RESULTADOS Y DISCUSIÓN
4.5. ADILESION DE CÉLULAS A LAS PARTÍCULAS DE MINIERAL
Architects must consider a variety of specific issues during the succession planning process.
Contingency Planning
Such planning is important because it:
• allows for faster succession in case of unforeseen circumstances such as illness, disability, divorce or shareholder/partnership disputes;
• minimizes risk of failure by making the succession plan more flexible, and by building the talent pool.
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September 1999 Canadian Handbook of Practice for Architects Volume 2 Chapter 2.1.2 Succession PlanningReview of Shareholder and Partnership Agreements
When reviewing agreements, sellers should:
• seek professional accounting advice and legal counsel when drafting or amending shareholder/partnership agreements;
• ensure that agreements have a termination clause which addresses misfits or poor performers or those with a mental or physical incapacity;
• conduct a detailed regular review of the agreements with new/prospective owners to ensure the ongoing appropriateness and relevance of the agreements.
Liability for Past Work
Generally, the liability for past work stays with the practice, although some insurers or provincial jurisdictions may hold the original principal responsible. Thus, it is important to:
• verify whether individual protection against potential long-term liability exposure after succession should be maintained;
• seek professional counsel for guidance within a specific context and legal jurisdiction.
Payment
Keep in mind that:
• many prospective internal buyers may have a high personal debt load (home mortgages, car loans, etc.);
• buyers may encounter difficulties providing payment for the acquisition of shares during the succession period;
• it is a significant advantage for the practice to be highly profitable during this period, especially if buyers expect to finance the purchase from the practice’s earnings through increased salaries or bonuses;
• the buy-in must be feasible and attractive to new (typically younger) principals who need assurance that their investment will pay off;
• a “sinking fund” could assist the second-generation owners to buy-in and pay-out the first-generation “founders.”
Valuation of the Practice
The value of the practice may be estimated through:
• earnings capitalization;
• discounted net cash flow;
• excess assets;
• a modified book value procedure that recognizes the economic worth of the firm (the net realizable value, or NRV) as opposed to an historic assessment based upon generally accepted accounting principles.
In most cases, the firm’s accounting records are an objective starting point to begin the process of determining the NRV.
Sellers and purchasers should seek independent professional advice when estimating the value of the practice.
Goodwill
Goodwill is a subjective asset. Keep in mind that:
• intangible assets are notoriously difficult to evaluate;
• typically, goodwill is over-valued by the seller because of emotional considerations and under-valued by the buyers due to self-interest;
• the valuation gap between buyers and sellers is even more pronounced when the buyer is from outside the architectural practice;
• the valuation of specific intangible factors
“should be restricted to those assets whose utility can be transferred to other parties independent of the business and therefore have some hope of a value in exchange.
Even for these, hard evidence should be available to justify the basis of valuation.”
(Skinner)
Canadian Handbook of Practice for Architects September 1999
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The Strategic Human Resources Planning Process
Succession planning is most successful when leadership can be transferred gradually within the architectural practice. This process can take up to ten years of internal staff development time and encompasses the following four stages:
Phase 1. Strategic Planning
• know the firm’s culture because leadership begins with an understanding of the firm’s values;
• develop a strategic plan, which is essential for the firm to effectively integrate business components such as:
• realize that the strategic plan will provide a framework for more detailed human resource development.
Phase 2. Development of the Talent Pool
• identify and communicate the measures that future leadership must take to maintain staff commitment and motivate people to achieve success;
• assess existing staff and acquire new talent in areas of deficiency;
• provide opportunities for leadership and cross-functional experience;
• establish a meaningful performance evaluation system to monitor and foster ongoing
development through:
• coaching;
• review;
• feedback on performance achievements and performance gaps;
• keep in mind that ownership is not an end in itself, but a way to give a financial incentive to the person identified as a major contributor to the firm;
• implement a continuing education program to nurture the acquisition of professional knowledge.
A common concern regarding staff education programs is that only a limited number of staff groomed for promotion will actually advance within the firm, while others may leave and become informed competitors. While it may seem counterproductive to train potential competitors, remember that: “the only thing worse than training your employees and losing them, is not training them and keeping them” (Zig Ziglar).
Phase 3. Selection and Transition
• select a successor or successors and monitor their ongoing development and performance;
• provide prospective successors with a transition period to management and ownership which involves:
• management training;
• leadership development;
• orientation before taking ownership;
• professional development to achieve the stature of a senior partner.
Phase 4. Continuous Renewal
• relentlessly continue the process;
• watch for opportunities to use the experience and succession plans of the other owners (if any) to regularly facilitate a staged ownership transition upon successive retirements.
It is healthy to continue with professional involvement after ownership transition/retirement through such activities as mentoring, community service, and committee work.
The Issues
Architects must consider a variety of specific issues during the succession planning process.
Contingency Planning
Such planning is important because it:
• allows for faster succession in case of unforeseen circumstances such as illness, disability, divorce or shareholder/partnership disputes;
• minimizes risk of failure by making the succession plan more flexible, and by building the talent pool.
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September 1999 Canadian Handbook of Practice for Architects6
September 1999 Canadian Handbook of Practice for Architects Volume 2 Chapter 2.1.2 Succession PlanningDefinition
Goodwill: The intangible element of the value of a business (including the worth of the architect’s legacy, image, and client base) calculated as the amount by which the value for sale or investment exceeds the sum of net identifiable assets. This is sometimes measured as the current value of expected future earnings in excess of the return required for sale or investment, or calculated as a multiple of earnings performance averaged over a period of five or more previous years.
References
Barlow, Kenneth J. Internal Transfer of Ownership: A practical guide for consulting professionals. Clarkson, Ont.:
Clarkson Publishing Ltd., 1986.
Royal Architectural Institute of Canada (RAIC). Firm Valuation. RAIC Practice Builder. Ottawa, Ont.: RAIC.
Skinner, Ross. Accounting Standards in Evolution. Toronto, Ont.: Holt, Rinehart and Winston of Canada, 1987.
Stasiowski, Frank A. The Complete Guide to Ownership Transition. Newton, MA: PSMJ Resources, Inc., 1996.
Stratem Consultants, Inc. Succession Planning Within Consulting Engineering Firms. Ottawa, Ont.:
Association of Consulting Engineers of Canada, 1996.
Canadian Handbook of Practice for Architects September 1999
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Identification of Business and Payment
❑ Assets — Land and Leases Inventory, Work In Progress (WIP), Supplies & Equipment, Goodwill, Contracts & Royalties, Accounts Receivable
❑ Liabilities
❑ Purchase Price, Deposit, Payment of Balance — Cash, Shares, Earn-out Security for Payment
❑ Terms of Letter of Intent Securities and Other Regulations
❑ Securities Act Compliance and Exemptions
❑ Change of Control of Ownership
❑ Investment Canada — Exemption, Notification or Reviewable Transaction (for foreign purchasers)
❑ Bulk Sales Act Requirements
❑ Provincial Architects Acts Pre-Closing Matters
❑ Insurance and Good Faith Operation of Business until Closing
❑ Preview and Seek Required Consents (e.g., from landlord, etc.)
❑ Right to Conduct Due Diligence
❑ Documents to be Delivered on Closing
❑ Independent Legal Advice
❑ Other Condition Precedents to Closing Tax Issues
❑ Allocation of Purchase Price
❑ GST or HST and Tax Rollovers
❑ Tax Filing on Deemed Year End
❑ Non-Resident Vendors Tax Certificate
❑ Land Transfer Tax
❑ Loss Carry Forwards and other Tax History
❑ Retail Sales Tax
Representations and Warranties of Vendor and Due Diligence of Purchaser
❑ Employment and Consultant Agreements
❑ Employment Standards
❑ Employee Benefit and Pension Plans
❑ Environmental Matters
❑ Threatened or Pending Litigation or Outstanding Judgements
❑ No Other Purchase Agreements Outstanding
❑ Contractual and Regulatory Approvals
❑ Incorporating and/or Partnership Documents and Licences
❑ Compliance with Incorporating and/or Partnership Documents
❑ Financial Statements
❑ Partnership or Shareholder Agreement
❑ Indebtedness
❑ Commitments for Capital Expenditures
❑ Tax and Source Deductions and Remittances
❑ Restrictions on Doing Business
❑ Clients and Outstanding Agreements
❑ Good Standing of Agreements
❑ Affiliations and Joint Ventures
❑ Insurance
❑ Government Assistance
❑ Liens, Charges, and Title to Assets
❑ Work Orders and Deficiencies
❑ Construction Liens affecting the Practice
❑ Real and Intellectual Property
❑ Leases of Equipment
❑ Condition of Property and Equipment
❑ Status of Vendor, i.e., Bankruptcy, Citizenship, Arms Length
Post-Closing Matters
❑ Non-Competition — Continuing Employment
❑ Confidentiality
❑ Employees — Restructuring Employment
❑ Release by Vendor
❑ Announcements
❑ Releases from Guarantees
❑ Indemnities and Set Off of Obligations
❑ Other Obligations Continuing After Closing