NewHavenBIZ

20 n e w h a v e n B I Z | A p r i l 2 0 2 1 | n e w h a v e n b i z . c o m F O C U S : A c c o u n t i n g By Michelle Tuccitto Sullo B usiness owners spend years building up their company and brand, but even- tually must prepare for a time when someone else will take over. at day may come when you want to retire or switch careers. Perhaps you'll decide to leave the business to your children or sell it. Either way, you'll need to take steps to ensure the business you worked so hard on — your legacy — continues and thrives under new ownership. However, nearly 60% of business owners lack a transition plan, according to the financial services firm Wilmington Trust. Chris Snider, president and CEO of the Exit Planning Institute, compared exit plan- ning to the three legs of a stool. Business owners have to prepare per- sonally, and think about what they'll do next. ey need to evaluate their finances, and whether they'll have enough money to maintain their lifestyle. ird, they need to evaluate if their business is ready for the transition, Snider said. "If one of those legs is missing, that stool won't stand," Snider said. Brian Kerrigan, an advisory partner with Hartford-based accounting firm Whittlesey, said succession planning is a "weak spot," for business owners, with people oen not giving enough thought to their eventual exit plan or an emergency plan if they were to pass away or become disabled. Business owners look to move on for a variety of reasons, according to Kerrigan. "Being a business owner can be difficult and stressful," Kerrigan said. "People may get to the point where they want to retire. eir biggest asset may be their business, and they want to be able to enjoy retire- ment. If a new generation is taking over, they want to make sure the next generation will be successful." Building a plan Frank Ferrucci, vice president of F+F Mechanical Enterprises Inc. of North Hav- en, just went through the process. His father, Mario, the company's founder, transferred shares to Frank and his two brothers, John and Joseph. Mario is now semi-retired, with his children handling the business' daily operations. e company is a commercial mechanical contracting firm that provides HVAC, plumbing and sheet metal installation and services. e family hired accounting firm Marcum LLP to help it through the process. "is business is my father's fourth child," Frank Ferrucci said. "For a family business to transfer from one generation to the next is very difficult. It is psychological — you are handing over your brainchild to the next generation and wondering if they are ready." eir accountant and an attorney walked them through the process. "e tax code and implications are constantly changing and for a lay person to keep up is challenging," Ferrucci said. "We were able to see the benefits of transferring sooner rather than later, because there are tax and estate implications." Joe Granato knows first-hand what it is like to decide to sell a business. Granato is the former owner and oper- ator of the Marco Polo restaurant in East Hartford. Now, he is principal broker with commercial real estate firm ABC4 Restau- rants, which specializes in selling Connecti- cut restaurants. Granato is still a partner in restaurants, including in Farmington and a soon-to-open eatery in Rocky Hill. "I was in it for 27 years, and I wanted a family — the hours were so demanding, and I was working all the time," Granato says of his decision to sell Marco Polo years ago. "I wanted a different life for myself." ere are a variety of reasons why people choose to move on from their business ven- tures, according to Granato, who has helped clients sell over 80 restaurants. "Retirement is the number one reason," Granato said. "Oentimes, kids don't want to go into the same business." Matt Bailey, who owns Olives and Oil restaurants in New Haven and Seymour, and Elm City Social in New Haven, is also a bro- ker with ABC4 Restaurants and Granato's business partner. With multiple business enterprises, Bailey has made sure to have a succession plan in place. "We never want to think about the end," Bailey said. "Over the past year, with Succession Planning Plotting your business' future without you Joe Granato owns the commercial real estate firm ABC4 Restaurants, which specializes in selling Connecticut restaurants. Source: blumshapiro/CLA 1. Start early 2. Develop a strong internal framework 3. Establish clear and defined roles for key employees 4. Involve trusted advisors 5. Identify a qualified successor 6. Understand the fair market value of the company 7. Create buy/sell agreements 8. Buy-in of C-suite employees 9. Establish a time frame for the succession and transition 10. Develop a unified message Top 10 steps of succession planning for privately held companies Continued on page 22 PHOTO/GARY LEWIS Brian Kerrigan

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