UBS Wealth Management From Entrepreneur to Wealth Manager: Professional, Personal and Financial Challenges of Business Sales

Transcription

1 BOOKING CENTER SWITZERLAND UBS Wealth Management From Entrepreneur to Wealth Manager: Professional, Personal and Financial Challenges of Business Sales April 2012

2 Today's Objectives One who cares is one who listens. 1. Introduce UBS Group and our capabilities in Central and Eastern Europe 2. Understanding the entrepreneur, his company and his family 3. Overcoming the professional, personal and financial challenges of business sales 4. Your point of view Conclusions 1

3 Table of Content UBS Group and our capabilities in Central and Eastern Europe Holistic understanding of the Entrepreneur, his business, his family Professional, personal and financial challenges of business sales Conclusions 2

4 UBS one of the leading financial firms UBS draws on its 150-year heritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. UBS employs about 65,000 people around the world We combine our Wealth Management, Investment Banking and Asset Management businesses with our Swiss operations to deliver superior financial solutions and manage CHF 2.2 trillion in invested assets UBS is present in all major financial centers worldwide. It has offices in over 50 countries, with about 37% of its employees working in the Americas, 37% in Switzerland, 16% in the rest of Europe and 10% in Asia Pacific 3 Please refer to the disclaimer at the end of this presentation

5 About UBS Wealth Management at the core Our business is built on strong relationships Wealth Management & Swiss Bank Wealth Management Americas Global Asset Management Investment Bank Focuses on delivering comprehensive financial services to high net worth and ultra high net worth individuals around the world as well as private and corporate clients in Switzerland. Our Wealth Management business unit provides clients in over 40 countries with financial advice, products and tools to fit their individual needs. Provides advice-based relationships through financial advisors who deliver a fully integrated set of products and services specifically designed to address the needs of ultra high net worth, high net worth and core affluent individuals and families in the US as well as in Canada. A large-scale asset manager with businesses diversified across regions, capabilities and distribution channels. It offers investment capabilities and investment styles across all major traditional and alternative asset classes. These include equities, fixed income, currency, hedge fund, real estate, infrastructure and private equity investment capabilities. Provides securities and other financial products and research in equities, fixed income, rates, foreign exchange and precious metals. It also provides advisory services and access to the world's capital markets for corporate and institutional clients, governments, financial intermediaries, alternative asset managers and private investors. 4 Please refer to the disclaimer at the end of this presentation

6 UBS Capabilites in Central & Eastern Europe Advisors Switzerland: A strong workforce of dedicated client advisors with language capabilities Russia Advisory Office: Launched CZECH POLAND SLOVAKIA BELARUS HUNGARY MOLDOVA SLOVENIA ROMANIA CROATIA BOSNIA SERBIA MONTENEGRO BULGARIA MACEDONIA ALBANIA ESTONIA LATVIA LITHUANIA UKRAINE Being one of the leading wealth managers for Eastern Europe provides access and opportunities for our clients Representative Offices Prague Moscow Budapest Kiev Warsaw ICELAND Dedicated Research Over 120 analysts cover the region Product offering Booking centers in Zurich, Geneva, London and Singapore Market related products, tailor-made for Eastern European clients by our numerous market and product specialists SWITZ. RUSSIA 5 Please refer to the disclaimer at the end of this presentation

8 Wealth Planning - you and your wealth No matter what phase of life you are in, we are here to help you meet your financial goals EUR Setting up a company/career Wealth accumulation Well established company Advancement of inheritance Wealth preservation Retirement Early retirement Wealth transfer Heirs/succession Assets Cost of living Income 20 Family Marriage Age For a family business it is to be understood Owner and ownership structure Management, by owner or outsiders personal and financial needs of the owner Needs/ goals of the family members In emerging markets there is a general shortage of qualified professional managers Thus, business owners often face difficulties finding a potential CEO who could take over day-to-day management The Inheritors' dilemma is how to create an effective individual identity strong enough to separate from, yet integrate with, the massive power of wealth Wealth brings freedom in choices of lifestyle but also a sense of obligation to society Please refer to the disclaimer at the end of this presentation

9 The Role of a Private Banker Understanding begins with listening to you, focusing on your personal situation Three interconnected worlds When we talk about your financial future, we consider all the relevant information about your situation Your assets and liabilities Your stage of life Your attitude to risk Your investment horizon Your cash flow requirements Your ongoing personal needs Maximize the value of your business Manage your financial assets Create lasting family wealth 8 Please refer to the disclaimer at the end of this presentation

11 Aspects of a Liquidity Event A liquidity event refers to the conversion of an illiquid asset, a business, a building, into a liquid form such as cash. We need to consider several aspects Liquidity event Sale of a business or liquidation of a position in a business or partnership Sale or disposition of a concentrated or illiquid asset. The sale of concentrated stock positions, real estate or other holdings may also amount to a liquidity event, usually when it represents a primary or majority share of net worth Financial windfall. A less frequent form of liquidity event occurs when an individual receives a large financial position that significantly alters his or her financial state To be considered External aspects Economic outlook Industry outlook Tax outlook IPO and M&A cycle Internal aspects Personal goals Life stage/age Family goals Wealth/Financial goals 10

12 Roadmap for a Successful Company Sale As private bankers we support the entrepreneur in the 3 worlds but Business Family Investments 2Y to 5Y before Monitor business cycle to identify good timing for sale Build team of trusted advisors Fine-tune business model Prioritize needs and goals Understand roles and goals of family members Structure wealth, possibly transfer ownership to heirs Invest assets to protect them against losses before sale 1Y to 2Y before Prepare employees and managers for transition phase Bring M&A advisory team on board and start looking for potential buyers Prepare family members for transition phase, consider more formal family governance Think about your role after the sale Delegate management and oversight responsibilities for financial assets Up to 1Y before Focus all your energy on getting the best deal Use personal activities to remove stress and relax as much as possible Do not be distracted by your investments. If need be, park them in safe assets Up to 1Y after Do not interfere with new management if you still occupy a position in the firm Go on a long vacation or take lots of time off with family and friends Separate accounts for taxes, consumption and investments Educate yourself about wealth management 1Y to 2Y after Reassess work aspirations Settle into your new role and pursue lifetime goals Develop strategic asset allocation to fit financial goals Invest your money along your personal financial plan 11

13 Behavioral Biases of Entrepreneurs 1 the strengths as an entrepreneur lead to weaknesses as investors Typical entrepreneur' behavior... Belief in one's ability helps overcome difficulties...translates in behavioral bias... Overconfidence... leading to typical mistakes as investor! Increased stock picking activity and excessive trading costs 2 Keep faith in business during difficult times Optimism Overly concentrated portfolios with excessive risk 3 Owners have power to control business operations Illusion of control Portfolio trades at the worst moments in time 4 Spot new opportunities from few recent observations Representativeness Trend following 12

14 1 The importance of Strategic Asset Allocation The most important decision, in the long term, is the Strategic Asset Allocation, as it accounts for up to 90% of asset returns Strategic Asset Allocation: The appropriate mix of asset classes based on long-term market assumptions (10+ years) given an investor's objectives and risk tolerance. The optimal portfolio depends on the preferences and the risk profile of the investor. Sub-optimal portfolio Cash Bonds Equity Real Estate Please refer to the disclaimer at the end of this presentation Strategic Asset Allocation of an initial and optimized portfolio. For illustrative purposes only Optimal portfolio Cash Bonds Equity Commodities Real Estate Hedge Funds Private Equity Return Optimal portfolio Efficient frontier line Sub-optimal portfolio Risk The efficient frontier line represents the portfolios with the lowest risk for each given return level. These portfolios are called "efficient" portfolios. 13

15 2 The best-performing asset classes change over time Diversification and a dynamic, market-driven investment process are key Historical annual returns of selected asset classes Market understanding Highest return When analyzing historical annual returns on various asset classes, differences in annual returns become very clear Lowest return Liquidity Bonds Equities Hedge funds Real estate Commodities For illustrative purposes only. Markets are subject to change and returns may vary. Performance figures refer to the past and past performance is not a reliable indicator of future results. Source: UBS Quantitative Investment Solutions Please refer to the disclaimer at the end of this presentation

16 3 Profit from Market Movements with a Tactical Asset Allocation (TAA) Ultimate goal of a Tactical Asset Allocation is to profit from short-term investment opportunities without significantly altering the long-term risk profile Market cycle Phase 1 Bonds Phase 2 Equities Phase 3 Equities & Comm. Phase 4 Money Market Bonds outperform as economy slows Stocks do well when economy initially recovers Interest rate hikes Interest rate cuts Overweight bonds Overweight equities Underweight cash Stocks are still attractive (positive earnings effect). Commodities usually perform well when output gap disappears Neutral equities Underweight bonds Cash is a safe haven when growth slows from the above trend, and rising unit costs trigger a (wage) price spiral (inflation risks) Overweight cash Underweight equity For illustrative purposes only Please refer to the disclaimer at the end of this presentation

17 Private Equity 15% Real Estate 10% Hedge Funds 10% Commoditi Cash 5% es 7% Bonds 5% EM Equity 1.6% Manager C European Equity Japan 4.4% Equity 2.5% UK Equity 19% US Equity 10.5% 4 Take the guesswork out of investing Investment decisions should rely on sound information and a well-founded world view By identifying the most important and promising short- and mid-term trends, UBS's global research offers you: in-depth analysis of key topics that might shape our future objective and private-client-focused investment ideas advice on recommended positioning across all asset classes Themes cycle Buy Buy Sell Sell Hold Hold By combining research expertise and first class investment ideas, we translates these key investment topics into specific investment ideas that suit your personal circumstances informs you about the different ways to stay up to speed with financial developments Specific solutions for each theme Single instruments Structured products Manager A Manager C Manager B Manager A Manager B 1.6% Funds Managed solutions For illustrative purposes only Please refer to the disclaimer at the end of this presentation

19 What is UBS bringing? You benefit from exceptional advice and an outstanding wealth management offering Our experience Acknowledgment 150-year tradition of serving the wealthiest individuals and families across the world Conducted 248 M&A deals in past 5 years, EUR 51bn in value One of the world's best capitalized banks with a Tier 1 ratio of 19.7% Our advice Our investment process orchestrates and consolidates our vast market know-how for you Access to all asset classes We deliver sustainable absolute performance for your investments Enjoy seamless access to the capabilities and universe of an integrated bank with global reach and local presence Our long term commitment Focus on building long term relationship Accompany families for many years Best Private Banking Services Overall ranked by Euromoney Awards #1 in 2012 and 2009, #2 in #1 Pan European Equity House for the 8th year in a row Awards across products in 2012 Best Global Bank for "Range of Investment Products and Advisory Services" Best Global Bank for "Structured Products" Best Global Bank for "Commodities Investment" Best Global Bank for "Luxury Investment" Global awards in 2012 Best Global Private Bank for individuals with 1 million to 30 million USD Best Global Bank for "Family Office Services" Best Global Bank for "Inheritance and Succession Planning" 18 Best Global Bank for "Philanthropy Services"

20 Q&A Thank You Dr. Giuseppe De Filippo Head South Eastern Europe Tel

21 Disclaimer UBS AG (UBS) as a Swiss bank and its Hungarian Representative Office are not licensed to provide financial or investment services in Hungary. Products and services are available and provided by UBS outside Hungary This document and the information contained herein are provided solely for information purposes, they are not to be regarded as investment research, and they are not to be construed as an offer or as a solicitation of an offer to buy or sell any securities or other financial instruments in Switzerland, the United States or any other jurisdiction. Please note that UBS retains the right to change the range of services, the investment products and the prices at any time without prior notice and that all information and opinions indicated are subject to change. Further, asset classes, asset allocation and investment instruments are indicative only. No investment decision relating to securities of or relating to UBS AG or its affiliates should be made on the basis of this document. All investments carry a certain degree of risk and the attention is hereby drawn to such risks which can be substantial. The market in the certain securities may be illiquid and therefore valuing the investment and identifying the risks may be difficult. Some investments may be subject to sudden and large falls in value and on disposition may pay back less than invested. The client should consult the UBS client advisor on the nature of each investment and carefully consider whether such investment is appropriate for the client's situation. Further, tax treatment depends on the individual client s circumstances and may be subject to change in the future. 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These factors include, but are not limited to: (1) future developments in the markets in which UBS operates or to which it is exposed, including movements in securities markets, credit spreads, currency exchange rates and interest rates; (2) the effect of the current economic environment or other developments on the financial position or creditworthiness of UBS s customers and counterparties; (3) changes in the availability of capital and funding, including any changes in UBS s credit spreads and ratings; (4) the consequences of the recent Swiss court decision relating to the provision of certain UBS client data to the US Internal Revenue Service, including possible effects on UBS s 2009 settlements with US authorities and on its businesses; (5) the outcome and possible consequences of pending or future actions or inquiries concerning UBS s cross-border banking business by tax or regulatory authorities in various other jurisdictions; (6) the degree to which UBS is successful in effecting organizational changes and implementing strategic plans, and whether those changes and plans will have the effects intended; (7) UBS s ability to retain and attract the employees that are necessary to generate revenues and to manage, support and control its businesses; (8) possible political, legal and regulatory developments, including the effect of more stringent capital and liquidity requirements, constraints on remuneration and the imposition of additional legal or regulatory constraints on UBS s activities; (9) changes in accounting standards or policies, and accounting determinations affecting the recognition of gain or loss, the valuation of goodwill and other matters; (10) limitations on the effectiveness of UBS s internal processes for risk management, risk control, measurement and modeling, and of financial models generally; (11) changes in the size, capabilities and effectiveness of UBS s competitors; (12) the occurrence of operational failures, such as fraud, unauthorized trading and systems failures, either within UBS or within a counterparty; and (13) technological developments. 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