Massachusetts Family Business Fall 2015

Massachusetts

FALL 2015

FAMILYBUSINESS Official magazine of the

ALL IN THE FAMILY

Boston Public Market Businesses Celebrate Grand Opening

Inside: Alexopoulos Family Welcomes Its Community Home

?

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Massachusetts Family Business Official magazine of the

CONTENTS

16

A FAMILY AFFAIR Local Businesses Celebrate Milestone Boston Market Opening

4

from the board

A Wide Variety of Benefits from FBA Membership

6

business profile

8

16

Alexopoulos Family Welcomes its Community Home

cashing out

Taking a Closer Look at Employee Stock Ownership Plans

10 conference

FBA Conference Hits A to Z: Advisory Boards to Zoo Management

12 outstanding women

The Stories Behind the Second Annual

10

Outstanding Women of Family Business Award Winners

20 family owned real estate

Challenges and Opportunities of a

Family-Owned Real Estate Company

22 after the will

When Family Feuds Erupt

after the Will Is Read

20 3

Directors’ Corner

A Wide Variety of Benefits from FBA Membership

By Steve Aronson

F

amily businesses are unique animals. At the core, we are like any other small business. We struggle with growth, hiring, perpetuation, compliance, technology, taxes and all of the other issues faced by every business. But, we are different. Our approach to all of these issues is tempered – or framed, if you will – by family “stuff.” This can be both a strength and an albatross. In some cases, professional consultants, experienced working with family businesses are a great asset. On the other hand, there are some issues that only another family business owner/manager can have the perspective to help solve.

I’ve been fortunate to serve on the Family Business Association’s Advisory Council for five years. This Council has been organized, led and sponsored by Wolf & Company with Brian Nagle of First Republic serving as the FBA board liaison and Margery Piercey of Wolf & Company serving as the Council facilitator. During my term, I have learned so much from other family business owners on the Council as we share our experi-

ences with one another.

In addition to peer-to-peer learning, we make recommendations back to the FBA Board about programming opportunities that will assist other family business owners as they struggle with the same issues we face. Our in-depth conversations lead to many of the topics presented at seminars during the year and at the annual New England Family Business Conference (NEFBC). I’ve taken advantage of many of the great afternoon presentations, offered on topics that affect my everyday business decisions. They are free, relevant and convenient. Topics at recent FBA sponsored seminars include succession planning, HR, data security, and employee benefits.

I had a tough time choosing which class to attend at this year’s annual 2015 conference, held in June at Babson College.

I picked up several great ideas about how to improve my family business from the sessions.

What keeps you up at night? Where do you want your business to go, and how do you avoid major pitfalls along the way?

How do you engage the next generation?

How do you transition from the older generation? Would you benefit from a family business peer-to-peer group?

You’ll find the information and help you need at the FBA’s website, www.fbaedu. com.

I hope you will join us for the 11th annual FBA for Massachusetts 2015 on Thursday, Oct. 22, at the Royal Sonesta Hotel in Cambridge. With thanks to the FBA’s founding sponsors, Jeffrey Davis (Mage), Brian Nagle (First Republic), Ed Tarlow and Al DeNapoli (Tarlow Breed Hart & Rodgers), and all of the sponsors for making this one-of-a-kind event possible, you’ll meet this year’s award finalists and hear what they do to make their family businesses successful and sustainable.

The Awards event epitomizes what the FBA is all about – celebrating family businesses, sharing family business stories and learning from one another. You won’t want to miss it.

■ STEVE ARONSON IS PRESIDENT OF ARONSON INSURANCE AND A MEMBER OF THE FBA ADVISORY COUNCIL.

Massachusetts

FAMILYBUSINESS

Official magazine of the Family Business Association. Inc.

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

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

4

PRESIDENT Edward D. Tarlow, Tarlow, Breed, Hart & Rodgers, P.C.

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

TREASURER Jeffery P. Foley, Gray, Gray & Gray, LLP

280 Summer Street, Boston, MA 02210 Phone 617-428-5100 Fax 617-428-5119 www.thewarrengroup.com ©2015 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.

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Business Profile

Alexopoulos Family Welcomes Its Community Home

By Joe Kourieh

A

lexandra Alexopoulos sat, smiling, behind her makeshift desk – a fold-out workbench covered in papers, a laptop and a few half-full water bottles – in her new office, as it was built around her bit by bit. Accompanied by the occasional screech of a drill or echo of a distant hammer strike, she went over the different facets of the redevelopment of her family’s business, Randolph Automotive, in detail.

“I knew what I wanted this to look like,” she said of the project, currently in the meat of its progress. “We don’t want to look like anybody else. We want you to come here and feel like you’re at home.”

Breaking the mold is not cheap in terms of money or time. Weighing in at $2.5 million and completed in two phases, the redevelopment has been in various stages of planning for over 10 years and in progress for three. The first phase involved the construction of the new six-bay, 3,740-square-foot garage and attached office/customer reception building (complete with new equipment and digital record systems), which was specifically done before the demolition of the old garage in order to avoid putting the 6

team of highly skilled mechanics, who make up the most profitable arm of the business, out of work. With that phase wrapped up, the next phase is a new gas station and convenience store, set to be completed by Halloween of this year.

“It’s a little scary to think about, but to me, the thrill of something new, of creating it – that’s just awesome,” Alexandra said. “It’s super exciting when you see progress.”

“I’m quite pleased with it,” her husband Bill, a bit dusty but looking content, said of their gradually materializing brainchild. “To actually see it come to fruition is pretty exciting.”

“It’s gonna be a nice site,” he added, leaning by a small window, out of which could be seen the embryonic second phase of their project, featuring huge, partially buried green tanks and the early makings of the soon-to-be convenience store.

Three Generations of Leadership Development In order to even consider an undertaking on the scale of the Randolph Automotive redevelopment, a business needs

established financial success, as well as driven leaders – two elements this particular family business has never lacked, according to Alexandra.

After cutting his teeth as an automotive technician working on buses and big rigs in his native Athens, Greece, Bill’s father, Chris Alexopoulos, set his sights on the U.S., home to a few uncles and aunts, and a host of opportunities for career and personal fulfillment. He migrated to the Boston area in 1955; shortly after, his talents were recognized by local businessman Eli Kravitz, who asked him to partner up to run a service station in Randolph. This set in motion a family enterprise that would run through three generations and culminate in the multimillion-dollar investment currently buzzing and clanking away at 1245 North Main Street.

But there’s more to this family business’ success than a well-timed partnership and skill under the hood. Alexandra and Bill explained that the ethics of hard work, honesty and the drive to succeed are, and always have been, at the core of the Alexopoulos family’s endeavors.

“Nobody is going to hand you suc-

cess – too many people expect that these days,” Alexandra said. “You have to go out and get it. We’re always trying to be the best that we can be. Mediocre is not something we’re interested in.”

In a family business especially, dedication and a finely tuned team dynamic is critical not only to keep customers walking in, but to prevent family members from storming out. Thus, Alexandra said, it is important to let each Alexopoulos define their own role, on their own terms.

“We believe in playing to everybody’s strengths and weaknesses,” she said.

“That’s how you’re going to be most successful. A family equals a team. And we have to work well together in order for everybody to prosper.”

The Alexopoulos’ team dynamic has been refined so masterfully over the decades, however, that it seems to have adopted an entire town. The fact is, the family has done well for itself by doing well for its community.

“We like to really get to know our customers on a regular basis,” Alexandra said, “on a personal level.”

“You’re not a number in our business,”

Bill agreed. “You’re an actual person.”

Alexandra described local families with generations of regular customers, having grown up with the shop over the decades. Some have even been coming to the shop since it was opened half a century ago. Mrs. Adler, for example, or Mr. Washburn – names that mean little to an outsider, but everything to the Randolph Automotive family.

“We really pride ourselves on quality work and relationships,” she said, noting the sour reputation that businesspeople, especially in the automotive industries, often have with the general public. “People think that you’re here to take their money. But that’s not true. We’re not like that.”

She added that the “hit-and-run” businesses seeking maximum profits by any means necessary don’t last in a close-knit community for 53 years, as this one has.

“We live around the corner,” she said.

“We’re not going to ruin the community that we have to live in every day. That’s ridiculous.”

Through involvement and dedication to the community that surrounds and supports their business, the fam-

ily – known for the business as well its sponsorship of youth programs and role in local government – is admired and respected. Alexandra compared a good family business’ role in its community to something like a mother.

“If you don’t know what your kids’ needs are, how can you be the perfect mother? Each child is different – you have to figure out what’s going to help them the best,” she said, and customers are the same. “It’s a lot of listening, a lot of understanding and being respectful toward one another.”

The Alexopoulos family did just that – listened to, understood and respected what their community wanted. Its response is written into the new state-ofthe-art garage, the half-buried gas tanks and the skeletal convenience store growing taller every day. With a few more months of evolution, the dusty worksite will become a home away from home for the hungry, thirsty and automotively needy of its community, for years to come.

■ JOE KOURIEH IS AN ASSOCIATE EDITOR FOR THE WARREN GROUP, PUBLISHER OF MASS. FAMILY BUSINESS. 7

Cashing Out:

Taking a Closer Look at Employee Stock Ownership Plans For Family Businesses, ESOPs Can Increase Liquidity, Generate Tax Advantages and Benefit Employees

By Victoria P. Lazzell

W

hile not appropriate for every business, employee stock ownership plans (ESOPs) certainly deserve careful consideration for family businesses seeking to unlock wealth tied up in their ownership of the company, or as part of planning an exit or transition strategy.

By definition, an ESOP is a defined contribution plan, a form of retirement plan, as VICTORIA P. LAZZELL defined in IRS code section 4975(e)(7). Defined contribution plans became qualified retirement plans in 8

1974. An ESOP is one method of promoting employee participation in corporate ownership. As with other tax-qualified deferred compensation plans, ESOPs must not discriminate in their operations in favor of highly compensated employees, officers or owners. In an ESOP, a family business sets up an employee benefit trust that is funded by contributing company shares directly or contributing cash to buy company stock. Alternately, a company can choose to have the trust borrow money to buy stock (also known as a leveraged ESOP), with the company making contributions to the plan to enable it to repay the loan. Generally, full-time employees with a year or more of

service who worked at least 20 hours a week qualify to participate in a company ESOP. So, what makes ESOPs so attractive to family businesses? Simply put, ESOPs provide a means to unlock and diversify assets while creating significant tax advantages and benefits for employees. These benefits have helped ESOPs become more mainstream in recent years. In fact, the National Center for Employee Ownership (NCEO) estimates there are roughly 7,000 ESOPs covering about 13.5 million employees.

When taken together with other types of employee ownership plans, employees now control about eight percent of corporate equity.

ESOP or Not When determining whether to pursue an ESOP for your company, consider the following: • ESOPs are typically limited to S and C corporations and best suited for profitable operations with positive cash flow.

• A company can transition to ESOP ownership all at once or incrementally, providing a large degree of flexibility in balancing liquidity and ownership, with the business owner being in control of the timing of the transition.

• ESOPs can preserve a business owner’s legacy and protect current jobs by transferring ownership of the company to existing employees rather than selling to an outside buyer.

• ESOPs allow the owner to diversify his or her assets and liquidate wealth, while remaining involved in the dayto-day leadership of the business.

Tax Advantages As they fall under the Employee Retirement Income Security Act (ERISA) rules and regulations, ESOPs can provide significant tax advantages for the company, its owners and its employees.

For the company, an ESOP trust is tax exempt under the IRC Section 501(a) and contributions to the ESOP trust are deductible under IRC Section 404(a).

The company does not have to pay a federal tax on the share of the business that is ESOP owned. Also, under certain conditions when selling shares to an ESOP trust, owners of C corporations have the ability to defer capital gains indefinitely, which would result in greater net proceeds than other options.

For employees, an ESOP functions similar to a 401(k) or other stock ownership plan, in that they become “beneficial” owners of the trust. Employees’ shares vest over time, and employees have the ability to liquidate their holdings in retirement. In addition, ESOP benefits are funded without any employee wage deductions or reductions, and generally are subject to favorable tax treatment upon distribution.

cial benefits to ESOP trust ownership, the less tangible benefits can be equally important – especially when dealing with family businesses. For example, by maintaining control of the company via the ESOP trust – which is typically managed by a company executive – ESOP businesses are better equipped to retain their loyal employees and maintain their culture. In addition, ESOPs can incentivize employees as part owners, thereby increasing both morale and productivity.

In other words, the better the company does, the better the ESOP performs and the more everyone benefits.

Where to Turn Next As with any major ownership, liquidity or benefit program decision, ESOPs have complexities that are best discussed with a trusted advisor. Fortunately, there are a number of excellent resources available to help prepare you for those conversations, including the NCEO and their www.esop.org website. It is important to carefully weigh the benefits and requirements of any such plan, and measure those against your larger plans

for both your company and personal wealth.

■ VICTORIA LAZZELL IS A SENIOR VICE PRESIDENT AND TEAM LEADER IN COMMERCIAL BANKING AT BOSTON PRIVATE BANK & TRUST COMPANY.

Disclosure notice: 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 FDIC 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 avoiding tax-related penalties or promoting, marketing or recommending to another party any transaction or matter addressed herein.

Beyond the Financials While there are a number of finan9

FBA Conference Hits A to Z:

Advisory Boards to Zoo Management

Barry Sloane, president and CEO, Century Bank

Betsey Brower, executive director, Southwick Zoo

The governance session featured (from left) Dr. Sharon Livingston, Edward Stautberg and Beth Yohai.

Mark Elevante, Sal Lupoli (pictured), Val Hollingsworth and Steve Verrill spoke on a panel about growing a family business through real estate purchase or investment.

By Christina P. O’Neill

B

arry Sloan, president and CEO of Century Bank, told the audience at this year’s New England Family Business Conference that his father, unsuccessful in securing a big-bank tenant for his real estate holdings, decided to start his own bank. Today, 46 years later, Century Bank has $3.9 billion in assets and a national lock on its brand name.

Howard Goldman, CEO of Humboldt Storage and Moving, said he felt an obligation to become the third generation of his family’s moving business and strove to get his kids involved. “I was really hoping in the back of my mind that they would 10

show some interest in it,” he said, “but they were smart and they didn’t.” Nonetheless, he has grown the business from $4.5 million annually, when he took it over 10 years ago, to more than $18 million today.

Beth Yohai, director of the employer resources group at Associated Industries of Massachusetts, said a board of advisors can serve as well or better than a board of directors, dependent on the growth stage and focus of the family business, and that “big” does not necessarily require “public.”

Sal Lupoli, CEO of Lupoli Com-

panies, said of ownership in real estate trusts that with 51 percent, “you have a lot of control. If you have 49 percent, you might as well have 1 [percent].”

Matthew Allen, an associate professor and academic director of Babson College’s Institute for Family Entrepreneurship, said that a business owner’s incorrect assumption is that everyone in the business shares his or her view – or that they should. “You think they know what you want,” he said, “but they just don’t.”

Betsey Brewer, executive director of Southwick Zoo and Earth Ltd., recounted having a spotted leopard living in her

house for a year, what happened to her living room sofa when two lion cubs stayed there, and what it was like to do night duty to raise an orphaned infant monkey awakening every two to three hours to feed it.

All that these individuals have in common is a connection to the art and craft of family businesses. These excerpts are from speeches and panels during the third New England Family Business Conference presented by Massachusetts Family Business magazine and its publisher, The Warren Group, in partnership with the Family Business Association and Associated Industries of Massachusetts. The event was held June 18 on the rolling green campus of Babson College.

The governance session focused on how private and family CEOs work with their boards, the different types of board options, the board’s role in company strategy, refreshing the board, onboarding new directors and solutions for difficult board situations. Moderator Beth Yohai had sold a business before joining AIM. She noted that boards of advisors can be more effective than boards of directors for LLCs, in part because it’s not necessary for an LLC

to carry indemnification insurance for advisory boards. Nor are term limits for advisory board members an issue.

“When your needs change, your board of advisory personnel change,” she said.

The session titled “Growing Your Business: The Real Estate Angle” explored the role of real estate as an element of growth and stability in a family business. Panelists covered acquisition and sales, financing, land-use issues, real estate trusts, commercial leasing, litigation and residential properties. Despite the stability component of real estate, it may always come with surprises, they indicated. Steve Verrill, partner of Verrill Farm, recounted how effluent from a large nearby tech company directly affected his land. Sal Lupoli recounted his experience in acquiring former mill properties. Surprises have included the discovery of 130,000 gallons of unspent No. 6 fuel oil underground. “You’re buying a mill,” he stated simply – in essence, what do you expect?

The leadership transfer session covered different aspects of succession. William Aubuchon III of Aubuchon Hardware outlined a detailed format for a talent

hunt, and Howard Goldman noted that family succession plans don’t always come to pass.

The human resources session included an observation by Matthew Allen of Babson, who said family business leaders do family members a disservice when trying to fit them into jobs that are not right for their lives. “We only look at the portion of the person that applies to the job at hand. If most of their skill set is outside that job, they will not be happy,” he said.

“You might not be as clear as you think about your expectations. Consider the job AND the person.” Jeffrey Davis, chair and CEO of MAGE LLC, concurred, noting that company leaders do family members a disservice when placing relatives in unsuitable positions.

Someone who appeared to have found a good match was Southwick Zoo keynote speaker Betsey Brewer. Southwick Zoo spans 200 acres, employs 100 and now has 850 animals, representing 150 species. “If you have a family business, you have to step in when the need is there,” she said. Audience members could relate, as the postspeech questions and answers indicated. ■

Building Family Trust for Generations For over 150 years, generations 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.

Copyright © 2015 Hemenway & Barnes LLP

www.hembar.com 11

T

he second annual Outstanding Women of Family Business awards were distributed at this year’s New England Family Business Conference to the following 11 women for their dedication to their family businesses and the communities they serve. Some founded their businesses and grew them into successful enterprises employing multiple family members; some joined family businesses already formed and stewarded their continued success. All are outstanding. Congratulations to the 2015 Outstanding Women of Family Business.

■

VICTORIA AMADOR • Co-Founder & CEO, Tremendous Maid Victoria Amador, co-founder and CEO of Tremendous Maid, has grown her company from two employees in 2011 to 30 employees in 2014, and she aims to create 100 jobs by 2018. In 2014, her company provided financial literacy and English training programs for her employees. In April 2015, she announced the Tremendous Maid Simple Retirement plan. Tremendous Maid has also won several awards, including Best Cleaner of the Year by Boston Magazine, Small Neighborhood Business of the year by the Immigrant Learning Center and Small Business Year by the city of Boston for the Hyde Jackson area. Amador leads the Hyde Jackson Business Association and works with the Jamaica Plain Neighborhood Development Corp. as a board of directors member.

ELLEN CALMAS • Executive Vice President & Co-Founder, NPS Rent Assurance Ellen Calmas and her husband Richard Calmas co-founded Neighborhood Pay Services (NPS), a double bottom line company focused on increasing access to rental housing for credit-challenged and/or under-banked Americans.

Her vision and contributions have led NPS to create a new vertical category in multi-family rental housing (rent assurance) and a sophisticated yet simple solution to enable people living paycheck-to-paycheck more affordable access to rental housing, while assuring the property companies that serve them that rent (and cash flow) will be received on time. To date, she has helped more than 10,000 hard-working Americans gain affordable access to professionally managed housing at costs that don’t drain their personal savings.

SIOBHAN DERRICKSON • President, The PostureWorks, LLC The PostureWorks, a first-generation family business founded in 2003, is a social enterprise company that develops and manufactures therapist-inspired seating technologies to improve the lives of those who spend their waking hours in a wheelchair. The PostureWorks started in the garage of Siobhan Derrickson’s home in Wellesley, and today it is recognized by leaders in the healthcare industry for innovative products that are highly effective, easy to use, simple to maintain and affordable. Both the company and Derrickson’s family are directed by the same values and principles: treating people fairly and with respect, improving lives, finding a passion and pursuing excellence and, most importantly, balancing hard work with play and family to enable a rich fulfilling life.

12

CHRISTA HAGEARTY • President & CEO, Dependable Cleaners Dependable Cleaners is a third-generation, family-owned dry cleaning company with over 65 years of dedication to trust, quality and care. Since Christa Hagearty became president in 1994, Dependable Cleaners has expanded from 12 to 18 locations, added home pickup and delivery service in Boston and 29 suburbs, branched out into specialty services and tripled its annual revenue. Hagearty is a well-known supporter of the next generation of women leaders, most notably supporting organizations such as the Boston Breakers team in the National Women’s Soccer League, Dress for Success and the Girl Scouts of Eastern Massachusetts, where she recently was honored as one of five Leading Women at the 2015 GSEM Annual Event.

DONNA KELLEHER • CEO, Next Generation Children’s Centers Donna Kelleher is the founder of Next Generation Children’s Centers (NGCC) – 10 centers serving more than 2,000 children and employing more than 300. She is a member of the Family Business Association’s Advisory Council, a past chair of the Metrowest Chamber of Commerce and an active volunteer and philanthropist to numerous charitable organizations. Bright, clean and warm are perfect descriptions of NGCC. The staff is smart, friendly and engaging. The programs are fun, stimulating and educationally rich. NGCC strikes the perfect balance between the personal attention a parent would associate with a smaller provider and the resources a parent would expect from a larger provider. Its mission is to educate children as easy transition as possible to the next grade level.

DR. SHARON LIVINGSTON • President, ICCA, a Division of Psy Tech Inc. Dr. Sharon Livingston brings the absolute best out of any person she comes in contact with. There is nothing that she will not do to help someone succeed and live a life of passion. Through her business, International Coaching Certification Academy, she and her husband have designed tools and strategies that allow anyone from the scholar to the fresh graduate to be able to start their own business and maintain the fire in their soul to succeed. With Livingston, there is no talk of glass ceilings or of injustice. There is empowerment and the feeling of personal satisfaction just being in her company. She truly is an inspiration and an enduring positive face in the world today.

MARIEMMA MILLER • Co-Founder, Dimples Inc. From leading award-winning technical startups to performing musical fundraisers for individuals in need, Mariemma Miller is an outstanding woman professionally and personally. She has a knack for identifying individuals who may not be socially engaged, “lifting their veil” with a kind gesture or remark and, ultimately, encouraging the individual’s inner self to surface in a warm, friendly environment. In the past year, she suffered through the death of her dear friend, who was also a critical Dimples Inc. team member. She was able to translate her grief into fuel to make Dimples succeed. While the emotional wounds were fresh, the company was accepted into the world’s largest startup accelerator, MassChallenge, where it joined 127 other companies (out of 1,700 applicants) in Boston.

Dimples was eventually selected as a MassChallenge Gold Winner and received a $50,000 award.

Continued on page 14 13

Continued from page 13

AMY SILVA RIGTRUP • Funeral Director, Silva-Faria Funeral Homes Amy Silva-Rigtrup, daughter of Paul Silva, president of Silva-Faria, represents the fifth generation in the family business that began in 1890; she will take over the business when her father retires. Despite the highs and lows of working in a family business, Silva-Rigtrup is focused on how things can be made better. She recently started an hour-long weekly radio show all about the funeral business, death and dying, as a means to educate and to demystify the process of death, as well as to provide a unique means of marketing and customer recruitment. Silva-Rigtrup had her third child in the last year – she also has 3-year-old twin boys – and she integrated her family responsibilities into the business so that her absence was minimized.

CAROLYN CROWLEY STIMPSON • Director of Mountain Services, Wachusett Mountain Ski Area Carolyn Crowley Stimpson, along with her brothers Jeff and David Crowley, owns and operates Mt. Wachusett ski area in Princeton, Massachusetts. This ski area has been an incredible success in a very challenged industry and is a great example of a public-private partnership that works (the ski area is on state-owned land). The Crowleys pride themselves on providing an excellent experience through superior customer service and upto-date infrastructure. Stimpson is also a board member of the family-owned Polar Beverage Company, as well as a member of the Family Business Association’s Advisory Council. As a sought-after speaker for her entertaining and candid family business insights, among her many speaking engagements, Stimpson and her husband presented the keynote at the FBA’s annual awards gala.

Congratulations Carolyn!

2015 Outstanding Women of Family Business Honoree!

We’re so proud of you!

Love, Your Wachusett & Polar Family

Wachusett Mountain Ski Area operates in cooperation with the Massachusetts Department of Conservation and Recreation.

14

ROBIN TAUCK • Co-Owner, Former President & CEO, Tauck Inc. Robin Tauck started working in Tauck Inc.’s mailroom when she was 15. Today she is a co-owner and the former president and CEO of a global travel company founded by her grandfather in 1925. During her 35-year career, she helped expand Tauck’s operations into 70 countries across all seven continents. She has been named one of the Most Powerful Women in Travel five years in a row. She also created Tauck’s “World of Giving” in 1998, an extensive philanthropic program that has developed over 80 grants and led extensive volunteer events throughout the United States, is a long-standing board member of the World Travel & Tourism Council (WTTC) and serves on the Tourism for Tomorrow strategy committee.

MAUREEN WOODMAN • Director of Catering, Woodman’s of Essex Maureen Woodman is a true leader who is beyond indispensable to her family’s sizable local business. From the very beginning, before she became a Woodman, she took extra measures to make sure she did not fail Woodman’s restaurant or the Woodman family. Any family business, especially one that is over 100 years old, has its own unique set of issues, and when the family experiences a change, it is difficult not to let ripples of that change effect the business. When such events occur at Woodman’s, she steps up and makes sure the family is taken care of, thus taking care of the business. With her, Woodman’s has done great things, such as start a scholarship and help countless local businesses. She always knows what needs to be done, and Woodman’s has only benefitted from her hard work.

■

The FBA has been a vital part of our continued success, offering educational programs that have sharpened our knowledge and confidence to grow. So grateful, Maureen Woodman 15

A Family Affair

Local Businesses Celebrate Milestone Market Opening

By Malea Ritz

T

hey say blood is thicker than water, and for several family businesses at the new Boston Public Market, that couldn’t be more true.

The opening of the market signified an important milestone for both the businesses and city alike. It is the first market of its kind in the United States – all offerings are locally sourced and the market is open year-round. For the businesses, the market’s opening on July 30 was the culmination of many years of work and planning to expand their companies and client bases.

And it was a hit.

The market, located on 100 Hancock St. just above Haymarket Station, houses 35 vendors in 28,000 square feet of space, selling farm-fresh produce, meat and poultry, eggs, milk and cheese, fish and shellfish, bread and baked goods and also offers classes in nutrition and preparation.

The market will also feature a cookbook exchange, where customers can swap their favorite cookbooks and recipes with other community members.

16

The Boston Public Market Association was formed in 2001, when a group of food producers, restaurateurs and food lovers banded together. After years of advocating for the development of a public market in Boston, they gained support of public officials to help identify a location for the market.

The market is funded through the commonwealth of Massachusetts and over $9 million in donations.

Drawing Together After Tragedy Josh Danoff, co-owner of Union Square Donuts, was at the market opening day. Danoff owns the doughnut shop in Somerville with his two siblings, Noah and Leah. Tragedy brought them together when they moved home to spend time as a family after their father was diagnosed with pancreatic cancer and later passed away.

Growing up, their parents owned a health food store and the siblings saw the

sense of community around good food, Josh said. So together they started a business called Culinary Cruisers, serving kombucha tea on tap from a cruiser bike at farmers markets.

“It was cool to spend so much time together as a family and it was kind of intense. It brought us closer together to be there to support each other,” Josh Danoff said.

Later, they started producing fresh fruit popsicles and called it Ocean Ave. Pops, an homage to their father, whom they called “Pops” and once lived on Ocean Avenue in Brooklyn.

One day, Noah posed the idea of adding doughnuts to the family’s offerings, and after some consideration, they decided to go for it. Josh called his friend Heather and brought her on as a partner.

“Neither one of us had made a doughnut before,” Josh said.

It went from concept to market and they had their first event three weeks later, Josh said. They did a few popups and

opened their store about a month after.

“In the greatest possible way, we severely underestimated how ready people were for these kinds of doughnuts,” Josh said.

Passed Down through Generations Luca Mignogna grew up in Molise, Italy, on his grandparents’ farm and in his grandmother’s restaurant. Early on, he learned the importance of roots and traditions, passed down from his grandfather and father.

After moving to the United States later in life, Mignogna was working in the restaurant industry in California when he found a bottle of raw milk and decided he was going to make mozzarella. When he distributed the cheese to friends and family, he found them asking for more.

Eventually, he decided he wanted to make cheese for a living and moved to Massachusetts, where, according to Christina Barbieri, the cyclical nature of the seasons improves the quality of cows’ milk (though possibly not their quality of life). Barbieri oversees marketing and other aspects of the cheese-making business.

Mignogna went back to Italy for six months to work in a cheese-making facility in Molise, where he learned the traditions that have been passed down through generations of cheesemakers. When he earned approval from his peers, he wanted to learn more the more technical aspects of cheese-making and attended University of Vermont’s Institute of Artisanal Cheese.

Mignogna started by selling his cheese at farmers markets; in 2013, Barbieri joined him and they opened their caseificio (cheese shop) and retail store at Wolf Meadow Farm in Amesbury. The family affair carries on, with Mignogna’s family helping out in the cheese-making room and Barbieri’s mother assisting, along with her father doing deliveries.

Photos by Laura Alx

“In the greatest possible way, we severely underestimated how ready people were for these kinds of doughnuts.”

— Josh Danoff, owner of Union Square Donuts after graduating, his father was diagnosed with terminal cancer and his mother was suffering from Alzheimer’s disease, so he

returned to the family farm to help out.

Pollock eventually took over the farm Continued on page 18

Restoring the Family Business For Andy Pollock, a second-generation family farm owner at Silverbrook Farm in Dartmouth, giving back to the land was important.

His parents bought the farm in 1953.

Pollock worked on the farm as a child and left to pursue a degree in business at Pennsylvania State University. Shortly 17

with his spouse after his parents passed away. “[When] I came back to the family farm … it was pretty much in tatters,” he said.

“I decided to farm it, protect it and to put it in agri restriction. It’s an old farm that will always be a farm – one of the oldest in the commonwealth and privately held.”

The Agricultural Preservation Restriction program pays farmland owners the difference between the “fair market value” and the “agricultural value” of their farmland in exchange for a permanent deed restriction which precludes any use of the

18

property that will have a negative impact on its agricultural viability.

Pollock’s brother John later joined him in the venture as a manager.

“We started with 7 acres and three people, and now we have 70 acres and 30,000 feet of greenhouse space,” Pollock said.

A Capstone of their Careers Boston Mayor Martin Walsh, Gov. Charles Baker and Family Business Association Advisory Council Member and Public Market vendor Al Rose, of Red Apple Farm, all attended the grand open-

ing of the market, along with other leaders and donors who brought the vision of the market to reality.

Theresa Zhong, a visitor, woke up early just to attend.

“I sampled ice cream around 8 a.m.

It was awesome,” she said. Zhong said an interest in the community and the atmosphere, along with a love of food, drew her to the event. Jan Prouli, visiting from Michigan, said, “The variety is phenomenal. There are great choices and warm people that are selling them.

It’s wonderful.”

“To have the ability to share our product with so many people is really incredible. … The pleasure of being surrounded by other small businesses doing the same thing; it’s everything that you dream of.”

— Christina Barbieri, Wolf Meadow Farm Business owners shared excitement and relief at the grand opening.

“I’m really excited to be here because I feel like it’s kind of a capstone for me and for a lot of the folks that have worked on the farm,” Pollock said.

Barbieri added, “I think for us it [has been] surreal. It’s one of those things

that you’ve been planning for over a year. … To have the ability to share our product with so many people is really incredible. … The pleasure of being surrounded by other small businesses doing the same thing; it’s everything that you dream of.”

“We weren’t alone in not really

knowing what to expect in terms of people. I remember when construction was almost done, just sitting there and wondering if people were gonna show up. And they did,” Danoff said.

■ MALEA RITZ IS AN ASSOCIATE EDITOR WITH THE WARREN GROUP, PUBLISHER OF MASS. FAMILY BUSINESS.

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Challenges and Opportunities of a Family-Owned Real Estate Company

By Sheryl C. Starr

I

n November 2014, a panel at the Urban Land Institute Fall Meeting revealed that, due to poor succession planning, family-owned real estate companies are dying out. That doesn’t have to happen.

In many respects, the challenges facing family-owned real estate companies are the same as those found in any familyowned business: • How to determine which family members will be involved and what will be their roles.

• How to transition authority and ownership from one generation to the next.

• How to resolve conflicts in operations, management, goals and values.

• How to structure estate plans to mini20

mize taxes and maximize asset transfers to future generations.

Luckily, family real estate businesses have opportunities to structure ownership and management, as well as tax and estate planning, in a more flexible way than other family businesses.

Let’s look at two typical clients.

Pat and Mary built their business from scratch, and now own more than a dozen office buildings. Pat’s daughter, Sue, got her MBA and was excited to join the company. His son, Tom, loved teaching, but felt obligated to work in the business as Pat wanted. The family worked together, but relations were strained because Sue felt that Pat undermined all of her decisions, and Tom wasn’t really interested.

Pat and Mary always intended to address estate planning needs, but neither wanted to give up control, and Pat was worried that if he “gave away” too much, the banks SHERYL C. STARR would not look favorably on his financial statement. When Pat died suddenly, Sue struggled to make decisions on her own, the banks started to call in loan guarantees, and Sue felt that Tom wasn’t pulling his weight.

David and Sarah also spent many years building up their real estate holdings.

Their daughter, Jennifer, is now in charge of retail development, and their son, Nate, handles office development. Their

middle son, Jason, is a writer who occasionally contributes to marketing efforts, but spends most of his time in California.

David is planning to retire soon; Jennifer is poised to take over as chairman, and she and Nate have good relations with nonfamily member employees. Jason is happy because he gets to do what he really loves, but still has some income from the family business.

So how did David and Sarah get it right?

Communication. David’s family did not always have smooth communication, but they started early and now meet regularly, sometimes with the help of a family business consultant, to resolve differences in management styles and acquisition opportunities. When Jennifer saw a hot market in an up-and-coming, but underdeveloped, area of town, the family agreed to acquire retail space that would support the hip new restaurants Jennifer loves. Nate is concerned about the environment, and takes great pride in the sustainable and energy efficient office buildings in the family portfolio.

Tax and estate planning. David spent considerable time working with both his real estate attorney and his estate planning attorney, using vehicles such as limited liability companies, generation skipping trusts, intentionally defective grantor trusts and installment sales, to structure an estate plan that gives him the comfort that his estate will not be consumed by taxes, and that assets will stay in the family for future generations.

Ownership interests. Although not all of his children are equally involved, David wanted to be sure that each of his children (and his grandchildren) had an ownership interest. Using a separate LLC for each building allowed ownership interests to be tailored to meet his estate planning goals and still be fair to each of the children.

Financing considerations. David’s attorneys were able to properly structure sales of ownership interests to family members, so that David’s financial statement was not adversely affected by those transfers. His attorney also made sure to negotiate loan documents so that the banks would not call the loans upon his death.

Like other family businesses, family

real estate companies need to start succession and estate planning early, help children and other family members find their niche, create financial structures that work for all family members and, most of all, maintain communication among the members.

The very nature of real estate lends itself to flexibility in each of these areas.

However, it is not easy, and too many families are unwilling to put in the effort needed to achieve success. The first step to creating and maintaining a thriv-

ing family real estate business with a solid succession plan is to bring in third party professionals, such as a real estate lawyer who understands the industry, experienced estate planning lawyers and other financial and business consultants.

■ SHERYL STARR IS A PARTNER AT THE BOSTON LAW FIRM OF BERNKOPF GOODMAN LLP. SHE HAS OVER 30 YEARS OF EXPERIENCE IN ALL ASPECTS OF COMMERCIAL REAL ESTATE TRANSACTIONS, INCLUDING ACQUISITIONS, SALES, LEASING, SOPHISTICATED FINANCING AND DEBT RESTRUCTURING AND JOINT VENTURE ACTIVITIES.

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Create your financial plan with Northwestern Mutual. From business planning to employee and executive benefits and financial planning, together we’ll design a personalized plan to help you achieve financial security. Who’s helping you build your financial future?

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05-3059 © 2015 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. 21

When Family Feuds Erupt after The Will is Read

T

he recently deceased don’t always ingratiate themselves with their survivors when it comes time to read the will.

“People want to control things from the grave, not just throw a bunch of money in a beneficiary’s lap,” said family wealth guru John Pankauski. “It’s their money, so that’s their right.”

But family members aren’t always crazy about how the deceased divided 22

up the money or, if the inheritance was put into a trust, the restrictions that are placed on how the money is spent.

And often ill feelings among family members can bubble to the surface when money is at stake.

“I deal with sibling rivalries, petty jealousies and childhood grudges played out by adults who are decades older, but no more mature,” says Pankauski, founder of the Pankauski Law Firm,

which specializes in trust and estate law.

“It makes me think that part of my job is to be a wealth psychologist.”

Often, an inheritance isn’t doled out immediately. Instead, it’s placed in a trust with a trustee to oversee it, making decisions on when and how to distribute the money based on the terms of the trust.

In many situations, that works out fine. But in seriously dysfunctional

families, that can make a bad situation borderline intolerable.

Pankauski says any number of factors can lead to family feuds or general disgruntlement over an inheritance. Here are just a few: Sense of entitlement. Many beneficiaries have a misplaced sense of entitlement to an inheritance. They just expect that mom or dad will leave them money or property. In their minds, it’s what they have coming to them. “The truth is, you can dispose of your property any way you want,” Pankauski said.

a charity, they have every right to do so, assuming they are competent and know what they are doing. “It’s their money,” Pankauski said. “They can do with it as they wish.” Other than dealing with a spouse, there are almost no restrictions.

The audacity of the trust. Family members often become frustrated and angry when they realize they inherited money, but it’s in a trust and there are strings attached. “The beneficiaries view trusts as handcuffs on their money,” Pankauski said. “A trust takes all those family members’ personal feel-

“People want to control things from the grave, not just throw a bunch of money in a beneficiary’s lap,” — John Pankauski, family wealth guru “There is no right to an inheritance and just about anyone can be disinherited.”

So if people want to leave their money in a trust for a family pet, or bequeath everything to a neighbor, a mistress or The attorneys of Tarlow Breed Hart & Rodgers have

ings and emotions, all that baggage, and adds money to create a financial stew into which the beneficiaries are thrown.”

Often, because beneficiaries don’t like

it that a trustee gets to make decisions on when and how they get a portion of their inheritance, family members will seek counsel and try to “bust the trust.”

An implied accusation of financial irresponsibility. At some point it may begin to dawn on beneficiaries that one reason the inheritance was placed in a trust is that the deceased didn’t view them as responsible with money. “That may seem insulting, but it doesn’t have to be,” Pankauski says. “Many would argue that most people are irresponsible with money, particularly a large sum of inherited money that appears out of the blue, much like winning a lottery.”

Sometimes at least a portion of the family animosity might be avoided by better planning when the will is being written and the trust created.

“When beneficiaries don’t get along,” Pankauski said, “it may make more sense to cut their financial ties by either creating multiple separate shares within the trust or creating separate trusts altogether.”

■

If this is your organizational chart…

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Grandpa

Our experience and knowledge help

Mom

Dad

companies with

Aunt Betty

deep family roots

Uncle Charlie

to continue to grow from one generation to the next. For help in managing a successful future for your family’s business contact Ed

Brother Ted

Aunt Sue

Cousin Alice

Sister Sarah

We should be your law firm.

Tarlow, Chairman of our Family Business Practice Group, at (617) 218-2011, or via email at: etarlow@tbhr-law.

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