Hartford Business Journal

HARTFORDBUSINESS.COM | AUGUST 21, 2023 17 Michael Riley has joined West Hartford wealth advisory firm North- star Wealth Partners. Riley is an established advisor with over 30 years of investment and wealth manage- ment experience, mostly at Ameriprise in Middlebury. In addition to the West Hartford office, Riley plans to open an office in the greater Waterbury area in the coming months. Dr. Robert W. Elder, a cardiol- ogist who is a specialist in adult congenital heart disease and pediatric cardiology, has been named president of the American Heart Association's Connecticut board of directors. He will serve a two-year term that began July 1. Elder works at Yale New Haven Children's Hospital and the Yale New Haven Hospital Heart and Vascular Center. He has been a Connecticut board member for five years. say, 'I can sell it to my competitor. I can sell it to a private equity, or I can sell it to a strategic buyer that will buy it for more than fair market value,'" said Chuck Coyne, of Empire Valuation Consultants. In that case, he said, "ESOPs (are) not for you." Trend lines Coyne was the initial adviser to Flow Tech for its ESOP transaction, and carried out the valuation and feasibility study ahead of the deal. He's been in the ESOP business for several decades and seen their popularity ebb and flow. According to the National Center for Employee Ownership, ESOPs are actually on a slight downtrend in recent years. The latest available figures, from 2020, show there were 6,467 ESOPs in the U.S.; 46 of those were in Connecticut. Nationally, that's around a 4% decrease in the total number since 2014. Most are in professional services, manufacturing, construction, or finance, insurance and real estate. Coyne, though, believes that trend may be changing. The last two years, he said, are the busiest his business has ever been. "I probably talk to at least two or three new owners every week," he said. Some of that additional interest is due to the so-called silver tsunami, the generation of Baby Boomer busi- ness owners who are all approaching retirement age and looking for an exit. But some of it may also be due to advocacy and a new awareness. For many years, Ohio was the only state to have established an Employee Ownership Center, promoting the concept and helping businesses navi- gate the complex ESOP landscape. Vermont followed in 2001, and now 13 states have similar outreach efforts. Coyne is involved with a group that hopes to establish a similar center in Connecticut. "I think more and more people have started to understand that this concept of employee ownership is great for everybody," he said. And Coyne is also walking the walk. His company in 2021 established its own ESOP, as he and his partners at Empire Valuation approach retirement age in their 60s. Legislative changes There's generally been bipartisan support for the concept of employee ownership at the federal level over the decades since the original ERISA law. "We often say that ESOPs are the best kept secret in the tax code," said Rob Schatz, partner at ESOPPlus, Schatz, Brown and Glassman in West Hartford. He's an attorney who's special- ized in ESOP transactions since the 1980s. He said when company owners are contemplating an exit, "an ESOP is one arrow in a quiver of options. It's the least understood arrow, unfortunately." But successive rule changes have created renewed interest from the business community, as in 1986, when IRS section 1042 was introduced, allowing C corp owners to defer capital gains tax via an ESOP transaction. Then in 1998, the rules changed again to allow S corps, for the first time, to transition ownership into an ESOP. "You saw a huge wave of new transactions," said Schatz. He said the 1042 rule means that high interest rate environments, like the one we are in now, tend to spark more interest in ESOPs as an exit strategy. Combined with the silver tsunami, current market conditions could increase ESOP transaction activity. Schatz warns that owners consid- ering this structure should remember that because ESOPs are required to concentrate only in company stock, they do not provide any protec- tion for an employee's retirement through diversification. "Don't do just an ESOP," he urges. "If you're really, truly looking to benefit your employees, give them the opportunity to contribute to a 401(k) plan as well." Business continuity ESOPs can also take some time to mature and add real value, cautions Harper, the former Flow Tech owner. "The benefit's not going to happen tomorrow," he said. "Employees need to be patient because they really won't see the value of it until five, 10-plus years down the road where some equity in the company has been built, and their stock value has been able to increase." That means communicating about this complex financial vehicle is key. That's been the job of Flow Tech's marketing director, Nichole Peterson, who has fostered an employee committee around the ESOP, and holds regular events and updates to promote the concept. She emphasizes the continuity that the transaction has provided. "When Rich was looking to sell, if he were to sell to a larger corporation, we could have had a mass exodus," she said. But with the ESOP structure, "essentially when Rich retired, nothing changed. It wasn't like we had a new manager to report to, or a new set of rules." Another benefit that Davis points to: becoming an ESOP has solved one aspect of the succession problem for Flow Tech in perpetuity. When it comes time for Davis himself to retire, the company will have to identify a new president, but the structure will remain in place. And how about Harper? He stayed on at Flow Tech for a year after the ESOP closed to ensure continuity, but he stepped down completely in October 2022. "So far, so good," he said of his new life in retirement. Movers & Shakers Michael Riley Robert W. Elder Robert Chomiak Amber Benzinger Chuck Coyne Connecticut law firm Hassett & George P.C. made two recent hires. Robert Chomiak has joined the firm's litigation group. His litigation career spans more than two-and-a-half decades, during which he has repre- sented clients in civil litigation, commercial disputes, construc- tion litigation and personal injury. Amber Benzinger joined the firm's busi- ness and commercial law group, focusing on business transactions, corporate formations, contract review and negotiations, and commercial real estate. The Webb Deane Stevens Museum in Wethersfield has named Brenton Grom its new executive director. Grom previously worked as the director of the George Read II House & Gardens in Delaware. He also spent two years as curator of special collections at the Delaware Historical Society's research library. Rocky Hill-based reproductive healthcare firm First Fertility has named Cara Reymann its new CEO. She will take over the company on Sept. 5, replacing Derek Larkin, who stepped down from the CEO post. First Fertility partners with reproduc- tive endocrinology practices across the United States to offer custom- ized care for patients interested in having children. Reymann has more than 20 years of executive experience in healthcare services, including as president of Fertilitas, which operates a network of fertility clinics across the country. Christine Koster has been appointed vice president, commer- cial loan officer at Westfield Bank's West Hartford location. She will be responsible for building relationships with business clients in Connecticut. Koster has spent over 25 years in the financial industry. She began her career with other local banks as a vice president, relationship manager and has held additional roles including vice president, commercial loan officer, prior to her current role. Koster serves on the boards of Friends of Connecticut State Parks and Friends of Hammonasset. The Community Health Center Association of Connecticut has hired Deb Polun as its new chief strategy officer. Polun had previously worked for CHCACT from 2012 to 2019 as its vice president of external affairs, and for the past four years has served as executive director of the Connecticut Association for Community Action. In her new role, she will guide strategy and partnership building for CHCACT, as well as lead the organization's legislative agenda in its advocacy for the 16 community health centers it represents. Radiology Associates of Hartford has named Dr. Michelle J. Romero as its new practice president. Romero, a board-certified radiolo- gist, succeeds Dr. Michael Firestone, who remains with the practice as a physician. A New Jersey native, Romero joined Radiology Associates of Hart- ford in 2015 as a staff radiologist, and held the position of secretary from 2020 to 2023. Her areas of expertise include breast imaging and minimally invasive procedures. Brenton Grom

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