Massachusetts Family Business Fall 2014

Massachusetts

FALL 2014

FAMILYBUSINESS NEFB CONFERENCE

SPEAKERS SHOW MANY DIFFERENT WAYS TO GROW

Inside:

Lamson Lumber and the Personal Touch Special Succession Section

Official magazine of the

Art by renowned illustrator Christoph Niemann.

Renowned FOCUS For more than a century, we’ve guided business owners as they focus on the future and secure their legacies. For access to an experienced wealth advisory team that will make your business their business, call Will Parizeau at 617-457-2049 or visit wilmingtontrust.com.

FIdUCIARY SeRVICeS

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w e A LT H P L A n n I n G

Š2014 Wilmington Trust Corporation. An M&T Company.

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I n V e ST M e n T M A n AG e M e n T

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P R I VAT e B A n K I n G

Massachusetts Family Business Official magazine of the

CONTENTS

12

NEFB CONFERENCE Highlighting the vitality and flexibility of family businesses.

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from the board

Money Follows The Value

Special Succession Section 5 early succession plan

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Planning Preserves Business Integrity

seven steps to sound succession planning

A Holistic Approach To Business Transition

See Your Business Through Outsiders’ Eyes

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8 private equity firms and succession

10 company profile: lamson lumber

How Lona Lamson Transitioned From Teacher To Business Leader And Industry Advocate

16 perspectives of the younger generation

Impressions From The Front Line 18 outstanding women

The FBA Honors Those Who Have Excelled

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Outstanding

Women D E D I C AT E D T O N E W E N G L A N D FA M I LY B U S I N E S S E S

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2014

Letter from the Board

The Devil You Know and the Value of the Unexpected

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amily-owned businesses have the latitude to make strategic decisions that would present barriers to investor-owned businesses. They can take risks without encountering widespread market pushback from shareholders they don’t know. However, sometimes pushback from the stakeholders they do know can be formidable, as we have seen play out over the summer with the drama in the supermarket business.

That’s where the Family Business Association (FBA) comes in. We are dedicated to helping family-owned businesses to improve their prospects, whether they’re startups or several generations old.

The FBA and Banker & Tradesman hosted the second Annual New England Family Business Conference (see cover story) in June at International Golf Course in Bolton.

The conference included awards for Outstanding Women in family businesses. Eighteen honorees were recognized, from a wide range of product and service industries.

At the conference, our two keynote speakers outlined their very different paths

to leadership positions in their secondgeneration companies. One of our panelists made the point that it’s just as important to pass along a set of company-based values as it is to pass along the family money. Each member of a women-owned family business panel revealed they’d not been the first choice to take over their fathers’ companies. They didn’t gripe about the early assumptions and long odds; the growth of their companies – collectively, over 600 percent during their ownership tenure – show that doing well is the best revenge.

Throughout the year, the FBA presents educational programs relevant to family businesses in each economic region. Recently held programs in September include “A Long Overdue Conversation: How Embracing Gay Family Members Can Enrich the Family Business,” and “Women In Power and Control of Family Businesses.”

The FBA has expanded its offerings to include facilitated peer-to-peer dialog groups. FBA member Valerie Bono and her sister, Maria Malloy, have begun the Next Generation Affinity Group for future gen-

erations, including today’s children.

On October 23, the FBA will hold its annual award ceremony, the 2014 FBA Awards for Massachusetts, to recognize successful family businesses, those who have demonstrated outstanding community involvement, overcome a significant obstacle or achieved excellence in marketing.

All Massachusetts-based family businesses are eligible to participate. To date, finalists have been chosen and announced; the winners will be named at the 2014 award ceremony at the Royal Sonesta Hotel in Cambridge.

You can be assured that FBA programming and service offerings will continue to be relevant, valuable and timely. The FBA staff, executive directors and sponsors receive guidance regarding programming and other service offerings from the FBA Advisory Council made up of nine family business owners representative of the diversity of Massachusetts family businesses.

Don’t miss out on all the resources and benefits of FBA membership. Joining is easy. Just contact Liz Pratt at (617) 2182077 or lpratt@fbaedu.com.

■

Massachusetts

FAMILYBUSINESS

Official magazine of the Family Business Association. Inc.

Editorial | Advertising | Design A Family-Owned Business Since 1872

PRESIDENT Edward D. Tarlow, Tarlow, Breed, Hart & Rodgers, P.C. 101 Huntington Ave., Suite 500 Boston, MA 02199 fbaedu.com

DIRECTORS Jeffrey S. Davis, Mage, LLC Al DeNapoli, Tarlow, Breed, Hart & Rodgers, P.C. Brian Nagle, First Republic Private Wealth Management

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VICE PRESIDENT Catherine Watson, Tarlow, Breed, Hart & Rodgers, P.C.

TREASURER Richard A. Hirschen, Gray, Gray & Gray, LLP

EXECUTIVE COORDINATOR Liz Pratt

280 Summer Street, Boston, MA 02210 Phone 617-428-5100 Fax 617-428-5119 www.thewarrengroup.com ©2014 The Warren Group Inc. All rights reserved. The Warren Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher.

Early Succession Planning Leads to Better Execution

By Scott Kaplowitch

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ne business, multiple children or family members. It’s a scenario rife with potential conflict.

In family business, each new generation multiplies the number of interested parties, often with their own competing needs and interests. Moreover, the younger generation typically brings its own ideas to the business, often moving the company further from the vision of its original founder.

The phenomenon isn’t new. One old Chinese proverb sums it up succinctly, saying “Wealth does not pass three generations.”

Statistics back it up. Today, less than a third of all family businesses survive into the second generation, and just 12 percent make it to the third generation.

Still, some families do manage to get it right, navigating business transitions to the third and even the fourth generation. How do they do it? Often their success is based on strategies that include early planning, a collaborative environment, a respect for individual talents and a recognition that single person needs to be at the helm.

Important lessons can be learned from companies now in the process of crafting transition plans, offering guidance both about what to do and what not to do.

When Approaches Differ Consider one Boston-area company. The founder purchased most of the company’s holdings years ago, then retired and passed the business on to his son. That son is now in his 80s, and the family has been struggling to come up with a succession plan.

The reason: The owner’s two sons, now in their early 50s, don’t have the same business philosophy, and both want to run the businesses. Given their different approaches to the business, succession options are limited.

One could take the helm while the other takes a lesser role. Or the family could split the business in two, but that would eliminate economies of scale that now help to make the business profitable. Or the business could bring in an independent management company to handle day-to-day operations, with

the two brothers taking seats on the board of directors.

To date, none of these options has been acceptable. The future is uncertain, and no resolution is in sight.

To Each His Talent Compare that to the transition being undertaken by a Boston-area company that is just starting to involve the third generation.

In this case, it is the son and the son-in-law, in their late 20s and early 30s respectively, being brought into the business. The current owner is taking a hands-on role, creating specific opportunities for each to learn the business, develop skills and assume responsibility.

The two aren’t being treated as equals, since their skills and experience levels are different. As a result, their compensation is different, as is the path each is taking within the company. The son-in-law, for example, is now in the process of developing a business plan to grow a particular aspect of the business. The son, who has different talents, is tackling other projects.

The long-range plan: The current owner – now in his early 60s – plans to exit the business over the next 10 years, while continuing to provide support and consultation to the next generation. So far, the plan is on track.

Start Early One lesson gleaned from these two stories: Starting early is critical. By bringing family members into business operations at a relatively young age, the owner can help train them and develop necessary talent. A professional adviser can help the family to develop a clearly articulated plan. By creating a collaborative environment, children are part of the planning, and that eliminates surprises.

While one person will likely emerge to run the business, a good succession plan will take other family members into account. In some cases, family members are paid a salary simply to stay away from the business. In other cases, they are considered a key part of company leadership. Finding the right approach will depend on such diverse factors as the personalities of the key players, the needs of the business and the economic climate.

The succession statistics are daunting, but strategic thinking, inclusive planning and an early start are important steps towards improving the odds of a successful transition to the next generation.

■ SCOTT B. KAPLOWITCH, CPA, IS AN ACCOUNTANT AND BUSINESS ADVISOR WITH THE BOSTON ACCOUNTING FIRM OF EDELSTEIN & CO. 5

Seven Steps to Sound Succession Planning

By Rawson Hubbell

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very business deals with transition, from meeting customer demands to launching a new product or service or changing personnel. For many, the most significant transition is passing the torch of leadership, and family businesses present their own specific challenges when RAWSON HUBBELL

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it comes to succession planning.

While every succession plan is – and should be – unique, there are steps you can take to help ensure a smooth transition. Whatever your exit strategy, enlist the counsel of qualified, trusted advisors.

And don’t wait to start planning! The best succession plans are initiated far in advance of officially handing over the reins of leadership. Begin by asking yourself the following seven questions:

Are you (really) ready? Be honest: will you be able to truly step back and leave the company in the hands of the next generation? If the answer is no, determine what steps need to be taken to make you comfortable with your decision to step away from the business.

Will you maintain a role in the business going forward? If your intent is not to remove yourself completely from day-to-day control of the business, decide

what you want your role to be. Work with the future leadership to put clear guidelines around that role – as an ongoing advisor or board member, or in the case of an outside sale, a consultant for a defined period – to ensure a smooth transition.

Is the business ready? Now it’s time to determine whether the business is ready for your departure. Whether transitioning within the family or preparing for a third-party sale, one crucial component is ensuring all financial records are in order.

Having a professional review your records

tion, you will need to consider whether or not you will request any type of earn-outs, which may reduce the sale price but will provide an ongoing source of income as part of the deal.

How will you prepare key employees? Uncertainty about the future can be a troubling distraction for employees. It is essential to take the necessary steps with key employees to instill confidence in the firm’s direction. Involve them as early as possible without running the risk of hampering the deal.

“Considerations around the sale or transfer of a family business extend beyond the company and can have a lasting impact on your financial stability.” can be extremely valuable as they can help confirm everything – from taxes and contracts to charitable giving – is accounted for and will withstand scrutiny.

Has the company been valued correctly? For many family businesses, the sale or transfer can be a critical component to the long-term financial well-being of the family, whether directly or through the estate planning of the owning family member(s). It is, therefore, crucial to have your business valued correctly. An advisor will be able to help by reviewing the maturity of your business, the company finances and even the sales of comparable companies to help establish a value range.

In addition, they can discuss with you how variables such as valuation discounts and hold-backs might impact the value and, ultimately, sale price.

Is the right structure in place? The sale or transfer of the business can be structured in a number of different ways and may depend largely on who the buyer or recipient is.

• Intra-family gift or transfer – for full or reduced value.

• Sale to an employee stock ownership plan (ESOP) – offers attractive tax and business incentives for the right kind of business.

• Sale to an outside party – “strategic” or “financial” buyer often offers the biggest return to the owners.

Many times, we recommend that clients use an escrow to help protect both parties until the deal has been finalized. In addi-

Are you ready for the future? Considerations around the sale or transfer of a family business extend beyond the company and can have a lasting impact on your financial stability. As part of evaluating your business’s exit strategy, enlist a qualified wealth management advisor to help ensure your financial values can be maintained over the long term. This pro-

cess might include a personal wealth evaluation, discussion of personal goals and those for your family, and development of a financial plan. Be sure to consider things such as charitable and lifetime gifting to help ensure your legacy and family’s financial health into the future.

■ RAWSON W. HUBBELL, CFP, IS DIRECTOR OF WEALTH PLANNING AT BOSTON PRIVATE BANK & TRUST CO. Investment products such as stocks, bonds, and mutual funds may lose value and are not insured or guaranteed by Boston Private Bank & Trust Company or any of its affiliates or by the Federal Deposit Insurance Corporation or any other government agency.

Views expressed in this piece may not be shared by the bank or its affiliates. This piece is meant for discussion purposes only.

Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any business, financial, tax or estate planning strategy.

IRS Circular 230 Disclosure: Pursuant to IRS Regulations, neither the information nor any advice contained in this communication (including any attachments) is intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

Family Business is Our Business.

We are attorneys who know how to address the challenges of generational differences and family member relationships.

Edward D. Tarlow, Esq. Chairman, Family Business Practice etarlow@tbhr-law.com 617.218.2000, x2011 7

Succession Planning Through Private Equity Firms – Preparation is the Key

By Steven A. Gagnon

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well-crafted succession plan is a vital tool for businesses today, and not just for those with an imminent transition at the top. Any business with a potential change in ownership coming sometime in the next three to five years should start the process now of building a succession plan that meets the needs of its owner(s).

With increasing regularity, businesses are choosing external paths towards succession planning, rather than turning things over to either family members or employees. Many times family members are not interested in taking control or the parent/grandparent does not feel com8

fortable leaving it to them, and the idea of other employees assuming management may not be viable. When looking externally, the best transition route may be with a private equity firm.

The gradual economic recovery since the 2008/2009 economic crash has contributed to this trend. Bank lending remains difficult to attain, but private equity firms have cash available to invest. This cash flow often makes this exit strategy very attractive.

In addition, private equity firms must put this cash to work in investments or risk losing it. Therefore, multiples being paid by private equity firms have gener-

ally been increasing.

To make this work, it all begins with planning. There are many reasons for a business owner to begin the transition process and create a succession plan before it is time to sell. The age and/or health of the owner are certainly factors, as is the desire to move on to his/her next phase of life, perhaps retirement or a new business challenge. Once an owner decides to choose the private equity path, planning should begin immediately–the sooner the better.

A succession process starts with what financial planners call the pre-diligence phase, a critical time to establish the cur-

rent value of the business and take steps to move it towards a maximized exit value. The value is most often determined through a multiple of Earnings Before Interest Taxes Depreciation and Amortization (EBITDA). It is common in negotiations for potential buyers to attempt to drive the EBITDA number down; naturally a seller will want to prevent that.

This is where pre-diligence is a strong safeguard. Owners should examine their business through the eyes of potential buyers in order to gauge strengths and weaknesses in an effort to maximize the company’s value upon sale and to prevent downward adjustments proposed by the buyer. It is also essential to set a goal for the business to determine what the owner needs or wants from the business financially. Most likely this is the major source of income and will not easily be replaced once the sale has occurred, and they will need to last a lifetime. Identifying this value gives an owner a roadmap on the steps needed (such as increasing sales or upgrading technology) to achieve desired valuation before private equity buyers are sought.

Other considerations to be addressed during this pre-diligence period include whether or not the employee base (or a portion of it) will be retained after the transition and how long the owner plans to stay. Often a period of 12 to 18 months is desired for an owner to remain on while the transition takes place.

Once pre-diligence concludes, employee considerations are set and the terms of the succession plan are established, an owner should talk to a business broker to identify the right private equity firms to approach as potential buyers. The broker will narrow the list to those firms that best meet the seller’s desires and then solicit bids. After a bid is chosen, negotiations begin, conditions of sale are set (regarding employees, ownership transition and other considerations) and the acquiring firm begins its diligence process, which can take anywhere from a few weeks to over six months.

This is why a proper succession plan/ pre-diligence pays dividends. A clean and quick diligence process will often lead to a completed transaction with minimal to no adjustments, while a poorly executed plan (or none at all) can mean

large downward adjustments on the sales price or even a broken deal. It’s true that time and legwork are needed to get a successful succession plan in place, but this investment far outweighs the risk of not having a plan. Unforeseen issues, such as the sudden illness or even death of key management people, can put unprepared businesses in immediate danger and leave them open to the predatory advances of outside interests seeking to either take over or liquidate. Failure to plan can also place a business behind the curve in terms

of peak times or economic downturns, which could greatly damage the overall value.

Once again, preparation is essential for succession planning. For owners who have spent their lives building a thriving business, a well-executed succession plan can provide the peace of mind in knowing there will be continued success for years to come.

■ STEVEN A. GAGNON, CPA, IS A PRINCIPAL WITH BLUMSHAPIRO.

Together, we’ll build a financial plan for your business.

Business success isn’t something you just hope for. You build it with a solid financial plan. Start with a Northwestern Mutual Financial Advisor. Together, we’ll design a personalized plan to help your business achieve its full potential, including risk management and business succession. Who’s helping you build your financial future?

David C Mc Avoy Managing Partner Boston (617) 742-6200 nmfn-thebostongroup.com

05-3077 © 2014 Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life and disability insurance, annuities) and its subsidiaries. Northwestern Mutual Investment Services, LLC (NMIS) (securities), a subsidiary of NM, broker-dealer, registered investment adviser, and member of FINRA and SIPC. David Charles Mc Avoy, General Agent(s) of NM. Managing Partners are not in legal partnership with each other, NM or its affiliates. David Charles Mc Avoy, Registered Representative(s) and Investment Advisor Representative(s) of NMIS. 9

Company Profile

R.S. Lamson & Sons, Now Run by the Family’s Daughter

Left to right: David and Elsie Lamson, third generation; Lynne Sheldon and Lona Lamson, fourth generation; Lindsey Stepp, fifth generation, holding Harper Stepp, sixth generation; Elizabeth and Eben McCormick, fifth generation.

By Debbie Swanson

W

hen 22-year-old Rolla S. Lamson started an ice delivery service in 1887, he probably didn’t think he was laying the groundwork for a business that would thrive for five generations. Now, 127 years later, R.S. Lamson & Sons is a staple to the area building community and an esteemed figure in the lumber industry.

From its early roots delivering ice out of Hudson’s Tripp’s Pond, the company has evolved into a trusted supplier of lumber, millwork, building materials, kitchen 10

cabinets and stone. Through the years, Lamson family leadership has remained constant, with each generation upholding their founder’s emphasis on maintaining valuable relationships and providing topquality products and service.

Five Generations of Family Leadership Company patriarch Rolla Lamson raised three boys, one of whom was killed in action in World War I. Remaining sons Albert and Chester became partners in

their father’s growing business, spurring the renaming to R.S. Lamson & Sons.

While Chester focused on sales, eldest son Albert eventually took the helm, then passed the business along to Chester’s only son, David.

A sign of the times, David’s three daughters weren’t expected to take over the male-oriented business.

“My sisters and I grew up hearing people tell us to marry someone to take over the business,” said Lona Lamson, current president. With her own plans in mind,

she earned a master’s degree in psychology, then moved to Montreal to work as a teacher. It wasn’t until a visit home while between jobs that she began getting involved in the business.

“Thirty-eight years later, and I’m still here,” she laughed.

She quickly became entrenched in the career change, taking business classes and staying active in the Northeastern Retail Lumber Association (NRLA), of which the Lamson family has been a part since 1955.

“Lona’s dedication to the industry has been outstanding,” said Rita Ferris, president of the NRLA. “She’s served as the president of the Massachusetts Retail Lumber Dealers Association (a local affiliate of the NRLA) and has been a strong legislative advocate on industry issues. She’s also been a huge advocate for industry education.”

Today, R.S. Lamson & Sons is proud to be ushering in its fifth generation with Lona’s grandson, Evan McCormic. A Bolton native, McCormic studied mechanics, then turned his focus on the lumber and building supply business.

“There are four other grandchildren, still young, so I’m sure others will become involved, as well,” Lamson reported.

Strength from Valuable, Long-Term Relationships “When I go to Lamson’s, I know all the employees. Most of them have been around 20, 30 years,” said builder Ron Ham, of Ron Ham Construction out of Sudbury, Mass. “I’ll send my customers there, because I know Lamson’s will treat them right [and] provide the knowledge they’ll need.”

Lona Lamson agrees that many of the employees boast a lengthy history with the family-friendly company; several have been on staff over 25 years.

“We love our long-term employees, but it can be a double-edged sword, so we also strive to bring in some younger people to keep us moving forward,” she said.

A recent addition was a new marketing manager, who will focus on growing

their social media presence. While the company didn’t rely much on print ads in the past – Lamson said word seemed to spread through outside sales people and satisfied customers – she recognizes the growing need for Facebook and online media.

“My sisters and I grew up hearing people tell us to marry someone to take over the business.”

— Lona Lamson, president, R.S. Lamson & Sons Longevity isn’t just for employees; regular customers have also been coming through the door for numerous years.

“Many of the contractors we see been coming in so long that now that their children are running the business, and they come in,” Lamson said. “We know the husbands, wives, sons, daughters, of our customers.”

A Competitive Edge In an industry where big-box stores are eager competitors, genuine care for its customers gives Lamson’s an edge.

That’s what keeps Ham, a loyal customer for over 22 years, coming back.

“You know you’ll find expertise when you stop at Lamson’s,” said Ham. “They make it easy for builders; they’ll order specific things we need. They’re able to take off with our plans and come back with a list and prices. And they’ll get what you need out to you in a couple hours. You don’t get that at the big-box stores.”

While socializing is always welcome – the company is known to hold cookouts for contractors – project talk is never at a shortage.

“Particularly with some of the bigger projects – like a kitchen – they come here because they want someone that will take the time to talk with them,” Lamson said.

Their industry involvement keeps

them abreast of news and changes, which they pass along to their customers.

“The family is always looking for ways to provide the best service,” Ferris said.

“One way is by participating in industryspecific roundtables, where dealers share best practice ideas and identify solutions for customer problems.”

“They also take the time to educate their employees and know what laws or regulations are in play that can impact their business and their customer’s business. If there is a way they can help their customers with compliance, they’ll do it,” she said.

Women-Owned Business While the name may lead you to believe otherwise, the passing of the torch from David Lamson to Lona enabled the company to become certified as a Women’s Business Enteprise (WBE), something which gives the company an advantage when bidding for contracts.

“With state and federal projects, when contractors are bidding on jobs, they have to fulfill a certain percentage of work with minority and women-owned business,” she explained. “It’s been a help.”

The company is also a certified Green Dealer, an independent program which certifies lumberyards or building material dealers if at least 75 percent of their personnel undergo specific training programs on the basics of green building science and green product knowledge.

While a fifth generation business is a rare find, Lona Lamson modestly insists that it’s not so uncommon in the lumber business, saying she’s met with colleagues in their fifth, sixth or seventh generation. “Once you learn this business, you stay in it,” she said.

As businesses of all types face new challenges and larger competition, keeping sight of its founding values and remaining loyal to the customer and industry have served well for this trusted Hudson fixture.

“It’s the kind of store you want to survive,” said Ham. “A home-town, family business, dedicated to taking care of their customers.”

■ 11

A New Look

New England Family Business Conference Brings Together Many Points of View Photos by Laura Alix, The Warren Group

Leo Vercollone, president of VERC Enterprises, framed by a back-in-the-day photo of himself and his brothers at the time they joined their father’s company.

By Christina P. O’Neill

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very multigenerational family business has a story. Usually, the story makes it to the company’s website, a string of genealogical and business facts that anchor the reader in time and place, and indentify who in the business they know or might have known. But to get the story behind the story, it helps to be in the room with a like-minded audience of dozens of people, listening to the highly individual stories of the people behind the businesses.

The two keynote speakers at the New 12

England Family Business Conference, held in Bolton in June and sponsored by the Family Business Association and The Warren Group, publisher of Massachusetts Family Business, shared their experiences.

Bringing Outside Experience Back Home Chris Raveis, managing partner at Raveis Real Estate, said that most of his classmates headed straight to Wall Street while he stayed at his parents’ home, taking on the role of sales agent in his father’s

company. Chris made that part of his life sound unglamorous when he spoke, but related that within three years, he had established a successful momentum by working seven days a week. The catch: While he knew he was successful, he did not feel entirely independent in that success.

So he chose to strike out on his own, moving to Atlanta, Georgia, right before the 1996 Summer Olympics. He lived modestly, and overcame a lack of bank credentials and the must-have-MBA mindset

Panelists Phyllis Godwin and Jennifer Lee Colosi tell of their experiences taking on leadership roles in their fathers’ businesses.

to crack the commercial real estate market in Atlanta. He joined Jones Lang LaSalle (now JLL), where he became one of the top five commercial real estate brokers in the Atlanta area. Meanwhile, he said, his father, William Raveis, was diligent in keeping him updated about the state of the family business.

He subsequently moved back home to start Home-Link Services Inc. with his father in 2000. The venture-capital-backed company marketed home products and services to the customers of real estate brokers, with the goal of reducing relocation costs. Chris headed a national sales team for Home-Link that signed 257 real estate companies over Home-Link’s three-year life. When the dot-com bust loomed, venture funding was starting to dry up, and the decision was made to sell the company. Chris took it as a learning opportunity as he had amassed valuable information working closely with the top CEOs and management teams of the top U.S. real estate companies. It was at that time that Chris made the choice to return back to the family real estate business and spearhead the company’s expansion outside its Connecticut home state.

William Raveis Real Estate now has the majority of its offices outside its original home state. It has 46 offices in Connecticut and 36 offices in Massachusetts, 11 in New York, four in Rhode Island, two in New Hampshire and, since the conference in June, has added one in New York City and seven offices in Vermont. The company is a second-generation business,

Aviva Sapers, one of the Outstanding Women of Family Business winners, spoke at the conference breakfast.

now with six children between Chris and his brother Ryan, that will take over the reins in future years.

“Chris Raveis became one of the top five commercial real estate brokers in the Atlanta area; meanwhile, his father, William Raveis, kept him updated about the family business.”

He said that the second generation “is really critical” to the health of a family business. His pointers: • Have respect for the generation before you; be patient and learn how you fit in.

• Let the next generation spend time gaining independence and working outside the company.

• Find your passion – Raveis related that his passions are goals of growth, entrepreneurialism and revenuebuilding.

• Let the next generation own what they do.

• Don’t force something that’s not meant to be; and keep your eyes open.

• Communication is the glue that holds a family together.

High-Octane Harmony Leo Vercollone, president of second-

generation VERC Enterprises, has built that business in a way that defies a lot of the stereotypes that outsiders may hold about the convenience-store industry.

VERC has been voted as one of the Best Places to Work by The Boston Globe, and the company is very active in community affairs in the municipalities in which it has outlets. VERC had its beginnings with Vercollone’s father Eugene, an Italian immigrant with a high school education and, apparently, a premium-grade measure of common sense.

“My children get along with my cousins,” Leo Vercollone said; his father had instilled awareness of the importance of family harmony 30 years ago.

VERC Enterprises began as a familyowned car wash business; it has subsequently grown into a retail convenience store/gasoline station and carwash group operating 26 facilities in Massachusetts and Southern New Hampshire.

Leo Vercollone graduated from Boston College in 1977. He told conference attendees that he had 20 post-graduate interviews and 20 rejections. He joined the company in 1978.

Throughout the life of VERC Enterprises, its leadership has tried new things, not all of which have gelled, but the company and its leadership have been nimble enough to rebound. A car-rental company, VERC Car Rental, established in 1979 as an adjunct business to the gas stations, was subsequently split off to Leo’s brother Jack, to the mutual benefit of both comContinued on page 14 13

Chris Raveis, managing partner at Raveis Real Estate, told the audience of his low-key beginnings in what is now a leading family-owned real estate business.

panies. Leo Vercollone noted the hugely different lifecycles of a convenience store enterprise, which typically sells a full shipment of gasoline in 48 hours, versus the debt-laden business structure of an auto rental company. VERC Car Rental now has seven locations and 400 vehicles. And family harmony, Vercollone said, is intact.

Another endeavor, QuickKava, a coffee franchise, was shelved after two and a half years and $500,000. Key to that decision was family consensus.

Vercollone’s advice: Be a differencemaker, keep growing and stay relevant.

The company’s advisory board meets twice a year, but, Vercollone cautioned, quoting management expert Peter Drucker: “Culture eats strategy for breakfast.”

A typical VERC station turns over its gas inventory in two days, but the same can’t be said of its workforce. The convenience store industry yardstick is 100 percent turnover a year; at VERC, it’s 40 percent. This could be in part because of a company policy of maintaining a workforce staffed 20 percent with individuals with physical and/or intellectual disabili14

ties. VERC partners with Best Buddies, Minuteman Arc, Eastern Middlesex Arc, Road to Responsibility, Vinfen, May Institute, BAMSI, GROW and the Charles River Center to maintain this goal.

“Throughout the life of VERC Enterprises, its leadership has tried new things, not all of which have gelled, but the company and its leadership have been nimble enough to rebound.”

VERC Enterprises also participates in the Massachusetts Re-Entry program, which matches up formerly incarcerated people with job opportunities. The company has received local and national attention for this effort. Its goal is for 5 percent of its workforce to be comprised of both male and female re-entry candidates.

Vercollone tells Massachusetts Family Business that family-owned businesses have a distinct advantage over publicly-traded companies in terms of the ability to enter new endeavors and to exit those that aren’t working.

Help Sessions The breakout sessions provided their own insight. Thomas Rogerson’s session on family sustainability focused on – in his words – “not only getting the money ready for the family, but getting the family ready for the money.” The goal of transferring values and purpose, in addition to assets, can be met with the construction of an integrated family governance plan.

He cited his own family’s experiences, as well as others’, and outlined various types of trusts that can help achieve financial goals. But philosophy trumps legal structure, he cautioned, quoting Warren Buffett, who said he wanted to leave his children enough money to do anything, but not enough to do nothing.

In “Growth Strategies and Keys to Success,” three female panelists shared a

common trait; they took their businesses over from their fathers in male-dominated industries. They have dealt with the cultural byproducts that amounted to cherche l’homme (look for the man). During their respective tenures, their companies have grown by an aggregate 600 percent. They covered a wide range of other topics, not the least of which was matching their company responsibilities with their skills; managing growth; when to take consultants’ advice and when not to.

In “Marketing and Communications: Propel Your Business Forward,” a multi-person panel addressed marketing and growing a family-owned business.

Industry experts and family business professionals who saw their marketing campaigns successfully implemented, and grown their businesses accordingly, discussed their paths to success.

Presenter Tom Rogerson’s panel included insights and lessons from his own family’s business.

“Managing Conflict in a Family Business,” another multi-person panel drew tions, opportunities and compensation, ployees of the organization.

■ from their own experiences of working and immediately addressing workplace for family-owned businesses to emphaconflicts. Family-owned businesses face CHRISTINA P. O’NEILL IS EDITOR OF MASSACHUSETTS size the importance of creating role clar- 2:57the FAMILY BUSINESS. SHE MAY BE REACHED AT CONEILL@ BlumShapiro Ad 7.5 x 5_Layout 1 8/19/2013 PM challenge Page 2 of meeting these expectaity, increasing transparency in promotions among family and nonfamily emTHEWARRENGROUP.COM.

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blumshapiro.com 15

The Importance of the Perspectives of the Younger Generation

By Paul Karofsky

A

recent conference for enterprising families – those in family businesses and others who had significant assets in common – included a panel of members of the next generation. These were the heirs apparent, the chosen ones who are challenged with the opportunity and responsibility to take their families’ enterprises to the next generation. Theirs is a role of stewardship for not only the tangible assets traditionally associated with wealth, but for the intangible ones – the values that 16

can sustain and even propel the family forward. The key talking points of these stewards is worth noting, and can serve as a guide to members of the senior generation on topics they need to address.

Bringing Value to the Family First, and perhaps foremost, they talked about their desire to bring value to the family and its holdings. They realize that they are not clones of their parents, and the value they bring to the

enterprise needs to be their own.

Next was communication, recognizing that all too often challenging matters are left unspoken for fear of making them worse. These younger generation members, unlike many of their parents, are willing to take the risk to have difficult conversations, realizing that the potential payoff is worth it.

They spoke of the need for planning and recognizing that alignment among stakeholders of both vision and strategy, short-term and long-term, is vital

to success. As these younger generation members talked about planning, they expressed the desire to work together with their parents and other family members to craft the necessary plans that will afford a seamless transition of both leadership and ownership with clarity on responsibilities and decisionmaking authority. They want to be sure that their roles are determined by the match of their skill sets with the needs of the business. As dialogue continued, “contingency planning” was discussed, acknowledging that the unexpected might occur and both the family and the enterprise need to be protected from the unknown.

The Heart and Soul of Transition Challenges The panel then shifted its focus to the heart and soul of transition challenges, the younger generation taking hold and the senior generation letting go.

There is the classic dynamic here that the younger generation can’t take hold until the senior generation lets go. And, of course, the senior generation won’t let go until the younger generation is ready to take hold. The responsibility for transition lies in both hands. Seniors must help the next generation understand what knowledge, skill and experience is required of them in order to be able to take hold. Likewise, the next generation must address a professional development plan with benchmarks and accountability that demonstrate competency to the seniors.

Implicit, but infrequently talked about, is what the younger generation needs to do to be sure that the needs of their parents are met. These needs are social and emotional as well as financial.

As discussion about the process of transition unfolded, the younger generation spoke of the value of keeping employees informed. The water cooler and coffee bar are still the hubs of chatter among those who work with enterprising families. Little can be more destructive to employee morale than inaccurate rumors. Younger generation family members will always be viewed

through critical, microscopic eyes, so why not set the record straight at the outset and even provide a vehicle for feedback? Though not discussed at the

“The younger generation can’t take hold until the senior generation lets go. And, of course, the senior generation won’t let go until the younger generation is ready to take hold.” conference, we encourage 360-degree performance appraisals for members of the next generation to support them in their quest for leadership. Self-awareness is the most important attribute of leadership, and a 360-degree evaluation can provide process and content for self-reflection and appropriate action.

The final topic of discussion was

bringing in the right consultant. Mom and Dad’s accountants, bankers, insurance professionals, attorneys, and financial advisors may not be right for their sons and daughters. Simply, if painfully, stated: They might be too old to relate effectively.

We encourage next generation of emerging leaders to be involved in the selection process of those professionals, as well as for family business consultants if and when needed.

A great opportunity exists for the senior generation to acknowledge and reinforce these contributions of next generation family members. The messages from these young leaders could more than prime a textbook on successful succession.

What’s that old expression? From the mouths of … ? We still have a great deal to learn.

■ PAUL KAROFSKY IS THE FOUNDER AND CEO OF TRANSITION CONSULTING GROUP AND CHAIRMAN OF THE PEER ALLIANCE.

Building Family Trust for Generations For over 150 years, generation after generation of New England’s family businesses have turned to Hemenway & Barnes for trusted advice about complex estate, tax and succession issues, charitable planning, and more.

Our clients turn to us to help protect and preserve their assets, to ensure the well-being of their families and to distribute assets in accordance with immediate and long-term needs and goals.

Meeting the challenges of sustainable family prosperity and unity requires great thought, care and planning. Whatever the challenge, families trust Hemenway & Barnes to help them find solutions.

www.hembar.com 17

The Inaugural

Outstanding

Women

2014

D E D I C AT E D T O N E W E N G L A N D FA M I LY B U S I N E S S E S

A

s a new addition to the New England Family Business Conference, this year the Family Business Association and The Warren Group honored the exceptional women of family businesses at a special awards breakfast.

The Warren Group editorial board set out to find female family business professionals who demonstrate outstanding leadership and commitment both within their businesses and in the communities they serve. Nominations poured in and each was carefully reviewed. The following 16 phenomenal women are the inaugural class of Outstanding Women.

Carol Bulman • CEO and President, Jack Conway & Co.

SPOTLIGHT WINNER

Carol Bulman has run Jack Conway & Co. since late 2009, shortly before the death of its founder, her father.

Only 18 months after his passing she reported record growth, outpacing the state by 11 percent in 2013 sales.

She is credited with restoring the company’s position as a market leader. Under her guidance, the company has added five new offices and is now the largest independently family-owned real estate firm in Massachusetts, with 45 offices from the North Shore to Boston, Cape Cod and the South Coast.

Diana Cataldo • Co-owner, Cataldo Ambulance Service Inc.

SPOTLIGHT WINNER

Cataldo Ambulance Service, established in 1977, is now in its second generation of ownership, serving 15 Greater Boston and North Shore communities. Diana and two siblings share management responsibilities and maintain family values in a rapidly changing health care environment. The company’s annual charity golf tournament has raised more than $150,000 to fund cancer research.

Sharon DiMinico • CEO, Learning Express

SPOTLIGHT WINNER

Learning Express began in the early 1980s as one small store in Massachusetts and now has more than 130 retail franchises nationwide, selling the best educational toys and products from all over the world. Sharon DiMinico has utilized the franchise business model to enable others to create successful businesses, empowering other women managers to grow personally and professionally

18

Joanne Flynn • Director of Golf, Windham Country Club

SPOTLIGHT WINNER

Beginning her career at age 13, Joanne Flynn has a lifelong love of golf. She has held her current post in the family business since 1995, and has led the Windham Country Club through an $8 million construction of a new facility and has achieved an average 85 percent customer retention rate. The Windham Country Club offers a free summer golf program to members of the Boys & Girls Club of Greater Salem (New Hampshire), and works with an inner city golf program for youth in Lowell (Massachusetts), and serves the Greater Boston area.

Cecelia Fraser • President and CEO, Fraser Engineering Co.

SPOTLIGHT WINNER

Cecelia Fraser took on the leadership role from her father in 2009, in difficult economic times, at the company her grandfather had founded in 1950. Her leadership has resulted in steady revenue growth and significant projected revenue growth. She participates in a variety of philanthropic and business-related organizations, including The Fraser Burn Center at Mass. General Hospital, the Associated Industries of Mass. and the Young Presidents Organization.

Aviva Sapers President and CEO Sapers & Wallack

SPOTLIGHT WINNER

Aviva Sapers became her father’s boss and continued the reputation and level of excellence of Sapers & Wallack into the third generation.

She has led the family-owned executive and group benefits, retirement plans, wealth management and insurance company for more than 15 years. Her community affiliations include The Commonwealth Institute, the Boston Estate Planning Council, The Combined Jewish Philanthropies of Greater Boston, and the Presidential Advisory Council for the Berklee College of Continued on page 20 Music.

Jack Conway & Company, Inc. is proud of our CEO Carol Bulman, and her selection as an Outstanding Woman in Family Business.

From the North Shore of Boston, through the South Shore, Cape Cod and the South Coast, Jack Conway, Realtor is the largest locallybased, family-owned independent real estate company in Massachusetts.

Your Neighborhood Realtor Since 1956 w w w. j a c k c o n wa y. c o m 19

Continued from page 19

Valerie Bono • Owner, Golden Cannoli

The Inaugural

Outstanding

Women

Valerie Bono combines success with creativity, driving sales to record levels, while moving the company to a new facility in 2014. She took the business over from her father in 2007 and brought her sports and teamwork experience as a Division 1 level ice hockey player to bear in expanding the company to more than 40 employees, and its lines of business into new products. She also co-founded the Next Generation Affinity Group, in affiliation with the Family Business Association, to prepare next-generation family members for significant roles in their families’ businesses.

2014

D E D I C AT E D T O N E W E N G L A N D FA M I LY B U S I N E S S E S

Kathryn Cecere • Owner, Harmony Horse Stables Harmony Horse Stables, owned by the Cecere family for more than 25 years, has been voted best in the Metro West for Equestrian Riding School for the past six years. Kathryn Cecere instructs students in all aspects of equine care, from competition to basic care on the road. Of more than 1,200 students, many have advanced to national competition levels. Harmony Horse Stables also hosts numerous fundraisers for families in need.

Robin Emerson • Co-Proprietor, Ferns Country Store As Fern’s Country Store celebrates its 10th anniversary, Robin Emerson has been called the glue that holds it together. After a long career in advertising, in which she learned and developed many business and branding skills, she co-manages Carlisle-based Ferns Country Store and allied businesses, and makes the business an active participant in many community activities in its home base.

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Jennifer Verrill Faddoul • Partner, Verrill Farm LLC Jennifer Verrill Faddoul helped bring the business from a “you-pick” operation to its first farm stand in 1995, and subsequently added a bakery and kitchen component, creating jobs and adding space. When the business was reorganized, she was added as a partner. Today Verrill Farm is operated as a partnership between Stephen and Joan Verrill and their daughter. It consists of about 200 acres in Concord and Sudbury, with 100 acres of prime farmland and 100 acres of wildlife habitats, woodlands and wetlands.

Michele Kolligian • Senior Vice President, Distributor Corporation of New England Michele Kolligian represents the second generation in the company her father and uncle founded 51 years ago. She and three siblings now own and operate the company, which distributes premier HVAC products throughout New England. She leads the human resources segment, orchestrates customer events, including an annual sales incentive trip, and is the customer liaison within the company. Her volunteer work includes the Armenia Library and Museum and the Advisory Council of the Family Business Association.

Heidi Lehner • Chairwoman and Director, Leigh Fibers Inc. Heidi Lehner is the only woman of all her siblings and cousins who is actively involved in the family business. She has been at the forefront of making difficult decisions and changing the course of the company, which has experienced increased profitability in recent quarters, and can now focus on additional growth through new product lines or acquisitions.

Faith Pulis President and CEO, The Thoreau Club & Camp Thoreau Faith Pulis took over operations in 2004 as the third generation to manage an enterprise that started in 1951 as a children’s summer day camp.

Her father grew it into a year-round enterprise in the 1970s.

It expanded into a fitness club in the 1980s. She has led the business through an $8 million construction of a new facility.

The camp has an average 85 percent customer retention rate. Faith is a corporator and member of the Auxiliary at Emerson Hospital.

Congratulations to

Joanne Flynn A 2014 Outstanding Woman of Family Business

McLane.com NEW HAMPSHIRE – MANCHESTER | PORTSMOUTH | CONCORD MASSACHUSETTS – WOBURN

Continued on page 22 21 Massachusetts Family Business Magazine.indd 1

8/11/14 5:22 PM

Continued from page 21

Kathryn Soderberg • President, Soderberg Insurance Services Appointed president of the company 10 years ago, Karen Soderberg successfully cultivated the Hispanic market long before it was recognized as a growth demographic. Today over 30 percent of the company’s more than 3,000 clients are Hispanic. She joined the business after graduating from college with a major in Romance languages, specializing in Spanish. The acquisition of the CPCU gained her the recognition within the business, at which she is the main producer.

Rhonda Sprague • President & Broker/Owner, Harvard Realty Harvard Realty, established in 1964, has a historical knowledge of the local real estate market. Rhonda Sprauge’s nominator, her daughter, credits her with instilling an interest in real estate and says her grit and market knowledge make her successful year after year.

Cheryl Eidinger Taylor • Chief Operating Officer, ERA Key Realty Services Cheryl Taylor manages 14 offices and more than a half billion dollars in annual sales, leading her company to become one of the top 10 agencies in Massachusetts, and one of the top 10 franchises out of more than 2,400 in the franchise system. She has served on the board of directors of the National Association of Realtors and on the Massachusetts Association of Realtors Agency Law Task Force, which created new consumer disclosures for real estate.

BFM MFAB ad v1_Layout 1 4/8/14 5:23 PM Page 1

LAW OFFICE OF ATTORNEY GORDON E. FEENER

FAMILY BUSINESS SERVICE GUIDE DIRECTORY

Over 22 years of Experience Assisting family business with: Offering comprehensive investment counsel, estate planning and fiduciary services to individuals, families and endowments for over 35 years.

— Please contact Mike Brown at MikeB@BFMinvest.com —

ONE WINTHROP SQUARE, BOSTON, MA 02110 617-338-8108 • www.BFMinvest.com

The Boston Group David C Mc Avoy Managing Partner Boston (617) 742-6200 nmfn-thebostongroup.com Together, we’ll build a financial plan for your business.

22

Family Business is Our Business.

We are attorneys who know how to address the challenges of generational differences and family member relationships.

DEBT COLLECTION BUSINESS LITIGATION INSURANCE CLAIMS 617-742-7770 76 Canal Street, Boston, MA 02114 info@attyfeener.com www.attyfeener.com

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Edward D. Tarlow, Esq. Chairman, Family Business Practice etarlow@tbhr-law.com 617.218.2000, x2011

617.428.5118 www.thewarrengroup.com