Hartford Business Journal

16 Hartford Business Journal • January 30, 2017 www.HartfordBusiness.com Millennials as buyers poses challenges for both groups, experts say. "There's a growing interest among Baby Boomers to get out, and a growing interest from Millennials to do something,'' said Robin Ann Bienemann, a former entrepreneur turned adviser to small- and family-businesses. "But not all family businesses transfer easily.'' New England regional commercial lender Webster Bank is among the local lenders wit- nessing rising demand for SBA-backed loans to invest in family owned, service-oriented businesses, mainly real estate and insurance brokerages, engineering/architectural firms, and medical/dental practices, said Tim Berg- strom, president of Waterbury-based Web- ster's Hartford region. Though SBA lacks specific data to verify the lending trend, SBA officials in Connecticut recently reaffirmed the agency's commitment to supporting intergenerational transitions. Bergstrom said it's more than a coinci- dence that so many family enterprises are choosing right now to position themselves to "transition'' from one generation to the next. With economic conditions continuing to improve, so too is the health of many Con- necticut companies. That's backed up by a 2016 Connecticut business survey from BlumShapiro LLC, a West Hartford regional accounting-business consultancy, and the state's leading pro- business lobby, the Connecticut Business and Industry Association. About two of every three Connecticut companies claimed to have posted a profit in 2015 — the high- est percentage since 2005, well ahead of the Great Recession (2008-2010). On top of that, one in five business owners sampled, according to the survey, said they intend to sell their business within the next five years. Eighteen percent plan to sell with- in 10 years, and 15 percent were undecided. Tom DeVitto, BlumShapiro's chief market- ing officer, forecasts "a tsunami coming at us'' in the form of business-ownership transfers. However, DeVitto predicts that many of those transactions either won't occur, or will be derailed, due to a lack of transition planning by owners and their families. Several factors are to blame, DeVitto and other business-transition experts say. One is that the traditional passing of the family- business torch from one generation to the next cannot occur if the younger generation lacks the interest, or the skillsets, to run it. Another is that many older business own- ers harbor unrealistic expectations about their company's true market value and how much it would bring in a sale, experts say. Some owners, disillusioned when a third-party's valuation doesn't match theirs, wind up either staying and running the business, or, in other cases, shutting the doors and liquidating. Capri Frank has witnessed some of those succession challenges up close, working in her family's Avon food-distribution business that has seen three generations since her grandparents first delivered their fresh farm eggs to area customers in the early '50s. Mill- er Foods, now a regional food-distribution operation, was incorporated in 1972. First, Frank said, no one likes the spot- light on their mortality that accompanies succession planning. Frank said family busi- nesses often are unable to afford the pricey business consultants and other advisers who might be able to help them "transition" — a verb she prefers over "succession" — suc- cessfully from one generation to the next. "If you don't address those things now,'' she said, "it may be put into their laps without the proper resources.'' Frank's solution, with the assistance of Bienemann, the small-business consultant, is to offer, beginning in April, a four-week pilot "family-business boot camp.'' Working in conjunction with Manchester Community College, Frank said the camp "aims to take the mystery out of working in a family owned operation and to help with the multi-genera- tional issues of transition.'' Alternative buyers Kevin Cunningham, president of the Con- necticut/New England region for Bank of America, the nation's No. 2 bank in assets, says other players are stepping into the void left by fewer individual buyers. Cunningham said that increasingly Wall Street equity firms are trolling for small, family enterprises with a good product or service, strong cash flow and competent management. In other cases, he said, fam- ily enterprises are turning over the day-to- day reins to professional managers, who in addition to salary sometimes wind up with a piece of the business, too. The last five or six years have seen a rebound in borrowers' demand for capital to acquire new equipment or to build or expand production facilities, Cunningham said. n For information about the "Navigating Gener- ational Transition'' boot camp, contact Capri Frank at familybizbootcamp@gmail.com. Estimated Business Ownership by Age in Connecticut* Age Range 2025 Estimated Rate of Biz Est. No. of % of CT Pop. Ownership Biz Owners Total 25 to 34 435,338 1.3% 5,659 7% 35 to 44 464,928 3.6% 16,737 20% 45 to 54 466,606 4.8% 22,397 27% 55 to 64 529,927 4.4% 23,317 28% 65 to 74 441,726 2.7% 11,927 14% 75+ 341,122 1.3% 4,435 5% * B A S E D O N C T P O P U L A T I O N P R O J E C T I O N S F O R 2 0 2 5 ; F I G U R E S M A Y N O T T O T A L 1 0 0 % D U E T O R O U N D I N G . S O U R C E : U C O N N S C H O O L O F B U S I N E S S , B L U M S H A P I R O L L C ; B A S E D O N D A T A F R O M T H E C O N N E C T I C U T S T A T E D A T A C E N T E R from page 1 Hurdles await family business transitions Tanner Miller, left, and Capri Frank are among relatives responsible for Miller Foods' production and regional dis- tribution of its food lines. Capri is promoting an April "boot camp" for family business owners. P H O T O S | S T E V E L A S C H E V E R

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