Hartford Business Journal

HARTFORDBUSINESS.COM | JUNE 24, 2024 23 an active philanthropic arm. The family office donates a portion of its proceeds every year to Waterbury Arc, which helps adults with intellectual disabili- ties, and has been the organization's largest donor for 20 years. Figuring out a problem Elliott compares his family office to a "mini" private equity fund. The seed money for his investments derive from his business career, which began in 1987, when he and his wife started a company, DRE Dynamic Manufacturing, in his parents' one-car garage in Southington. The company evolved into S&S Dynamic Tool & Manufacturing through a partnership with The Siemon Co. S&S specialized in metal stampings, tool and die, and wire electrical discharge machining. In 1995, S&S started to concentrate on microwave and cellular telecommu- nications hardware and products. Elliott and a business partner purchased Siemon's shares and formed a revised LLC, then merged with Oregon-based MTS Wireless Components. In 1998, Elliott and his business partner took S&S public through Amer- ican Tower Corp. By 2004, American Tower decided to divest most of its non-real estate holdings, so Elliott and two partners purchased the business' three oper- ating units — MTS Wireless Compo- nents, S&S Dynamic and Wanho Feng LTD — back at a discount. "This is first-generation money," Elliott said. "Every penny was made physically from a part manufactured, either (through) R&D or production." Elliott has received patents for several inventions, including a snap-in hanger for coaxial and fiber cables. The snap-in hanger is used on every wireless monopole tower that is built. Since Elliott holds the patent, he is the only one who can produce the compo- nent. That means whenever a new wire- less tower is built, the developer has to buy the part from his company, Wanho. Elliott is on the boards of all the companies he's invested in, including Ai-Tek Instruments LLC, which manu- factures magnetic speed sensors and tachometers, and is located in the same Cheshire building as Wanho at 150 Knotter Drive. DRECo also has stakes in Square Products LLC, which designed a square-shaped barrel to make yard work and other tasks more efficient; and Danbury-based Cadenza Innova- tion, which is developing lithium-ion battery technologies. One of his previous investments stemmed from a chance encounter on an airplane, when Elliott met a small business owner struggling with his Texas-based plant food company. Elliott said he invested in Daniel's Plant Food Inc. and helped save it from bankruptcy. Within three years, Chicago-based Ball Seed Co., which owns the brand Burpee, bought Daniel's Plant Food for a seven-figure sum. "Normally, how I get these invest- ments is, people come to me to figure out a problem," Elliott said. Adapting to a new generation As they grow in popularity, many family offices are narrowing their focus to specific industries and spaces that interest their members, experts say. According to a report by The Econ- omist and DBS Private Bank, entitled "The Family Office Boom," generational changes are causing family offices to adapt, as millennials and Generation Z (those born in the mid-1990s to mid-2010s) put a greater emphasis on social-impact investing, technology integration and sustainability. Jo Anna Fellon, a tax partner at Marcum who serves as national leader of the accounting and advisory firm's private client services practice, said young people — often third-, fourth- and fifth-generation members — are becoming more involved in family offices, bringing their own perspectives to the table. "We've seen a turn of events where individual family members do not want to be part of the day-to-day, but they want to be part of the focus of invest- ments," Fellon said. Many family offices have their own governance and a mission statement, "and they very much run themselves like a business," said Nicholls, the Wiggin and Dana attorney. "They serve all facets of what a family could need and, beyond the investment realm, certainly tax and estate planning and philanthropy — having that under one umbrella — has proven to be pretty valuable to a lot of people," Nicholls said. A family office can serve many purposes, and one of them is to transfer generational wealth — a top concern among ultra-wealthy families ahead of the 2025 federal estate tax exemption sunset. On Dec. 31, 2025, the $13.61 million per-person federal estate tax exemp- tion is set to drop to $5.6 million. Connecticut's estate tax exemption is tied to the federal level, so as of Jan. 1, 2026, Connecticut's estate tax exemp- tion will drop to $5.6 million as well, unless Congress steps in to extend the higher exemption. "Time is no longer on our side," said Fellon, the Marcum accountant. "Stewardship needs to happen in both a thoughtful and efficient way, and it must happen in a timely, orderly way." Traditionally, family offices have been established by families with $100 million or more in net worth. But there are also multifamily offices, which can contain a handful of families, and even virtual family offices, Nicholls said. There can be overlap between family businesses and family offices, but usually they are distinct entities, she said. For example, a high-level exec- utive at a family-run business could become involved with managing the owner's family office. "You could ask 20 advisers in a room and each would probably have a different definition" of a family office, Nicholls said. "And each would be perfectly valid, because the concept of the family office is evolving, and as they grow in popu- larity, the types of entities that you see as family offices can vary." Jo Anna Fellon

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