Surviving and Thriving in the Family Business: What the Family Wants You to Know (and Do) to Succeed as Their CFO

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For small to medium enterprises, the role of the CFO is critical to sustaining the enterprise and ensuring a smooth succession. Drawing on recent research and first-hand accounts with family business owners and CEOs, the director of the Vermont Family Business Initiative at the University of Vermont and our panel will examine the key traits of the most successful (and enduring) family businesses–and how their CFOs played a significant role in that success.

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1. Surviving and Thriving in the Family Business What the Family Wants You to Know… and DO to succeed as their CFO. CFO Playbook October 28, 2013

2. Agenda Dann Van Der Vliet – University of Vermont • The family business system • Contributions of the CFO to a family business • The two priorities: Communication and governance Nord Brue – Founder of Bruegger’s Bagels • Role of CFO in growing, sustaining and selling the business • Where I needed my CFO the most • What I wish my CFO knew that I never (or couldn’t) told them Lawrence Writer – Louisville Slugger • Louisville Slugger story – why have they endured? • Complexities of working in a family business • What I wish I knew from the family members

3. Perceptions…

4. Issues “most on your mind” • Incentive compensation • Board effectiveness • Keeping family shareholders informed • Sustaining the business • Updating arcane business practices

5. Understanding Family Business Original research suggested two separate and competing entities TWO CIRCLE FRAMEWORK Family Issues Business Issues

6. Understanding Family Business In time, research suggested the two entities overlapped Family Issues Business Issues

7. Understanding Family Business Eventually, researchers realized that ownership was its own circle – THREE CIRCLE FRAMEWORK Ownership Family Business

8. The Three Circle Model Ownership 2 4 5 7 Family 1 6 Business 3 Taiguri & Davis 1993

9. Three Circle Model 1. A family member who is neither an owner nor an employee 2. An owner who is neither a family member nor an employee 3. An employee who is neither an owner not a family member 4. An owner who is a family member but not an employee 5. An owner who is an employee but is not a family member 6. A family member who is an employee but not an owner 7. An owner who is a family member and an employee

10. Two key priorities in a family business • Communication • Governance

11. Communication can be enhanced by giving each circle its own governance structure.

12. Adding value Source: Gurd & Thomas 2010

13. Adding value Source: Smith & Briggs 1999

14. Adding value Source: Strike 2013

15. Nord Brue Founder, Bruegger’s Bagels

16. The Owner’s Perspective Role of CFO in growing, sustaining and selling the business • Know where the enterprise is (at all times) • Know the trajectory of enterprise • Create financial strategies to improve trajectory • • • Financial Strategies a la McDonalds Capital Structure Strategies ala Marriott Tell story of the enterprise to financial world • Shareholders • Bankers • Potential investors/Buyers • Other parties as appropriate • Be credible teller of enterprise story • Act as consigliere to CEO

17. The Owner’s Perspective Where I needed my CFO the most • On my flank • In a spot to create objectivity • • Close enough to know; • • It’s hard to check your own work Far enough to stay out of weeds In a position of “emotional neutrality” • Sales chief can be cheer leader • Operations can be apologist • Need the straight dope from the CFO • Garrison Keillor “He’s Steady”s

18. The Owner’s Perspective What I wish my CFO knew that I never (or couldn’t) tell them If there is something you can’t tell your CFO • • • You are doing things you shouldn’t be doing Your CFO is not “up to speed” You’ve got the wrong person in the CEO slot

19. Lawrence Writer CFO & COO

20. Company History

21. Company Overview Founded in 1884 Signed Honus Wagner in early 1900’s – First Sports Endorser ~80% of Hall of Famers used Louisville Slugger – Babe Ruth, Ted Williams & Ty Cobb among them. ~55% of today’s professional players still use Louisville Slugger

22. President Cleveland President Roosevelt World War II First PC World War I Mark Twain First Automobile Wright Brothers Television

23. What we are today BBCOR Gloves Fast pitch Slow pitch Protective Leading provider of Diamond Sports Equipment

24. Fresh thinking: ideas to execution

25. Fresh thinking: ideas to execution

26. Why does a 130-year old company need to change? Hyper-competitive landscape Competition with deep pockets Regulation – Standard changes, lawsuits Innovation – Product is King Marketing – How do we remain relevant? Growth – What is next? Goal: ignite the power of LS

27. We believe that lasting greatness is only achieved by living the values of team sports; driven by sportsmanship, hard work, and dedication. We believe that confidence is the most valuable tool you REMOVE bring to your game. We believe working with elite athletes leads to the creation of elite products. We believe that we have a responsibility to grow and protect the legacy of Louisville Slugger as a American icon. Louisville Slugger exists to make players great We activate the power of Louisville Slugger to ignite an emotional connection to our brand and the game. Fresh Thinking: Ideas to execution. We design and market performance sports equipment 27

28. Working for a family business Questions to ask: Shareholder interests aligned? Acceptance? Wealth creation? Succession planning?

29. Follow up Dann Van Der Vliet Daniel.VDV@uvm.edu @fambizsuccess Nord Brue nlb@nbrue.com Lawrence Writer Lawrence.Writer@slugger.com

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Surviving and Thriving in the Family Business: What the Family Wants You to Know (and Do) to Succeed as Their CFO

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