14.30 > 15.45 Workshop 2 The impact of emotions in the transfer process Moderator : Toni Brunello CEO, StudioCentroVeneto Italy
14.30 > 15.45 Workshop 2 The impact of emotions in the transfer process • 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 awareness Annika Hall Professor, Jönköping International Business School, Sweden
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!
14.30 > 15.45 Workshop 2 The impact of emotions in the transfer process Maarten A.J.M. van de Kimmenade Adviseur, De Familiebdedrijven Adviesgroep The Netherlands
Two basic underlying principles of emotions related to business transferenceEffects of family dynamics? • 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
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
Psychological ownership and the influence on transference • 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
14.30 > 15.45 Workshop 2 The impact of emotions in the transfer process Sylvie Huard CEO, Harmonie Intervention Canada
"Buyers and sellers: when emotions get into the mix" • Business owners often worry about the risk involved in selling their company, but what is this risk exactly? My experience as an entrepreneur, mediator and expert in business transfers has shown that the real risk factor is human. Human, as in human relations and human decisions. • When a business changes hands, a lot of questions arise and these questions can become emotionally charged. This is when what we call emotional intelligence comes into play: the ability to recognize, understand and handle emotions, and to communicate clearly on sensitive issues. Read the full article here
14.30 > 15.45 Workshop 2 Valuation of SMEs: how to take up the challenge? The valorisation of a Family Business Laurent 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
14.30 > 15.45 Workshop 2 The impact of emotions in the transfer process “ The psychological aspects in the decision making process in the case of business transfers ” Edwin Weesie Lecturer, University of applied Sciences of Utrecht The Netherlands
Postponement of exit: past findings 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 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).
What do you see……… Anger…….. Guilt….. Sadness…..
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) Panel assessment Facial Recognition Software (FACS) Profile of Mood States (POMS) The PrEmo Interface Desmet, 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
14.30 > 15.45 Workshop 2 The impact of emotions in the transfer process Testimonial François MARTINEAU Manager, FM Consulting France
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.
Many questions come to the leader. • 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.
Transfer give a maximum bad stress • 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 can give shame and Sadness • 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 some dream • 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
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