1. Tick, Tock. Is Time Running out for Canadas Baby BoomerBusiness Owners?RULES OF ENGAGEMENT INC.

2. Baby Boomers The Big Picture There are over 80 million Baby Boomers in North America! In Canada, Boomers represent the largest single demographicsegment at approx. 10 million or about 30% of ourtotal population RULES OF ENGAGEMENT INC. 3. Baby Boomers The Big PictureBoomers control more of Canadas personal wealth than anyother segment. Net Worth 215% greater than Canadian median Canadas biggest discretionary spenders 80% of all leisure travel 40% of all electronics 77% of prescription drugsSource: Stats CanadaRULES OF ENGAGEMENT INC. 4. Baby Boomers The Big PictureCanadas highest household incomes 55% greater than post-Boomers 61% higher than pre-BoomersBetter educated than any previous groups 63% hold a college diploma or auniversity degree RULES OF ENGAGEMENT INC. 5. Baby Boomers The Big PictureOwn more property than any other demographic group 80% own a home (vs. 69% for the general population) 25% own at least one additional propertyRULES OF ENGAGEMENT INC. 6. Baby Boomer - Business OwnersBoomers own 1.5+ million businesses Small less than 50 employees Medium 50 500 employeesNo other segment comes close! Sources: Business Exit StrategiesRULES OF ENGAGEMENT INC. 7. Baby Boomer - Business Owners1.5+ million businesses 45% of Canadas gross domestic product Employ some 60% of all Canadian workers Source: Business Exit Strategies Canadian Federation of Independent BusinessRULES OF ENGAGEMENT INC. 8. Baby Boomer - Business OwnersMore than 70% of Canadas independent businessowners plan to retire or relinquish control of theirbusiness within the next 10 years. More than 40% intend to exit within 5 years Business sales will double each yearfor the next 10 years. Source: CIBC World Markets Report Canadian Federation of Independent Business RULES OF ENGAGEMENT INC. 9. Baby Boomer - Business Owners600,000+businesses owners plan to exit by 2015A transfer of assets valued at $1.2 trillion Source: CIBC World Markets Report Canadian Federation of Independent Business RULES OF ENGAGEMENT INC. 10. Baby Boomer - Business OwnersBoomers used sophisticated techniques over the past decades to start, grow and manage their businessbut have failed to understand the need to plan an exit. Only 15% have an exit strategy!Michael Coyle: CentrePoint Business Advisors, Inc.RULES OF ENGAGEMENT INC. 11. Baby Boomer - Business Owners 80 90% of business put on the market fail to sell or transfer successfully.Of the businesses that do sell: 20% sell to a family member 15% sell to an insider 50% sell to a third party Balance are mergers, employee share ownership etc. Sources: Business Exit Strategies RULES OF ENGAGEMENT INC. 12. Baby Boomer - Business OwnersPerfect Storm The net result of this perfect storm ofaging and selling could leave Boomers on the outside looking in when it comes time to cashing in on their lifes work and enjoyingthe fruits of their labour.RULES OF ENGAGEMENT INC. 13. Baby Boomer - Business OwnersWhy businesses fail to sell: Owned and managed by original entrepreneur Owner is driving force behind success of business Supplier contacts Personal relationships with key customers Surrounded by long term employees who, over the years developed internal policies, practices and processes to accommodate their idiosyncrasiesRULES OF ENGAGEMENT INC. 14. Baby Boomer - Business Owners The Founders SyndromeThis syndrome occurs when, rather than working toward its long term mission, the organization operates primarily according to thepersonality/needs/wants of the Founder or Owner.Profit OrientationRULES OF ENGAGEMENT INC. 15. The Founders Syndrome M ajo rityCompany Value $Survival Cash Flow Profit Live Style Retirement - Wealth TimeRULES OF ENGAGEMENT INC. 16. Baby Boomer - Business OwnersThe Problem with ProfitEvaluating a business based solely on its profitability requires a buyer to look backwards at historical performance. RULES OF ENGAGEMENT INC. 17. Baby Boomer - Business Owners Buyers Want to Look Forward They must be convinced that, at a minimum, past performance will continue undertheir ownership.An Asset with Appreciating ValueRULES OF ENGAGEMENT INC. 18. Baby Boomer - Business Owners What can PrivateBusiness Owners do to add value to their company?Lots!RULES OF ENGAGEMENT INC. 19. Baby Boomer - Business Owners The Old Paradigm If I work hard and build a profitablecompany I should be able to sell it and retire in comfort. Value = ProfitRULES OF ENGAGEMENT INC. 20. Baby Boomer - Business OwnersThe New Paradigm When a private company is put on the market for sale, profitability is only point of entry its just the beginning.V = PSTValue = Profit that is Sustainable and Transferable RULES OF ENGAGEMENT INC. 21. Baby Boomer - Business Owners Most entrepreneurial businesses do not sell because they are not: Sustainable owner is driving force Transferable few or no processes in place for new owner RULES OF ENGAGEMENT INC. 22. Baby Boomer - Business OwnersThe Entrepreneurial Challenge Owner vs. PresidentRULES OF ENGAGEMENT INC. 23. Baby Boomer - Business OwnersRole of Owner Role of President Corporate Vision Goal Setting Mission Statement Day-to-day mgmt. Strategic Direction Operational Efficiency Revenue Generation Profit Sustainability Customer satisfaction Stakeholder Value Financial Tracking Successful Transfer or Profitabilitysale of asset RULES OF ENGAGEMENT INC. 24. Baby Boomer - Business OwnersDrivers of Drivers ofSustainable Profit Transferable Profit Market Share Company Culture Growth Potential Finance and Admin. Recurring Revenue Sales and Marketing Operations Barriers to Entry Customer Satisfaction Differentiation Senior Management Branding Human Resources Customer Diversity Legal Cost of ProductionRULES OF ENGAGEMENT INC. 25. Baby Boomer - Business OwnersRole of the OwnerRole of the CEO STValue = Profit that is Sustainable and Transferable RULES OF ENGAGEMENT INC. 26. Baby Boomer - Business OwnersWhat is your Business Really Worth?What can you do to Maximize its Value? RULES OF ENGAGEMENT INC. 27. Baby Boomer - Business OwnersWith CoreValue You Can: Measure the true Value of your company Rate Company Performance against Industry Standards Assess Company Strengths and Weaknesses Define an Action Plan to Increase Enterprise Value Measure and Track Performance ImprovementsRULES OF ENGAGEMENT INC. 28. 4 Steps to Increasing ValueManage forAssessmentAnalysisAction Plan IncreasedValue RULES OF ENGAGEMENT INC. 29. Manage forAssessmentAnalysisAction PlanValueASSESSMENT Industry Research Report CoreValue Workbook 17 Operational and Market Drivers Industry Standards Gather Financial Information RULES OF ENGAGEMENT INC. 30. RULES OF ENGAGEMENT INC. 31. Manage forAssessmentAnalysisAction PlanValueANALYSIS Industry Research Submit info - secure webpage Proprietary algorithm industry rating Assess how sustainable & transferable business is Dashboard of Ops & Mkt. Drivers Estimated CoreValue RULES OF ENGAGEMENT INC. 32. RULES OF ENGAGEMENT INC. 33. RULES OF ENGAGEMENT INC. 34. AssessmentManage forAnalysisAction Plan Value Action Plan Revenue/Operations/Financial Set goals in Action Tabs 17 Business Drivers SWOT analysis Tactical Plan Use Dashboard to monitor results RULES OF ENGAGEMENT INC. 35. CoreValue Estimator 5 4$000,000 3 2 1 0 1st Qtr2nd Qtr3rd Qtr CoreValue Estimate Industry Value Estimates RULES OF ENGAGEMENT INC. 36. AssessmentAnalysisAction PlanManage forValueManage for Value Weekly/monthly review variance to budgets Monitor both Value & Profit goals Business Driver reviews Be agile make necessary changes quickly RULES OF ENGAGEMENT INC. 37. The Bottom Line A higher ROI based on a new understanding of: Owner vs. President Profit vs. Value Sustainable Drivers vs. Transferable Drivers Managing for today vs. tomorrowValue = Profit that is Sustainable and Transferable RULES OF ENGAGEMENT INC. 38. Thank You. Michael MangialardoPresidentRules of Engagement Inc.416-399-6588RULES OF ENGAGEMENT INC.