thanks to your support and the unbelievable nursing of Pat, Amy, Kendall, Champ, my sister Dora and brother in law Rich, I am back to my commitment: live until I die. The next good news, no let's make that great, is that the pathology reported that the lymph nodes were clear and that the surgical margin, although close, was clear of cancer. Sitting here ten days after entering the surgical protocol I am reasonably free of pain, holding my own with post surgical issues and regaining strength to hopefully resume my passion for life, my family, you my friends and succession planning. My surgeon has stated that next Tuesday I can step back into an active routine excepting that for another two weeks I can not do any lifting or other specific activities that could convert one of these four abdominal wounds into a hernia. Is God great or what?

For those of you interestedin my passage through the "valley," nine of the last eleven days were pretty dark. Your visits, prayers, cards, calls, flowers, gift baskets and emails were very instrumental in helping me, Pat and family through these challenging days. From the deepest level of my heart and soul Pat and I thank you for your help and we will continually seek ways that we can stand in the gap for you. The fundamental revelation of this experience is that there is an army of brethren out there who are just waiting for the opportunity to exercise their faith in the healing hand of the Lord on our behalf. To not allow your friends to participate in your trials and tribulations is to withhold them from an opportunity to exercise and be blessed through the experience.

Our family went over to St. Pete the weekend of August 12th to relax and position ourselvesfor the surgery which was to take place in Tampa the following Tuesday. Sunday evening, forty hours before the surgery I was instructed to begin fasting of everything but clear liquids as well as do a colon prep in the event of surgical complications. In retrospect I now better understand why the robotic surgery is described as being very easy. I will have to admit that as compared to being starved for a couple of days, when we arrived at the hospital Tuesday morning, surgery looked like a great opportunity to get fed again.

The presurgical processing was as anticipated other than the "ring thing." Just as anticipated witha well refined surgical program, I was out of my cloths, on a gurney and hooked up to an I. V. in what seemed like less than ten minutes. While laying on the gurney and being asked the same allergy questions by three different anesthesiologists, a surgical nurse noticed that the processing nurses had not been able to remove my wedding band. Earlier the processing nurse had unsuccessfully applied all of her skill and accepting that it wasn't coming off had taped it down. However, the three anesthesiologists gathered and committed themselves to the challenge of removing the ring noting that they had never encountered a wedding band they could not remove. Recognizing I was already half way in the bag from the I. V. juice, one grabbed my wrist stabilized through her arm pit, another stabilized my ring finger and guru of the team worked the ring for about fifteen minutes. While constantly yelling, "Mr. Rawls does that hurt" they grunted gowned and tugged. As reflective of a significant finger bruise, the changing color of my finger must have motivated concern that they were about to dislocate the knuckle. However, due to the fine juice, I was feeling no pain and was unconcerned other than a fear of being jerked off the gurney. They took so much time that the classically impatient surgeon came out of the operating room to see if he had been abandoned. He offered a couple of jokes about the apparent lack of dexterity of an anesthesiologist and how many anesthesiologist are required to change a light bulb. Ultimately, I give kudos to the gas gang because while giving reasonable odds that I was going to need an orthopedic surgeon before a urologist, they won and celebrated like little leaguers when the ring came off.

As I personally expected, the actual surgical procedure was a snap because immediately after noticing the amazing indention in my finger in lieu of a ring, I was out. Maybe they jacked up the juice to make up for the traumatized finger. Four hours later when I awoke I was amazed to learn that the prostate was out and the catheter was in. I was feeling no pain but just the thought of that catheter put me ill at ease. As you might expect, the rest of Tuesday was a blur other than the nurses predictably waking me up to make sure I was comfortable. No doubt I slept better than Pat who apparently wrestled all evening with a reclining chair.

Afterthis drug assisted evening, the surgeon bopped in the next morning about 10 AM, and of course his first comment was "how's the finger?" He quickly transitioned into stating that the surgery went very well and telling me I was going to be just fine. A great surgeon I hope he is but a bed side communicator he is not. In a flash he pulled back the covers, removed a drain tube and said go home and take it easy. As though he had a pressing tee time, he was gone. An hour later, less than 24 hrs after going under the robotic knife I was riding Interstate 4 with the family back to Orlando. What should have been a simple two hour trip became progressively more stressful as we recognized that I had not receive any departing pain medication. Net result, I can remember every bump in the newly resurfaced I-4.

Upon arriving homethe first mission was to fill the vicodin prescription. The "bottom" and belly pain became up front and personal. A couple hours later, I was relieved of significant pain other than to say that nothing seemed to overcome the actual or perceived pain of the catheter. The excitement of trying to get out of a chair or go to the bathroom achieved previously unimaginable levels. As I settled into "house arrest" with the darkside handicap of the catheter my outlook was greatly brightened by your visits, cards, letters and get-well encouragement gifts. Again I was overwhelmed and stand as a witness to the comforting hand and healing power of the love of family and friends.

From a more bizarre perspective, the prescribed pain medicationI confirmed what many of you have recognized for a long time, I am weird. Yes, the vicodin relieved the pain but unfortunately it also revved me up like "speed." Although I was free of significant pain, I did not sleep for the next four nights. "Where was that stuff during college!!" In the wee hours of the evening, it was just me, my catheter, HBO and Pat saying "are you still awake?" A desperation prescription for an antidepressant and a sleep drug could not even overcome the bizarre stimulation of the vicodin. Pat described me as a "deer in the headlights" as I restlessly stumbled around the house carrying the catheter. I don't know who was more weary, me or Pat because as you know it is difficult for one to sleep and one to ramble in the same bed? After my doctor confirmed what you have known (being weird) for some time, I gave up all drugs in search of relaxation and sleep. Subsequently the sixth day after surgery (Monday) was exhaustion day which manifested itself as pain from every pore of my body. The impact of the surgery and the sleep deprivation just finally hammered me.

After a decent night's sleep, Tuesday was a noticeably better day. Tuesday was also brighter in anticipation of the Dr.'s visit on Wed for the removal of the catheter. But of course, after living with that thing for a week I was also in wonderment of what I should expect when it was removed. Wed and the removal of the catheter met every favorable expectation. Maybe I overreacted but irrespective of the norm or my surgeon's smart-mouth nurse who claimed catheters were great because you do not to have get up to go to the toilet, I did not do well with that bugger. As soon as that catheter was removed on Wed morning, there was light at the end of the tunnel, Florida's ambient temperature dropped ten degrees and my wine glass immediately became half full. No doubt the very good pathology report also lifted my spirits. There is no prescribed follow up treatment other than to monitor my PSA closely. I did not even mind hanging around for a few hours to prove that I could empty my bladder without that stupid catheter. Trust me, I would have had Pat jump on my belly before I have allowed them to put it back in.

Again the checkup by the surgeon was brief. On inquiry Dr. Mastandria did say that he did not play golf so I think he is just not the patronizing type. The only real information we got including the pathology report was responses to the questions we asked. Unfortunately, we are currently finding out that we did not know all the questions. Surgeons may be artists but they are not notably good communicators.

I timidly walked with Pat and the family in a mall for a few hours before the afternoon appointment. This was incident free other than an encounter with another gentleman who had the same surgery on the same day and was also killing time before returning to have the bladder check. This gentleman after hearing my storybragged that he had encountered no pain, slept like a baby and apparently loved the catheter. I was impressed that he was dancing around while I was walking gingerly but privately I wanted to coke him. Pat was similarly effected and we consoled ourselves by resolving that this was not a competition. Then we agreed we would beat him back to the doctor for bladder clearance so we would not have to listen to any more of his gloating. Actually, I am now happy for the dude but at the time, our patience had just hit a low.

By 2:30 that (Wed) afternoon, we were the first (we won something) to be released by chatty Mastandria and were on I-4 heading back to Orlando. This was a much better ride! The road was now smooth as glass, the grass looked greener, the traffic was lighter, life was better.Words do not describe how good it was to go to bed without the catheter that evening. Thursday I was feeling better and here we are Friday and I am no longer wearing Depends and progressively feeling better. I am not ready for belly laughs or sit-ups but I also no longer look like an eighty year old hunch back. I pop a couple a Motrin whenever I begin to ache, take a power nap and continue to do as Pat tells me. Since I too admit that I am crazy, I am relying upon her good judgment to keep me from hurting myself. Other than having my cruise control stuck at 55, I am pleased to say that my biggest issue is leg cramps. It looks like I'll continue to lay low until mid next week and then hopefully (if Pat agrees) begin spending a few hours a day in the office. I anticipate returning to a reasonably normal schedule after Labor Day. But not to worry, if you need to chat, give me a call. I would love to speak even at home unless I am taking one of those siestas that seem to jump on me several times per day.

So again, thanks for your support and concern. It continues to be a challenge to comprehend the support group that is there for me to call upon. In the last few days I learned that a lady whom our family has known very closely was diagnosed with breast cancer in January of this year. Inquiring with other mutual friends, no one seems to know about the diagnosis, the prognosis or the treatment. Apparently she did not want to burden anyone with her problems or possibly she only wanted the confirmed faithful to be praying for her. I pity this lady as she does not understand that she deprived me and my family the opportunity to life our faith own her behalf. I believe we are all better off with the well wishes, cerebral prayer and deep spiritual prayer from anyone who will offer. I am regaining my game and I am confidently expecting a total healing based upon the support you have been giving me.

Major teary-eyed thanks to Pat and the kids who literally moved in with me and refused to allow me to get depressed. They are continuing to be my heart and soul. Pat is an example that true love knows no limits. I believe that as a result of this experience, I believe I am a healthier man and a better husband, father, friend, counselor and child of God. I now know not to postpone the important things in life because we may not get another opportunity. I humbly understand there are those that are reading our daily walks and we are making impressions, positive and negative,with everything we do as opposed to very little of what we say. Always priding myself as a giver, you have helped me also become a receiver of love and I now better understand that the best givers are those that also have had the experience of receiving. I would appreciate the opportunity to give by ministering to anyone you encounter who is going to deal with the same challenge. Unfortunately the numbers are growing. Succession planning is about giving clients the comfort of knowing they have a facilitator that has been where they are going. I believe addressing prostate cancer can be impacted with the same form of ministry. I would be honored to share my experience with anyone you refer.

Cherish each moment. Appreciate your family. Keep the Faith as this is your greatest power. And by all means, live til you die.

I'll keep you updated.

Much has occurred since I shared my challenging news

2006-08-03T23:26:00.000-04:00

Much has occurred since I shared with you the Challenging News that I received in June. I have learned a great deal about the disease of prostate cancer. In fact I went from being on a mission to learn what I was dealing with to being overwhelmed in less than a week. Fortunately there are many, many who have preceded me down this challenging path, most with very encouraging forecasts of what I will encounter. All had tremendous zeal to help me deal with the confusion of treatment options and the depression of knowing my life has come to a crossroads and there could be more bad news. Fortunately there are also many gifted treatment providers: hospitals, clinics, surgeons, radiologists and oncologists. All these providers appear capable although some are more user friendly than others. However, adding to the confusion, all treatments appear to have approximately the same success rate. But of course, all providers have something unique to sell. Most of the marketing appears to focus on the potential of avoiding the collateral damage or handicaps associated with the various courses of treatment. When you get caught up in all of this you realize that you/me are just little cogs in a big business machine. From a purely mercantile perspective, I figure my disease is going to mean $30,000 to $50,000 of revenue to some combination of providers. To that end, I assure you there is no shortage of marketing zeal to capture that revenue. And the insurance companies are appropriately skilled at making one jump through hoops to prevent being ripped off by the system. As long as you have insurance, you are somebody. In the absence of insurance, you are nobody. This whole environment has been very confusing.

Another part of the update is that I have been overwhelmed. Part of being overwhelmed has been the mouth dropping shock regarding those who are pro actively and enthusiastically concerned for my welfare. You all know that I am an "open kimono", transparent kind of guy so I felt obligated to let those with whom I have close contact know what was going on because some form of treatment was in my future. As I was drafting the "Challenging News" email I was giving thought to who I should send it to. I even said to myself, "I don't have many close friends and contacts so this won't take long." I concluded that my only criteria for advising someone of my Challenging News was if I would want to know and be involved if this person was encountering the same circumstances. I knew I had under estimated my situation when it took me three hours to select and/or accumulate all the email addresses. Due to the number of names, I had to break up the "send" into four waves. Then the nature of the responses from those I sent the email to and the "forwarded" responses from those I did not send it to just emotionally overwhelmed me. I must admit that I was unprepared for the outpouring of love and support I received. I was also not prepared for the embarrassment of realizing I had not sent the email to many, many who felt that I under estimated their concern, love and support.

I have learned that I am a much better giver than receiver. I receive a great deal of joy in giving and their are others who feel the same. If I deprive others of giving by not receiving the love and support they offer, it is comparable to telling them they are not valued or appreciated. I have also learned that I have touched many lives in ways that I had no idea about. As I was sharing with a caller the other evening, I am just speechless. God has not given may words to express how overwhelmed I am by your love and support. Based upon the prognosis of my doctors I anticipate long life after treatment, but if God chooses to take me home I will arrive in his presence still amazed at the comforting power of the Body of Christ. Although I would rather be serving your needs, I accept and truly appreciate your concern for my welfare and support for my recovery. And to those of you that I have emailed but I have not had the chance to personally speak, I am looking forward to that opportunity.

And no doubt, this has also been depressing. The emotional ups and downs are very fatiguing. This fatigue combined with concern regarding the impact of my mortality on family, partners and clients is depressing. The as you are being poked, tested and analyzed, it is easy to conclude that every ache and pain is the progression of cancer. Every doctors office feels like a branch of the government. Most of the time an automated receptionist tells you to leave a message and someone will call you back. Then no one you talk to can give you a straight answer.

Although I have been overwhelmed, confused and depressed, I am better. Pat, Amy, Kendall, Champ and I have decided that we are going to address this with surgery. Following the best advice I received, "treat the cancer not the side effects", I think this is the most appropriate route for me. I will have the prostate removed on August 15th in Tampa. I have identified the best "ace" I could find who specializes in this surgery. As of August 15th he will have done over 225 using the Da Vinci robotics. I will be in the hospital over night, out of action about a week and on injured reserve for another two or three weeks. We are going to treat the cancer first and pray for the best results regarding side effects, biopsies, etc. With a full understanding of what we are dealing with, additional treatments will be undertaken if deemed appropriate after the surgeon gives the scouting report on neighboring organs and limp nodes.

I wouldn't be honest if I didn't say I am a little scared about going under the ether and having someone fool around with my plumbing. However, I am relieved that we have made a decision and I have the peace of Christ that this is the right course of action with the right surgeon. Please pray for my surgeon Dr. Frank Mastandria. Devine guidance for the ace would be much appreciated. And, also pray for my family because I believe this is tougher on them than me. I'll be under the ether and in the hands of God while they are watching the clock. Also please pray for my patience and discernment. I have spent much time in the oncology ward with my Mom encouraging her and those sitting around us. I would like to continue to do that but it is easy for me to get so self absorbed that I don't recognize those around me need an encoring word. Thank you beyond words.

I received some bad news yesterday

2006-08-03T23:24:00.000-04:00

I received some bad news today. I tested positive for prostate cancer. Like most hard chargers, never thought this would happen to me. However, a genuine understanding of my mortality has set in. Having only received a phone call from a nurse, I do not know much more than that. Of course, there will be more details to follow as I go through the process of evaluation and treatment. This test came about as a result of a routine check up. I have had normal PSA tests for the past ten years. At my annual exam the PSA was elevated but still within normal limits. A subsequent test prior to the biopsy was normal. However, the biopsy reflected a positive indication for cancer. You mean a great deal to me so I felt you should know just as I would want to be part of your support structure in a time of crisis.

I don't know what this means yet but what I have heard from those who have preceded me down this path it is no tea party, but a path with God's grace that I can endure. As you might guess, my mind has been going to a thousand places, many of which do not make sense. I would presume that based upon the above history, we have caught this disease early but again, more details will follow as my physicians continue to poke me and make suggestions for treatment. I do know that I am prepared to see God's face but by no means am I ready to cash in my chips. I have the same fight as my mother who has had cancer twice and is 85 years of age. I genuinely have more concern for her than me. I believe God has a purpose for this little guy's continued life and love but I would also be accepting if He had a greater purpose in me preceding you to His side.

Each of us have had parents or love ones who have traveled this path so we know some of the routine I will be following. I could not count the hours I have spent in the oncology wards with my Mom and I have always wondered how I would act if it was me. So, here we go and I of course want your prayers and support. I know that attitude is a major component of health and I am optimistic that learning of this bad news in time to achieve a cure is exactly why we go through those annoying annual check ups.

Pat, Amy, Kendall and Champ; our extended family in TRG; and our friends hope and pray that you will not pity me/us, will not spend emotional energy feeling sorry for us but join us in positive prayer that Jehovah Rhoffe (the God that healeth me) will deliver me/us from this infirmity. We thank you in advance for your prayer and support.

I will continue to work a normal schedule and pursue my customary interests until the doctors or God does something to take me off of my game. However, realistically, as circumstances evolved, I may from time to time not be accessible so I will also ask for your patience in advance. Again thank you for your friendship and support. <><

Skip Generation Cross Purchase Agreement

2006-08-03T23:21:00.000-04:00

A new client consisting of two 50/50 partners expressed a desire to develop a buy-sell agreement around life insurance policies that they had been sold prior to my engagement. This was an extraordinary business reflected by the unique synergy created by the 50/50 partnership. Each partner had brought unique skills sets to their business that had been affirmed by success beyond anyone’s imagination. The values involved were tens of millions. The planning initiative also involved the updating of estate document and the initiation of strategic gifting.

Prior to fade-out, the insurance salesman had mentioned to our clients a traditional trusteed cross purchase arrangement and even left behind a proto-type document presumably provided by the life insurance company. I agreed with the general assumption of a cross purchase because of the structure of the businesses and the benefits of a step up in tax basis for the survivor. As I thought about what we were embarking upon, I asked myself, why should we allow wealth from buy-sell life insurance proceeds to be created in the estate of the surviving partner? When I subsequently presented this question to our two clients, their response was predictably, “Uncle Sam is not paying any of the life insurance premiums so we would be very pleased to cut him out of as much of this transaction as possible.”

With this tax avoidance endorsement, my partner Dave Ciambella, CFP and I designed a buy-sell agreement that among other “ad nauseam” details gave each partner the first option to purchase as much of the deceased partner’s interest as he desired. Conceptually, we all agreed that this purchase should be just enough to give the survivor voting control of the impressive operation consisting of ten independent operating businesses. After this “control option”, the agreement stipulated that a newly formed irrevocable trust would purchase the remaining minority portion of the deceased partner’s interest. However, unique to this design, this would be an intentionally defective, skip generation, irrevocable trust for the benefit of each partner’s children and grand children.

We subsequently suggested that we address strategic gifting by transferring to separate family accounts within this trust, interest in real estate LLCs also owned 50/50 by each partner. Since this transaction would make the newly formed trust and our client’s technical partners in the real estate LLC, we contended that we could transfer the personally owned life insurance to the irrevocable trust under the “partner” transfer for value exclusion.

After many days and hours of discussion, problems solving and negotiations, the deal was sealed. The above is a highly simplified description of a very demanding process that addressed what seemed to be endless contingencies relating to business valuation, payout terms, equalizing of insurance premiums, disability terms, retirement terms, qualified successor, divorce, bankruptcy, etc. Hearty shout-outs go to Bill Lowman, Esq. and Jennifer Junker, Esq. of the Shuffield Lowman Law Firm as well as mergers and acquisitions ace Micheal Goodbread, Esq. for their encouragement, brilliant drafting and technical support.

The net result is that we have provided our clients peace of mind that:

This extraordinary business has a viable succession strategy in the event of a partner’s death, disability, retirement or irreconcilable differences.

The surviving partner has confidence that he will have unencumbered control of the business if his partner voluntarily or involuntarily withdraws.

Both partners will be treated fairly in the event that they withdraw.

Strategic gifting will begin that will help control estate tax growth.

A structure is available to which the partners in the future can make additional strategic gifts and sales.

The deceased partner’s estate will be liquid through the application of life insurance.

The multi million dollars of life insurance that will relieve liquidity concerns for the deceased partner’s estate will project skip generation wealth to the survivor’s children and grand children and in so doing avoid millions of dollars of tax in the survivor’s estate.

The multi million dollar policy on the life of the survivor will remain out of his estate and provide estate tax liquidity for his heirs.

Hearty congratulations to all involved including other members of The Rawls Group such as Dan Thill who supported our creative process. Hopefully other business owners or advisors Seeking Successionsm can follow this or similar pathways. A 50/50 partnership is not a prerequisite. The only prerequisite I see is a cross purchase structure versus a stock redemption.

No No To Down Load

2006-07-26T09:12:00.000-04:00

No, No To Down Load

In route home from an endeavor to bring a family back from critical mass, I have confirmed again that families who choose to take advantage of family synergy in business must give up some freedoms to download emotions to intimate inactive family members. More succinctly, families who work together all day put the greater family harmony at great risk if they go home at night and emotionally download to spouses and children the acrid details of their daily experiences. Therapeutic, unrestricted dialogue about the emotion laden interactions with family members, partners and key managers should give way to an understanding that spouses and children who are not exposed to the intensity of day to day business interactions are not equipped to handle the uncensored blow by blow daily description of what takes place in a family business. Spouses and children are aggressively protective and they will connect the dots of “emotional downloading” as dastardly attacks on their love one. There natural response is to defend and viciously attack those who do not respect or who allegedly is taking advantage of their love one. Those who are not used to the realities of on job emotions will jump to incorrect conclusions and build up powerful resentment towards in-laws, cousins, key managers, partners etc that can severely damage the outer family harmony that is critical to achieving inner business teamwork. Uncontrolled downloading can create emotional flash fires that can be blown totally out of control over issues that otherwise would have blown over in a day or so in the normal course of business.

To the point: family members should think twice about immediately crying on the shoulder of intimate, uninvolved family members about highly emotional experiences that are common place in the family business. Keep in mind that totally supportive spouses and family members can go from zero to hate in less than five seconds. Hate is extremely difficult to remove. Try to suck up the highly emotional frustrations of the office until you can find some virtue in the both sides of the argument or issue. Try expressing yourself to someone other than a totally supportive family member first. Subsequently when you do share your experiences you will have more control your feelings and you will not incorrectly promote lasting animosity within you spouse and children toward your, parent, brother, sister or partner. Then, when your brother or parent invites you and your spouse over for dinner or on a family vacation, your spouse will not raise hell about why you continually patronize family members who are out to take advantage of you. Trust me, this self control will later make your greater family life simpler and support outer family business harmony which in the long term is just as important as inter family business harmony.

Technorati Tags:
Family Dynamics,
Family Business,
Business Succession

Start small but start

2006-07-16T12:19:00.000-04:00

“Start small, but start”
Succession planning can be an overwhelming thought. There is so much to be done. “I don’t even know what I don’t know.” There are so many potential issues. There are so many opinions. There are so many places where things can go wrong.

Correctomundo on all points. However, confirmation of your challenge is no reason to resort to ruminating, having no hope, disengaging from pro active behavior and just waiting for a wheel to fall off.

There is hope. The most important pro active behavior you can initiate is to start. If you do not start, you will truly never have a chance of fulfilling your dream of perpetuation your family’s business legacy. Although mistakes of the past with business structure, products, finances, children or key managers may be right in your grill, the problems are converted to issues once you make a commitment to address them. Problems are issues that you are unwilling (not unable) to address. Given enough time, where there is a will, there is a way.

And the start does not have to be world shaking. A small start is not only compatible, it is preferred. Why? Because you do not have to worry about being the brainiack. Small starts allow you to set a commitment, set a direction and give yourself plenty of room to negotiate the family, finance, feeling and Federal tax law mine field.

What’s the best first step? Commit. Decide that you are going to do everything within your reasonable capability to perpetuate the business through the next generation of family members of key managers. You hope it will be family but in the absence of a capable, committed, cooperative and available family member, a key manager will do just fine.

How do you commit, communicate. Tell the four to six most important people in your life that you are making a commitment to succession. That group should include your spouse, your children, any partners and any very special or special key managers and your attorney or accountant. When you tell them that you have made a personal commitment to the succession of your business through the next generation, ask them to hold you accountable. This start, this small start will start moving the wheels of the succession train.

Technorati Tags: Succession Planning

About this blog

2006-07-12T17:11:00.000-04:00

Seeking Successionsm will be mostly about business succession planning, my passion. I will be discussing the internal and external factors that impact the continuation of a business legacy through the next generation and some of my bizarre experiences as a dedicated family business succession planner. Trust me, if you walked in my shoes you would learn that facts are stranger than fiction.

To share with you some thought and philosophy, I believe that family owned businesses are the cornerstone of any economy. However, these potentially hyper productive entities, by their very nature, have unique challenges. In fact, a family owned businesses is monumentally impacted by an internal contradiction: Family is a forum of unconditional acceptance based upon the sperm lottery and business a forum of conditional acceptance based upon “what have you done for me lately.”

With this as a foundation, based upon the combined 100+ years experience within TRG (The Rawls Group) I can further offer this contention that you can not run a family like a business and you can not run a business like a family. The inevitable excitement that I encounter on a daily basis is the unpredictable changes between family and business priorities.

For the sake of discussion, I define a family owned business as one where in two or more people are in business together for reasons other than money.  If you are in business with a partner, you probably know him/her as well as or better than any of your immediate family.

My goal for Seeking Successionsm is to build a forum to inform business owners, partners, family members, key managers and vendors on the critical factors that impact Succession Successsm. I’ll define Succession Successsm for you on my next contribution.
Furthermore, since most of my clients are in business in which I have a keen interest, I may also write about some of these interests such as automobiles, beer, wine, boating, books, travel or what ever.

I’ll be in touch.