How to Build a 100 Year Enterprise The Role of The Family Office Presented by: Linda C. Mack STEP New York June 11, 2015
100 Year Family Enterprise Family Family board Family council Family constitution Next generation engagement and education Exit policy Family Office Family board Family engagement Next generation education Family meetings/retreats Family unity/harmony Family foundation Family Business Enterprise Independent board Non-family CEO 2
Role of the Family Office In Support of the 100 Year Family Enterprise 3
Phase 1: Family Office Evolution Family s Situation G1: Wealth creator Founder, 100% owner and CEO of operating company Liquid assets of $300MM Wealth creator and his wife are 60 G2: Three children in their 30s, all married Two sons work in the operating business; the daughter is a stay-at home mom G3: Total of five grandchildren All under age 5 4
Phase 1: Family Office Evolution Current Status VP Finance from operating company taking care of personal financial needs Outside big four accounting firm taking care of tax needs Frat buddy at a local firm serving as his attorney No estate planning Investments being handled by hodge-podge of brokers and investment advisors Family Office Decision Accountants and attorneys have advised patriarch to establish single family office Consultant hired to assess options and help determine course of action - Considered benefits of establishing family office vs. support from existing multi-family office Decision: Establish a single family office for our wealth creator and his family 5
Phase 1: Family Office Evolution Structure and Governance: CFO hired to head family office Functions as expert generalist and trusted advisor CFO reports to Patriarch Support of 100 Year Enterprise Goal CFO works with Patriarch and family on mission and vision for the future and best practices for family enterprise evolution 6
Phase 2: Family Office Evolution Family s Situation 10 years later G1: Wealth creator Wealth creator sells a division of the operating company for $200 million Other assets have grown to $400 million Total liquid assets of $600 million Wealth creator and his wife are 70 G2: Three children in their 40s, all married Two sons work in the operating business; the daughter is a stay-at home mom G3: Total of nine grandchildren All under age 15 7
Phase 2: Family Office Evolution Current Status More internal support needed for investment function Larger staff needed to meet growing needs of family Estate planning has resulted in creation of numerous trusts Foundation has been established Structure CFO promoted to family office President Continues to function as expert generalist and trusted advisor Hire controller and VP of tax to manage those respective functions Hire senior investment professional Hire Foundation executive director 8
Phase 2: Family Office Evolution Governance Family Office Board established Two G1s and three G2s Investment Committee established Support of 100 Year Enterprise Goal President working with Family Council to develop: Family constitution 100-year family office strategy Next generation engagement and education strategy 9
Phase 3: Family Office Evolution Family s Situation Another 10 years later G1: Wealth creator Wealth creator and his wife are now 80 Liquid assets have grown to $1 billion G2: Three children in their 50s; all married Two sons work in the operating business; the daughter is a stay-at home mom G3: Total of nine grandchildren All under age 25 10
Phase 3: Family Office Evolution Current Status Current President retires; joins Family Office Board Investment Director wins the lottery and leaves; position upgraded to CIO Family decides to set up private equity investment function in-house Estate planning has resulted in 50+ trusts G2s deem next generation education very important Structure Hire new family office President, CIO and private equity team Hire Client Relationship Manager to: Build proactive client service function to serve family clients Work with President and Family Board to implement 100-year family office strategy Implement G3 education and engagement strategy 11
Phase 3: Family Office Evolution Governance Family Office Board Two G1s, three G2s and the former President Investment Committee Family office Executive Committee established Support of 100 Year Enterprise Goal Work with Family Council and Committees to help develop and implement initiatives to support family unity/harmony Implement initiatives for next generation education and engagement Work with Family Council/Committees to plan and coordinate family meetings and retreats 12
100 Year Family Enterprise Family Family board Family council Family constitution Next generation engagement and education Exit policy Family Office Family board Family engagement Next generation education Family meetings/retreats Family unity/harmony Family foundation Family Business Enterprise Independent board Non-family CEO 13
Questions and Dialogue 14
Linda Mack Linda C. Mack is the founder and president of Mack International, LLC, a boutique firm specializing in retained executive search and strategic human capital consulting solutions for family office and wealth management industry clients on a national and international basis. Prior to founding Mack International in 2002, Ms. Mack was a Partner of TMP Worldwide Executive Search, one of the top five retained executive search firms in the world, from 1997 to 2002. As a member of the firm s global Financial Services Practice, Ms. Mack was responsible for senior level search assignments across a wide range of financial services functions including private banking/wealth management, asset management, private equity, corporate and investment banking, and capital markets. Ms. Mack brings more than twenty-five years of financial services, human resource management and family office/wealth management industry experience to each client engagement. Prior to joining TMP Worldwide in 1997, Ms. Mack was a senior vice president at Harris Bank. Her most recent position at Harris was as senior business development officer in the Private Bank, where she was responsible for marketing wealth management services to high-net-worth individuals and private family offices/enterprises. She was previously a senior executive in Harris Human Resources Department, where she managed the majority of the bank s HR functions and was a senior HR consultant to Harris Bank/Bank of Montreal on merger integration issues. Earlier in her career, she held corporate banking relationship management positions at Harris Bank and Northern Trust. Ms. Mack received her M.B.A. in Finance and Accounting from the J.L. Kellogg Graduate School of Management, Northwestern University. She is a frequent speaker at family office/wealth management conferences on a global basis. 15
Contact Information Linda C. Mack Founder and President O: 800.976.0014 M: 312.953.7809 E: lmack@mackinternational.com Mack International, LLC provides executive search and consulting solutions to family office/family business enterprise and wealth management industry clients on a national and international basis. More information about Mack International is available at www.mackinternational.com. 16
1100 North Lake Shore Drive 28B Chicago, Illinois 60611 Telephone 800.976.0014 Facsimile 800.976.9210 www.mackinternational.com