14.30 > 15.45 Workshop 2

The impact of emotions in the transfer process

Moderator :

Toni Brunello

CEO, StudioCentroVeneto

Italy

• Annika Hall - Professor, Jönköping International Business School, Sweden

• Maarten A.J.M. van de Kimmenade - Adviseur, De Familiebdedrijven Adviesgroep, The Netherlands

• Sylvie Huard - CEO, Harmonie Intervention, Canada• Laurent Weerts - Managing Director, Institut de

l'EntrepriseFamiliale, Belgium• Edwin Weesie - Lecturer, University of applied Sciences of

Utrecht, The Netherlands• Testimonial: François MARTINEAU - Manager, FM Consulting,

France

14.30 > 15.45 Workshop 2

The impact of emotions in the transfer process

Another kind of awarenessAnnika Hall

Professor, Jönköping International Business School, Sweden

14.30 > 15.45 Workshop 2

The impact of emotions in the transfer process

We know that transfers are emotional.

We know some of the consequences.

But this is not enough.

To improve transfers we need

another approach!

From knowing that to understanding why.

How did it feel to sell Skype the 2nd time?

”It was a big difference. The first time I was founder and CEO and Skype defined me as a person. Skype was something with which I had worked day and night for many years. Then it was a difficult and emotional decision to sell the company. --- The second time I had an investor´s role. I was on the board and kept away from operational issues. Then it was no emotional decision, it was only about financially evaluating our alternatives”.

(Niklas Zennström, Dagens Industri, 2011-11-25)

From solutions to questions.

From transfer to transition.

Need of transition facilitators.

Awareness from within!

Maarten A.J.M. van de Kimmenade

Adviseur, De Familiebdedrijven Adviesgroep

The Netherlands

14.30 > 15.45 Workshop 2

The impact of emotions in the transfer process

• The family bond or family dynamics

–roles, birth order, position, age, intelligence, history etc.

• Psychological ownership of a company

–Meaning,

–Power over the organisation

–Emotional bond with the organisation

Two basic underlying principles of emotions relatedto business transferenceEffects of family dynamics?

Effects of family dynamics?

• They can hinder or can support the successor

• Father/son or mother/daughter relations can often be in conflict

• My study in 2003: 6% of all family companies are sold to avoid family conflict

Psychological Ownership

• Company is the creation of the owner/director

• Company becomes an extension of the owner/director

• After succes: it gives meaning, a positive identity, high self esteem, status and respect

• A positive working behaviour

• More involvement, care, responsibility

Psychological ownership and the influence on transference

• Resistance of transferrer to letting go because of :

–Lost of meaning, identity, self esteem

–Lost of power and influence

–Lost of challenge and life routine

–Fear for last period of life

• Resistance for successor due to:

–Difficulty to replace the relationship between the transferrer and the organisation

–The loyalty of the organisation to the transferrer

–Distrust from the organisation for the newcomer

Psychological ownership and the influence on transference

Sylvie HuardCEO, Harmonie Intervention

Canada

14.30 > 15.45 Workshop 2

The impact of emotions in the transfer process

14.30 > 15.45 Workshop 2

Valuation of SMEs: how to take up the challenge?

The valorisation of a Family BusinessLaurent Weerts

Managing Director Institut de l'Entreprise Familiale,

Belgium

1 The Family Business is a system

How does it work?

1 The company overloads the family

2 The family overloads the company

3 Respect of the history

4 The values

5 The strategy

6 The charter

7 The “extern” (independant)

8 The chief emotional officer

2 The valorisation of the company

Net assets value Discounted cash-flow Gordon Shapiro model EBITDA valuation multiple …

No place for emotion

3 What is the value of a Family Business?

VALUE OF FB = FINANCIAL VALUE + EMOTIONAL VALUE

3.1 Emotional Income

Reputation, visibility Recognition Stability of the family Independance …

3.2 Emotional cost

Unbalanced FB system Tensions in the family Obligations Rivalries No time for business

Conclusion

EI – EC > 0 FB value > Financial Value

EI – EC < 0 FB value < Financial Value

“The psychological aspects in the decision making process in the case of business transfers”

Edwin WeesieLecturer, University of applied Sciences of

UtrechtThe Netherlands

14.30 > 15.45 Workshop 2

The impact of emotions in the transfer process

Postponement of exit: past findings

Studies describe a state of mind. Psychological “persona causa” of the entrepreneur is mostly unknown

and should be further investigated e.g.:Hessels et al., (2009); Sharma (2003); Stone et al., (2004); Baron, 2008)

Homo economicus Cognitive Bias Simon, (1954); Tversky et al., (1974); Kahneman, (2012)

Bounded rationality: Information increase; Environment highly unpredictable; Entrepreneurial process

chaotic, time compressed and complex; Investment in case of personal risk Rubenstein, (1998)

Heuristics: Simple rule to help make decisions affect heuristic eg: Morris (2012),Steunebrink et al., (2011); Crown et al., 2002).

Lansberg (1988) Kets de Vries (2003)

•uncertainties surrounding the future, •the edifice complex,

•reluctance to face one’s own mortality, •the experience of nothingness

•losing control over life itself

DeTienne (2010)

losing a part of the identity

What do you see………

Anger……..

Sadness…..

Guilt…..

Affect: what is it?

Emotions: intense, short-lived, with a definite cause and clear cognitive content

Moods: low intensity, diffuse and relatively enduring affective states without a clear cause

Supporting model A circumplex for emotions, (Russell, 1997:210)

Conceptual model in development and adapted from Noble & Walker, (1997:32)

Liminal period rite of passage shapes new identity through for example symbolic possessions and cummunitas e.g.: Meta et al, (1991); Belk, (1992)

Research methodologies

Organizational storytelling (James et al., 2004)

Facial Recognition Software (FACS)

Profile of Mood States (POMS)

Panel assessment

The PrEmo InterfaceDesmet, et al., (2000).

Want to participate?

• Do you know someone who can and wants to share a story on business transfers?

2 or 3 contact maximum

• Do you want to share your experience?

• Expert panel participation?

edwin.weesie@hu.nl

+31 (0)6 5068 5822

Testimonial François MARTINEAU

Manager, FM ConsultingFrance

14.30 > 15.45 Workshop 2

The impact of emotions in the transfer process

SME TRANSFER

SME TRANSFER IS A HIGH STRESS PERIOD FOR SELLER - Why ?

- Often the leader has no expertise in selling

- In the same time, he is the expert of is own company

- The leader does not know where he can find the expertises he needs?

- How control all the mix of confuse emotions?

- Which kind of reactions the manager develops in front of this stress.

• To Take the décision to sell or not

– What will be my life after ?

– What will be my Status ?

– Is that correct or not ?

– When it will the better time to do it?

• What is the good price of a transfer

- Does a market price exist.

- Who has the money to buy my company : a competitor? Export group?

- Belief : Personal buyer has not enough money.

Many questions come to the leader.

• Bad stress is given by emotions that you do not control

• The fear :

– Is it the good time

– What I will become

– Which price or value

– What will happen to the company

• Each person reacts with different way in this stress period

– The seller needs a personal help to coach him

Transfer give a maximum bad stress

• Guilt

– Leaving the enterprise (Why do you leave if the company is still good?

– Guilt because the LMBO years will be more difficult for employees

– Giving the business to a unexperienced person

• Sadness

– Leaving your partner, employees

– Leaving customers

Transfer can give shame and Sadness

• Pleasure

– Money comes ……….

– His money will become more secured

– A personal succes in the continuity of his enterprise

– Free time will be coming!!

Last but not least : join the CRA

Transfer can give some dream

• Prevention of the emotions (help of a coach)

• Help the manager to control its feelings

• To have a better knowledge of himself

• Help the leader to prepare the transfer

• he needs about 3 years work.

• To Coach him or give an awareness in the way to succed

• The transfer period is very hard because a lot of work and emotions.

Seller is the expert of the enterprise but he needs help.

How to help the transfer

• Speaking of his personal objectifs for him and for the company

• Making a retro planing of the 3 years time.

• Give to the seller a list of Expert with whom he can work

• Chatered accountant

• Banker expert in personal property

• Lawyer specialized in the Transfer

• Solicitor

How to help the transfer

A seller with good help of the experts

and

with a good preparation ( anticipation)

Will give more value

to his enterprise .

How to help the transfer

• Annika Hall - Professor, Jönköping International Business School, Sweden

• Maarten A.J.M. van de Kimmenade - Adviseur, De Familiebdedrijven Adviesgroep, The Netherlands

• Sylvie Huard - CEO, Harmonie Intervention, Canada• Laurent Weerts - Managing Director, Institut de

l'EntrepriseFamiliale, Belgium• Edwin Weesie - Lecturer, University of applied Sciences of

Utrecht, The Netherlands• Testimonial: François MARTINEAU - Manager, FM Consulting,

France

14.30 > 15.45 Workshop 2

The impact of emotions in the transfer process