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When I’m 64

When I’m 64. InterDirect Network sept 2010 Georges Van Nevel. Succession planning or the next generation. Background. Some day, we will all retire. You think you’ve worked enough. Key issue. What to do?. Selling. To a third party To the kids To the other management members. Trends.

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When I’m 64

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  1. When I’m 64 InterDirect Networksept 2010Georges Van Nevel Kasteellaan 160 | B-9000Gent | BE 0426.851.666 | RPR Gent | TEL. +32 9 224 43 60 | FAX +32 9 224 01 69 | www.dvn.be | info@dvn.be

  2. Succession planning orthe next generation Kasteellaan 160 | B-9000Gent | BE 0426.851.666 | RPR Gent | TEL. +32 9 224 43 60 | FAX +32 9 224 01 69 | www.dvn.be | info@dvn.be

  3. Background • Some day, we will all retire. • You think you’ve worked enough.

  4. Key issue • What to do?

  5. Selling • To a third party • To the kids • To the other management members

  6. Trends • Sector fragmentation • Smaller agencies • Importance of freelance groups • The role of procurement and financial people: • Fee and price pressure

  7. Trends • Marketing is becoming increasingly marginalised in big companies. Even more in smaller countries. • Networks are concentrating on BRIC-countries and on-line. • China: they have the tangible stuff, but they don’t have the brands. • Converting communication into a commodity.Split-up of the jobs.

  8. Trends • Digital/social media are our core business. • Software as a commodity tool in the digital world. • Private equity offers other opportunities.

  9. It’s a new world. Conclusion

  10. Selling to a third party • Networks • Private equity • Private individuals as sleeping partners

  11. Selling to the kids • Do they have the know-how and the skills? • Integrationwithin the existing management team. • Yourotherkids.

  12. Selling to the management team • Are they willing to invest? • Do they have the money or the capital sources?

  13. New trend • A mix of shareholders. • The previous owner becomes sleeping partner. • Other parties concerned become shareholder (eg printer, software developer, holding, …)

  14. Rating methods • Based on historical performances. • Discounted Cash Flow method (DCF). • Earn out: • Based on growth • 3 – 5 years • Multiplier influenced by certain criteria • Importance of continuity • Value ≠ price

  15. Model • Old situation Selling price: 1.000 Owner 1: 600 Owner 2: 400 Owner 1 Owner 2 60% 40% Agency x

  16. Model • New situation alternative 1 Owner 2 Owner 3 Owner 4 60% 20% 20% NewCo 100% Agency x

  17. Model • New situation alternative 2 Owner 2 Owner 3 Owner 4 60% 20% 20% Agency x

  18. New financial situation • Capital: 400 • Owner 2: 240 • Owner 3: 80 • Owner 4: 80 • Bank loans: 600

  19. Trend • The way it used to be: • 20/80 • Nowadays: • 30/70 • 40/60

  20. Payback period • 5 – 7 years

  21. My interest is in the future, because I’m going to spend the rest of my life there Thank you

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