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22 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 COVID, it has made us think twice about what is next for us. We do have a succession plan for our restaurants, and it gets modi- fied periodically." Expert advice Barry Fischman, a partner with Marcum LLP in the firm's New Haven office, advises business owners to think about their suc- cession plan immediately, and revise plans periodically. "e worst type of plan is where you do nothing," Fischman said. Just as new parents need to consider who would raise their baby if they were to pass away unexpectedly, business owners need to ponder this grim possibility too. Planning can avoid bad outcomes, such as business interruptions or having to liquidate a company to pay taxes, Fischman notes. "You need to figure out — if I am not here anymore, how does the company con- tinue and who steps in?" Fischman said. For any business, one of the first steps is to have honest conversations with family members about their level of interest in running the company, said Fischman. Business owners may find a younger person in the family who is excited about taking over. If multiple children will be involved, it is best to have early discussions about their interest, skills and future duties, he said. With next-generation planning, business owners can potentially lower tax exposure. "I talk a lot about trusts to protect the company and protect the next generation," Fischman said. "You can do better plan- ning for your children than they could ever do themselves." It also may take several years of training and preparing before the next generation would be ready to take over and run a business successfully. Communication with family members can also help avoid hard feelings down the road, according to Wilmington Trust. "If they don't line up, you need time to train so people have the skills to run the company," Kerrigan said. Businesses also need to plan for the transfer of not only power, but relation- ships — with customers, suppliers and Employees. Looking outside Fischman also sees companies that are sought aer, with other businesses seeking to acquire them. ey may have never had any intention of selling, but the offer comes in high and it makes sense to sell, according to Fischman. Business owners can explore a third-par- ty sale with new owners and management, or investigate having current employees take over, Fischman noted. He frequently hears from business owners that they want to ensure their employees are taken care of following their departure. An option to consider, which firms are also seeing, are employee stock ownership plans, or ESOPs. "You can set up a program where the owners transition a company to the employees through a retirement plan," Fischman said. "at keeps the company intact, and gives employees the opportunity to have ownership over time." is provides a vehicle for current owners to retire and monetize the value of their holdings without having to seek out a third-party buyer, he said. Business owners need to know exactly what their company is worth if they are considering selling someday. Kerrigan suggests companies looking to sell begin preparing five to seven years beforehand, which gives them time to de- termine the value of their business and take steps to increase this value. Business owners also need to consider cash flow planning and what income they'll have aer retirement. ey could consider not cashing out completely, and retaining a partial interest in the business. Any succession plan should include a transition period, where an owner commits for a certain time frame to provide training and help out when needed, until the next generation or new ownership is ready to go it alone successfully, according to Fischman. n Joe Granato, right, owns the commercial real estate firm ABC4 Restaurants, which specializes in selling Connecticut restaurants. Restaurant owner Matt Bailey, of Elm City Social and Olives and Oil restaurants, is a broker with ABC4. Continued from page 20 PHOTO/GARY LEWIS

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