Massachusetts Family Business 1Q 2011

Massachusetts

First Quarter 2011

BUSINESS Official magazine of the

Rising Like A

Phoenix

Chicopee-based J. Polep Becomes A Thriving Business

Plus: Turning Over A New Leaf: After the Sale A Supplement to Banker & Tradesman

Advising generations of families and family businesses...

Your business is our business.

Family Business and Succession Planning Estate Planning | Corporate | Tax | Litigation | Real Estate 101 Huntington Avenue | Prudential Center | Boston, MA 02199 | www.tbhr-law.com

Massachusetts Family Business Official magazine of the

CONTENTS

20

TAKING THE BUSINESS AND RUNNING WITH IT Five Generations Wrest A Family Business Back From The Brink J. Polep, sold and then bought back out of bankruptcy, is better than ever.

4

grateful praise

20

FBA Awards winners celebrate, and are celebrated.

7

a final bow Transitioning gracefully, with faith in the future.

8

awards business Where families are fĂŞted.

12

7

fraud in the family business Five ways to prevent trusted employers from robbing you blind.

13

legal limits New amendment to state law will affect how family businesses document employee performances.

14

sold!

You can take the entrepreneur out of the business, but you can’t take the business out of the entrepreneur. How three former business owners are getting on with their lives.

14

8

Massachusetts

from the board

Giving Thanks For Families — And Awards

By Al DeNapoli

Thanksgiving has passed; the December holidays are upon us; and the New Year shines brightly ahead of us. It is a busy time for families and for family businesses alike — a time to give thanks, a time to gather and celebrate the joys of family life, and a time to plan for the new year. The Family Business Association is no different.

We would like to thank all of our sponsors, readers, family businesses, supporters and friends. We are so grateful for all the hard work that has been put Al DeNapoli into the Family Business Association, enabling it to advance its mission of educating and honoring family businesses in Massachusetts. And we are very grateful to have been able to gather, celebrate and honor family businesses at the 2010 FBA Awards for Massachusetts.

To all of you who were nominated, we applaud you for the interest and care you sparked, igniting in your nominator the desire to place your name in nomination for the awards.

To those of you who applied, we hope that the process of looking at your family business through the prism of the application’s questions was rewarding in itself.

To our finalists, we are so glad to have met you and your families. Your representation from across Massachusetts, the diversity of your businesses and the wonderfully unique stories of each family were truly inspiring.

And to the winners, we appreciate the privilege of honoring you at the Awards Program and bestowing upon you distinctive and welldeserved recognition.

To all those who were nominated but did not apply, to those who applied but did not become finalists, and to the finalists who were not the ultimate winners in their award categories, please join us again by applying for the 2011 FBA Awards for Massachusetts.

While the awards at the dinner are given to a few, we truly believe all family businesses are winners.

We are also thankful that the worst of

the recession is, hopefully, but never quickly enough, receding behind us.

It is no accident that family businesses, because of the unique set of values, traditions, and an internal support system that are central to their identity, are specially equipped to weather the difficulties in operating their businesses throughout the challenging times over the past few years. Each family should be encouraged and find strength in the family values, traditions and work ethic that have brought them through this economic storm and will continue to strengthen them on the other side.

As we look ahead to the new year, the Family Business Association is excited about the ever-growing number of programs and events for family businesses for 2011.

To help you learn more about the FBA Awards for Massachusetts and the FBA schedule of programs and activities throughout the year, the Family Business Association has launched its new website, www.fbaedu.com.

This website will not only provide you with details about applying for the 2011 Awards and upcoming educational programs and events, but there you can find a library of materials and resources of interest to family businesses.

To complement a full agenda of in-person educational programs, in January, the Family Business Association will launch its “Webinar Wednesday” program series. Mark your calendars for once-monthly, Wednesday afternoon, one-hour webinars providing an opportunity for family businesses to attend, via the web, valuable programming regarding relevant family business issues. We assure you that the mission behind these programs will be the same as the mission of the Family Business Association — to educate and honor family businesses in Massachusetts.

We are also pleased that the FBA Advisory Council will begin their work in January 2011.

A group of outstanding volunteers representing family businesses of all sizes and from regions across Massachusetts will provide input and feedback regarding the FBA programs and activities.

Again, thank you for your participation and support.

Best wishes for a healthy and prosperous New Year! n

AL DENAPOLI IS AN ATTORNEY WITH TARLOW, BREED, HART & RODGERS, AND DIRECTOR OF THE FAMILY BUSINESS ASSOC. 4

FAMILYBUSINESS Official magazine of the Family Business Association. Inc.

101 Huntington Ave., Suite 500 Boston, MA 02199 fbaedu.com

Massachusetts

First Quarter 2011

BUSINESS Official magazine of the

Rising Like A

Phoenix

Chicopee-based J. Polep Becomes A Thriving Business

Plus: Turning Over A New Leaf: After the Sale A Supplement to Banker & Tradesman

President Edward D. Tarlow, Tarlow, Breed, Hart & Rodgers, P.C. Directors Jeffrey S. Davis, Mage, LLC Al DeNapoli, Tarlow, Breed, Hart & Rodgers, P.C. Brian Nagle, BNY Mellon Wealth Management Vice President Catherine Watson, Tarlow, Breed, Hart & Rodgers, P.C. Treasurer Richard A. Hirschen, Gray, Gray & Gray, LLP

A Family-Owned Business Since 1872

Vincent Michael Valvo Group Publisher and Editor-in-Chief 280 Summer Street, Boston, MA 02210 Phone 617-428-5100 Fax 617-428-5119 www.thewarrengroup.com

Timothy M. Warren Chairman Timothy M. Warren Jr. CEO & Publisher David B. Lovins President

FINANCE & ADMINISTRATION Jeffrey E. Lewis Controller / Director of Operations EDITORIAL SERVICES

CREATIVE SERVICES John Bottini Creative Director Scott Ellison Senior Graphic Designer Nate Silva, Christina Briggs Graphic Designer

ADVERTISING & CIRCULATION George Chateauneuf Publications Group Sales Manager

Christina P. O’Neill Custom Publications Editor

Stefanie Magner David Moore Account Manager

Cassidy Norton Murphy Associate Editor

Lisa Wright Account Manager Emily Torres Advertising, Marketing and Events Coordinator

©2010 The Warren Group Inc. All rights reserved. The Warren Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher.

FINANCIAL NETWORK WEALTH MANAGEMENT

As the year draws to a close, the FBA wishes to thank the sponsors and supporters that enabled the FBA to bring quality programming and much deserved recognition to Massachusetts family businesses in 2010. ******** Wishing all a prosperous new year!

Media Supporters

Other Supporters

FBA Webinar Wednesdays The FBA is pleased to bring a new offering of quality, informative programming to you.

Introducing FBA Webinar Wednesdays.

Don’t miss relevant information delivered to you live over the web. Your family business peers and advisory professionals will address topics that are designed to

January 19 Understanding the Tax Implications of Selling your Business

Wolf & Company, P.C.

help you and your family.

February 16

Plan to participate from 2 p.m. – 3 p.m.

Philanthropy and Your Family – TBA

on each of the following Wednesdays.

Registration information will be circulated

March 23

via email, or visit fbaedu.com for

Non-Qualified Retirement Plans

registration details.

Tarlow Breed Hart & Rodgers, P.C. with The Kelliher Group

CUTE? SURE. BUT NEXT HE’LL WANT A COMPANY LEXUS. If you are managing a family-owned business you’ve got to make decisions today that will affect the future. Make sure you act on financial information that is timely, accurate and provides steady guidance for the road ahead. No matter what model you are driving.

Call Richard Hirschen at (781) 407-0300 to see how much more you can get from an accounting firm.

CERTIFIED PUBLIC ACCOUNTANTS VISION • DIRECTION • SUCCESS Westwood, Massachusetts 781.407.0300 www.gggcpas.com

6

How Can I Miss You If You Won’t Go Away?

By Ira Bryck

Research and anecdotes indicate the senior generation of a family business typically has 90 percent of their assets and 150 percent of their self-esteem tied up in the company. And though there is great to-do about how to cash out, there is less plotting about how to diversify one’s fulfillment, allowing successors to progress without undue cramping of their style.

Despite golf, travel and needlepoint, a senior’s momentum and character can lead to endless second-guessing and harumphing. Even if your kids have the social grace to thank you for your well-intentioned advice, plus the gumption to make their own decisions, you can’t help but grumble about what an ungrateful litter you raised.

But do not judge, lest you be judged. If your offspring could not grab the reins, what does that say about you? After a lifetime of teaching them how to take turns, to step up to the plate, to walk it off — all those great life lessons — you won’t teach them the one about knowing when to take your final bow? (This is a hard one, as you may be learning it and teaching it at the same time.)

How unfair, to have children that put you out to pasture, right in your prime!

Why can’t they continue on as second fiddle, while you conduct and orchestrate, as always?

The Lebanese Bostonian poet, Kahlil

Gibran, famously noted, “Your children are not your children. Though they are with you, they belong not to you. You may give them your love but not your thoughts, for they have their own thoughts. For life goes not backward nor tarries with yesterday.

You are the bows from which your children as living arrows are sent forth.”

As a parent, I know that’s bull: my kids are mine, all mine! But they are my offspring, not my clones. There is something wrong if they don’t spring off, launch from the nest. Our parental warmth is needed to hatch them, but our weight will crush them. We are obliged to accept what we cannot change: that they’re free agents (even if they’ve sold themselves). Even if yours work in the next office, they thrive when they have their very own opportunity, success, even failure; and the chance to learn from you, but do it themselves.

Plus, your business needs that regeneration. Very few companies do well under immortal leadership.

Journeys start with single steps, but best to ensure they’re in the right direction.

Consider considering: What different challenges will the next generation face, that they will need to face when you aren’t there to guide them? What talents, changes, resources, conversations and perspectives will help navigate that strange terrain? What have you learned from your successes and

failures that will allow you to face the future with wisdom and integrity? How can you fulfill your emotional and social needs, possibly using talents heretofore untapped?

What do you need to do to maintain your lifestyle without imperiling the economic freedom and security of the company?

What can you do now, new and different from ever before, that will leave you with less regret, and more contentment, that you did not accomplish in running your business? A fruitful and challenging thought process and conversation (my usual prescription) will increase the odds of enjoying competitive advantage and personal fulfillment, and averting business and life crises.

There are many fine examples of transition done admirably and creatively. Seniors have scaled back to their favorite job ever (operating a crane, making deliveries) or serving as company scout into the future of the industry, or teaching what they’ve learned (to someone else’s kid), or getting into what thrilled them when they were 12 (a la Passages, by Gail Sheehy). It takes a certain faith in their future and lack of fear to let the next generation face their future with bravery and gratitude. But not as much as putting your own personal arrow in your own personal bow, taking aim, and letting go.

With thanks to singer-songwriter Dan Hicks and His Hot Licks for the headline.

IRA BRYCK IS THE DIRECTOR OF THE UMASS AMHERST FAMILY BUSINESS CENTER. REPRINTED WITH PERMISSION. 7

Bigger And Better Than Ever: The 2010 Family Business Awards

By Cassidy Norton Murphy

8

E

very year the Family Business Association Awards for Massachusetts get a little bigger and little more exciting and honor more people; this year was no exception.

In addition to the categories of small, midsized and large multi-generational businesses, the community excellence award, and the adversity award, the FBA this year awarded the Comcast Spotlight Hall of Fame Award and the first-generation business award, recognizing a company that employs more than one generation of a family, but has not yet transitioned ownership from the founding generation to the next.

Moderating for the third year, David Wade of WBZ-TV noted that the event “has it all — warm cinnamon peach crisp, champagne sabayon with apricot and chocolate sauce garnished with raspberries” — the description of the dinner’s desert listed on the table menus. “That in a nutshell is why I wanted to be here tonight,” he said, drawing laughter from a crowd of more than 400.

Wade was later given an FBA award of his very own, “because after three years, he feels like one of the family,” according to FBA Director Al DeNapoli.

Agar Supply Company, Inc. What began as a butcher supplying specialized cuts of pork to Chinese restaurant owners in 1940 is now the largest independent food distributor in New England. Agar Supply Co. is the winner of the 2010 Community Excellence Award.

All 16 finalists were considered by the judging panel when considering the Community Excellence Award. While accepting the award, Karen Bressler, CEO, president and third-generation head of the company, said “this was the one we wanted to win.”

“It’s all about giving back,” she said.

“That’s what my dad taught me; giving back is what it’s all about. And my dad would want me to say, congratulations to everyone in this room for all their hard work, and the ways they have given back.”

Red Apple Farm Winner of the Small Business Award (50 employees or fewer), Red Apple Farm in Phillipston, Mass., is an authentic New England family farm whose definition of “family” extends to its employees and visitors. It is one of the town’s primary employers and welcomes more than 60,000 visitors annually.

An early embrace of innovative technologies led the farm to install a wind turbine last year, and solar panels this year. Together, they are expected to generate more than 90 percent of the farm’s electricity consumption.

Fourth-generation owners Albert and Nancy Rose were named 2005 Citizens of the Year in the town of Phillipston in recognition of their civic and monetary contributions.

Barrett Distribution Centers, Inc. The market leader in New England for third-party logistics, Barrett Distributions Centers, Inc. began as a wool storehouse in Lawrence, serving the raw material needs of the textile mills in the Merrimack Valley.

Now under the third-generation leadership of Arthur Barrett, president, and Tim Barrett, COO, the company is the winner of the 2010 Mid-Sized Business Award (51 to 150 employees). The company now employs over 100 people, supporting 10 operations in five states.

The Sandri Companies A.R. Sandri leased his first gas station in 1930. Eighty years later, his son (William Sandri, president) and grandson-in-law (Timothy Van Epps, CEO) own 105 retail locations, making the company one of the largest distributors of Sunoco gasoline in the United States. Winner of the 2010 Large Business Award (150-plus employees), Sandri, Inc. is now moving beyond fossil fuels and into emerging clean energy technology.

“This award shows that you can come from nowhere, go to bed hungry every night, work hard, love your family, love your community, and succeed,” said Wendy Van Epps, A.R. Sandri’s granddaughter. “Thank you so much on behalf of my grandfather.

This is what he was all about; family, community, working hard, and giving back.”

Tartt’s Day Care Centers, Inc. In honor of Mrs. Bessie Tartt Wilson, a woman from Mobile, Alabama who struggled to provide for her own children in Boston in 1946, and for thousands of other people’s children, the Tartt’s Day Care Centers were the recipient of the 2010 Adversity Award.

Based on a well-rounded, structured curriculum and strong value sytem, Wilson’s child care center evolved into one of Boston’s oldest, minority-owned family businesses.

Continued on next page

9

Family Business Awards Continued from page 9

Tartt’s approach to education focuses on social, emotional, cognitive, physical and language development, and makes nutrition a priority through the centers’ inhouse food services.

“My mother came up from Mobile, a young black woman with polio, and realized a dream,” said Mary L. Reed, second-generation owner.

“Four generations of our family, and others’ families, have been through the Tartt’s centers, and we thank you so much for this recognition.”

VPNE Parking Solutions, LLC VPNE Parking Solutions began when Kevin W. Leary decided he had had enough of the investment banking business, turned down a promotion, and opted to go into the parking business. Two years later, his son, Kevin J. Leary, joined the business as well.

This year, VPNE Parking Solutions is the winner of the First Generation Award; it is the first time the award has been granted.

“We have the greatest employees in the world,” said Kevin W. Leary when accepting the award. “There is very little turnover, which is unusual in our industry. The growth of our company is due to them, and to my son. I love working with him, and I’m very lucky to work with my family in a business I love.”

The Avedis Zildjian Company Inc. A previous Family Business Award recipient, the Avedis Zildjian Company received the inaugural 2010 Comcast Spotlight Hall of Fame Award.

In 1618, an Armenian alchemist created an alloy of copper, tin and traces of silver to create a cymbal with unique clarity and power. A few years later he started his own business in a suburb of Constantinople.

Nearly four centuries later, that business has passed through 15 generations of the Zildjian family and is now based in Norwell, Mass.

Sisters Craigie and Debbie Zildjian carry on the family legacy in what is recognized as the oldest family-owned business in America.

“This is the fourth year we’ve attended the Family Business Awards, and the awards are only four years old,” Debbie Zildjian said.

“We’re very honored, and it’s very heartwarming, to see this wonderful organization, celebrating what all of us, as family businesses, do every day. Thanks very much, and congratulations to all.” n

Timothy Van Epps, president, and Wendy (Sandri) Van Epps with others of The Sandri Companies.

Al Rose with three generations of Red Apple Farm.

CASSIDY NORTON MURPHY IS THE ASSOCIATE EDITOR OF CUSTOM PUBLICATIONS FOR THE WARREN GROUP, PUBLISHER OF MASSACHUSETTS FAMILY BUSINESS. 10

Mary Reed and management of Tartt's Day Care Centers.

Co-hosts for the evening, Al DeNapoli and Jeffrey Davis.

A crowd of over 400 gathered at the event.

Bill and Dorothy Arrighi of finalist A&A Metro Transportation.

Keynote speaker Whit Shaw gave an inspiring speech.

Moderator David Wade of WBZ-TV.

FBA sponsors and supporters celebrated the 2010 winners.

Fast

5

By Ryan M. Gorman

Ways to Prevent Fraud

You think it won’t happen to you. After all, you’ve been working with these people for years. You trust them. Some of them are related to you. But fraud happens. In fact, it happens at an alarming rate. According to the Association of Certified Fraud Examiners (ACFE), U.S. organizations lose 7 percent of their annual revenues to occupational fraud, which translated to approximately $994 billion in 2008.

The median fraud loss that year was $175,000.

According to the ACFE, small businesses are especially vulnerable. One way to avoid being a victim of fraud is to reduce the opportunity for theft. Good internal controls can help.

1.

Think Checks And Balances When It Comes To Cash Receipts Divide duties so that no individual is handling all aspects of revenue cycle transactions. For example, no one person should open the mail,

post cash receipts in the accounts receivable sub-ledger, and make deposits. Instead, introduce a second individual to at least one of these tasks. Step in and perform some of these tasks periodically, so that you are aware of how revenue is flowing through the business.

2.

Check The Inventory Perform unscheduled inventory checks to ensure that employees aren’t going home with or selling assets on the side. Be visible on the warehouse and manufacturing floor at unscheduled times. Perform surprise counts of petty cash as well. Surprise visits and counts can uncover and/or deter theft.

3.

Sign The Checks Some owners sign payroll checks in addition to vendor checks. If this isn’t practical, consider signing checks over a certain dollar amount. Have monthly bank statements

sent directly to you, so you can visually scan returned checks and other bank activity for unusual transactions. Also, consider reviewing bank activity online between statement dates.

4.

Make Vacations Mandatory Fraud is often discovered when an employee is away from work and others step in to take over his or her duties. Be wary of employees who over-zealously guard their “territory” or work without vacation time, as they may be hiding something.

5.

Create a Reporting System According to the ACFE, nearly half of the fraud cases in 2008 were discovered by a tip or complaint from an employee, customer, vendor or other source. Set up a hot line or other system for people to report suspicious activities. Most employees are honest and will not tolerate theft. n

RYAN M. GORMAN IS SENIOR MANAGER AT WOLF & COMPANY, P.C.

Northwestern Mutual announces a total dividend payout of $4.6 billion.

What makes this possible?

As a mutual company with more than 150 years of experience, we’re completely committed to delivering financial security to our clients and policyowners. It’s with their interests in mind that we work hard to minimize operating expenses and maximize investment returns.

David C. McAvoy, CLU® Managing Partner The Boston Group One Beacon Street, 25th Floor Boston, MA 02108 (617) 742-6200 nmfn-thebostongroup.com 05-2760 ©2009 The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM). David McAvoy is a General Agent of NM. Registered Representative of Northwestern Mutual Investment Services, LLC, a wholly-owned company of NM, broker-dealer and member FINRA and SIPC. NM and The Boston Group are not broker-dealers. The dividend scale and the underlying interest rates are reviewed annually and are subject to change. Future dividends are not guaranteed, although Northwestern Mutual has paid a dividend every year since 1872. 9029-067 12

Personnel Records Statute Amended To Impose New Notice Duty On Employers

By Willard Krasnow and Robert M. Shea

In Massachusetts, the Personnel Records Statute, M.G.L. c. 149, §52C (the statute), sets out what must be included in a “personnel record,” as well as various employer obligations and employee rights concerning personnel record access, challenges and retention. The statute has recently been amended to impose an affirmative duty on employers to notify employees whenever any negative information is added to their personnel records. The amendments, which are now in effect, require Massachusetts employers to examine (and likely change) the way they document employee performance and misconduct issues.

Willard Krasnow

Robert M. Shea

What Is A Personnel Record?

The statute defines a “personnel record” broadly as any “record kept by an employer that identifies an employee, to the extent that the record is used or has been used, or may affect or be used relative to that employee’s qualifications for employment, promotion, transfer, additional compensation or disciplinary action.”

Clearly, this definition is subject to some degree of interpretation. Employers with 20 or more employees must keep at least the following information or documents (to the extent prepared) in an employee’s personnel record: • Name, address, date of birth, job title and description; • Salary or hourly wage and any other paid compensation; • Starting date of employment; • Job application, resumes or other employee responses to an employment advertisement; • All employee performance evaluation documents, including evaluations, written warnings of substandard performance, documents relating to disciplinary action, list of probationary periods of waivers signed by the employee; and • Copies of dated termination notices.

Personnel records are not limited to documents contained in official or formal personnel files maintained by the human resources department. Rather, the statutory definition also encompasses what individual managers and supervisors may view as their personal files or notes on employees under their supervision, if those documents are used or may be used to determine promotions, transfers, additional compensation or disciplinary action. Consequently, managers and supervisors should be made aware that affected employees may have access to such documents.

Significantly, the statute excludes from its definition of personnel record “information of a personal nature about a person other than the employee if disclosure of the information would constitute a clearly unwarranted invasion of such other person’s privacy.” No additional guidance is provided on what types of information fall within this exclusion.

Employers sometimes can use this exclusion to shield sensitive documents relating to workplace investigations (e.g., a harassment investigation) when private information concerning other employees is involved.

New Notice Requirement With the amendments, an employer now is required to “notify an employee within 10 days of the employer placing in the employee’s personnel record any information to the extent that the information is, has been used or may be used, to negatively affect the employee’s qualification for employment, promotion, transfer, additional compensation or the possibility that the employee will be subject to disciplinary action.”

Documents addressing an employee’s performance deficiencies, attendance issues or improper workplace conduct that would normally be placed in an employee’s official personnel file clearly trigger the notice requirement. In addition, because the statute defines “personnel record” quite broadly, the notice requirement arguably extends to e-mail communications between managers and other informal written “information” that may negatively affect an employee’s employment, but were not intended to be placed in the employee’s personnel file. While employers can hope that the statute will be interpreted in a reasonable way, much uncertainty will remain until the Continued on page 22 13

LIFE AFTER THE BU You've Sold The Business.

Now What?

BY CHRISTINA P. O’NEILL

Okay, so you’ve sold your business, whether it was to family or to a larger firm. It could have been the carrying out of a well thought out transition, or it could have been an opportunistic response to an offer you couldn’t refuse. You now face the challenge of what to do next with your life — whether there’s some continuity with the business you ran and built, or whether you branch off in a whole different direction. Here are three very different stories of family-business entrepreneurs who found a balance.

Stepping Back, But Not Out Thomas Oliveri sold his Worcester-based restaurant to his two sons in the late 1990s, ceding to them the day-to-day operations, but the 68-year-old entrepreneur still takes an active role in the development of the business, which consists of Peppercorns Grille

Business owner emeritus Tom Oliveri (left) poses at Peppercorn’s with Master Brewer Ben Roesch and Tom Oliveri, Jr.

and Tavern in Worcester, Prezo’s Grille and Bar in Milford, and Elsa’s Eatery of Shrewsbury. The next generation has expanded on that platform with the recently-opened Wormtown Brewing Co., a microbrewery craft beer business, and another restaurant, Ollie’s Italian Eatery, which will open in West Boylston in the spring of 2011.

The restaurant business is harsh on a novice. Oliveri clearly is not that guy. A let’smake-it-happen person who prefers the simple and direct approach, he dove into the restaurant business in downtown Worcester in 1980, before the current restaurant boom in the city, and when his two sons were in

high school and college. He established Elsa’s Bushel & Peck in Tatnuck Square in Worcester in 1980, Elsa’s Downtown Bushel & Peck on Main Street in 1990, and Elsa’s Bushel & Peck Summit in Worcester in 1994. Elsa’s Downtown succeeded in a difficult downtown environment that saw a McDonalds and a Burger King shutter. What is now Prezo’s in Milford opened as the first Peppercorns in 1994. The Worcester Peppercorns would open in 1997.

Oliveri’s reason to step back, but not out, was the combination of a personal health problem, now under control, and the realization the staff at the front lines — wait-

CHRISTINA P. O’NEILL IS CUSTOM PUBLICATIONS EDITOR FOR THE WARREN GROUP, PUBLISHER OF MASSACHUSETTS FAMILY BUSINESS. 14

USINESS SALE

Name: Thomas Oliveri Sold: Peppercorns Grille and Tavern, Worcester; Prezo’s Grille and Bar, Milford; several delicatessens Sold to: His two sons, in the late 1990s Current Occupation: Restaurant and microbrewery business development

staff and kitchen staff — need direction from someone close to their own age. “To be an effective manager, you must relate to the people who work with you,” he says.

His sons now own all the businesses.

Oliveri is on the payroll and has a company car, health and life insurance. He and his sons “stay out of each other’s way,” he says. “We must have mutual benefit for the good, and we all participate in the bad.”

A definite part of the good is Wormtown Brewery, established in 2010. Wormtown produces 11 different beers, all with Worcester themes, and a 12th is on the way.

Among the brands: Worcester’s Bravest Ale, a brand for which a portion of sales goes to benefit the Worcester Firemens Foun-

dation; Elm Park Amber; and Seven Hills Pale Ale. Wormtown Brewery’s offerings are catching on in Boston, where the craft beer market now has a cachet similar to the wine market some years ago. It’s no slouch in Worcester, either — ­ an Oktoberfest held at Union Station brought in 550 people.

The traits he nurtured through 30 years in the restaurant business include a talent for knowing what the customer wants. The Milford location that houses Prezo’s is a case in point. It succeeded as Peppercorn’s where five or six restaurants had previously failed.

When Oliveri sold the property in 1999 at the onset of his health problem, he provided seller financing. When that enterprise failed, Oliveri bought it back and turned it into Pr-

ezo’s Grille and Bar — a family restaurant with an Italian flair and a sushi bar.

The business trait he uses in his current role is the ability to step back and see the big picture. Years ago, an important turning point came in 1984, when he decided to trim the deli hours back from seven days a week to six. Yes, the delis lost Sunday business, he says, but the ability for him to step back, recharge and evaluate the larger needs of the business paid off in good planning, which in turn paid off in improved results.

He’s also been in and out of the horse racing business for the last 25 years. “I’ve bought them and sold them,” he says. “I may Continued on next page 15

Former Family Business Principals Continued from page 15

decide I want ’em back, and buy ’em back.”

In an early-morning interview at the Worcester Peppercorns, hours before opening, he’s clearly at the start of another interesting day. Retirement is difficult for anyone who has a lot of energy, he says. “If there’s still fire in you, the worst thing you can do is retire.”

Picking Up Where You Left Off Sandy Goldstein-Davis says she used to have silent monologues with the portrait of her father on the wall as she climbed to the top of the office stairs; these mostly began with “how could you do this to me?”

Her father, Harvey Goldstein, who died in 1994, was a serial entrepreneur, buying residential, commercial and industrial land.

He created housing developments, shopping centers and also served as an auctioneer. He was the Goldstein in Goldstein & Gurwitz, a business started by his father and his father’s brother-in-law, which began in the farming and cattle dealing business. He joined the business after graduating from college, bringing in new ideas and revenue sources, such as selling farm equipment like the International Harvester, and then dealing heavily in construction equipment. But his most profitable idea occurred on a highway in the early 1960s when flying debris from an open-bed truck in front of him made him think, Someday, this is going to be against the law. It eventually became so in all 50 states.

He founded Pioneer Consolidated Corp., DBA Pioneer Cover-All, in 1963, based in North Oxford on U.S. Route 20, which had become a major truck route.

By the time of its sale to Wastequip Inc. in July 2006, Pioneer was by far the nationwide industry leader in truck covers, primarily for waste haulers, and holds multiple patents on truck-cover design in both the construction and refuse industry.

Goldstein-Davis joined Pioneer in 2002, eight years after her father’s death. Her business experience up to that time had been owning and operating three restaurants, and spending more than 10 years with Boston Catering Connection Inc., which started by representing some of the best restaurants and chefs in the Boston area. “I dreamed up the concept myself because I was tired of operating restaurants, and did not want a large staff or overhead,” she says. “I sold my expertise in the catering and events area to these restaurants by providing them with the whole package of 16

Name: Sandy Goldstein-Davis Sold: Pioneer Con Corp DBA Pioneer Cover-All Sold to: Wastequip Inc. in July 2006 Current Occupation: Oversees other family businesses, operates event planning business

doing off premise catering without them having to hire management or staff. “ The restaurant clients provided the food and Goldstein-Davis’s company provided the events. And thus came the evolution of the restaurant business into the events management business that it is today.

Between her father’s death and the time she joined Pioneer, the company tripled in

size and became comfortably profitable.

However, internal conflict ensued between existing management and the board. Although there had been offers to purchase the business, the board and the family felt the timing was wrong and expected more growth potential ahead. Davis-Goldstein was asked to step into the role of managing the company. While her background

seemed a far cry from truck covers, “I was the only one in the family with business experience,” she says, and “at the end of the day, numbers are numbers.” So she jumped into the ring, and set out to make Pioneer as attractive as possible in order to secure a price that reflected its true earning potential.

But in order to get there, she had to investigate and question every nook and cranny of operations. “Change does not always come easily, and I had to dig my heels in and prove that a short term change in profit would increase long term growth,” she says.

“Every area needed expansion.” The company kept hiring people, knocking down walls, and adding offices. It integrated a new computer system, and renegotiated pricing with its long time vendors. Pioneer grew fast and doubled its sales between 2002 and 2006. In the meantime, Goldstein-Davis’s event-planning endeavors went on the back burner.

“It was difficult, but what a learning experience. I felt so close to my dad sitting at his desk, in his office, in his shoes. There were times when I didn’t know if I could get through the day.” She cites her husband, Jeffrey Davis, and his partner, Jonathan Freedman, of Mage Inc., as staunch supporters — as well as her mother, who, in addition to providing a listening ear, offered support to the management left behind after her husband’s death. Goldstein-Davis praises the trustees and employees who had been with the company for decades, whom she says helped during the rough times.

When she received notification that the deal had closed and the funds had been wired to the bank, she and her family celebrated “the end of a long journey that brought the kind of security my father dreamed of.”

But after the sale, it still wasn’t over.

Harvey Goldstein also left significant landholdings throughout Central Massachusetts, so Goldstein-Davis has switched her Pioneer hat for the hat of the operator of the family businesses that are left. She is now president of two corporations and manager of multiple partnerships. And yes, she’s also back in the event-planning business, serving friends, charities and a loyal customer base to whom she is loyal in return.

Holding The Keys To Life’s Next Chapter Michael Blank had it all planned and filed in a folder marked “TDA,” for “The Day After.” When he and other family members sold Arthur Blank & Company in 2007, the first thing he did was to take an office suite in the century-old building at 119 Braintree St, in Allston that his

family owned, which had served as home base for the company from 1963 to 1986.

Today, he’s in his element, doing what he likes — managing that building. It’s now home to more than 85 businesses and is close to downtown Boston alongside the Mass Pike, with ample free parking. It’s hard not to notice the “119” logo on the building and the enormous American flag on top.

Blank came of age in the family business. Now 60, he worked there since graduating from college in 1972. He’d grown with the company, taking on increasing amounts of responsibility, and at the time

of the sale, was senior vice president. His older brother was president, and two cousins were vice presidents. At the time of its sale, the company, founded by Michael’s father Arthur* and two uncles in 1934, was the industry leader in the printed plastic technology that virtually all of us carry around in our wallets in the form of credit, debit and gift cards.

In 2007, the family decided unanimously to sell. “The next generation after us was not active in the business, and we were at the point where it seemed like good timing [from the family’s point of view].

Continued on next page

Minding family businesses for almost 150 years.

For generations, New England families have entrusted Hemenway & Barnes with their futures. Our goal has been — and will always remain — the same, helping families achieve their personal goals and maximize the value of their businesses.

Continuity Planning | Governance | Tax Planning Employment | Real Estate | Risk Management Litigation and Dispute Resolution

Trustees l Counselors at Law 60 State Street

Boston, MA 02109-1899 t 617 227 7940

www.hembar.com 17

Former Family Business Principals Continued from page 17

We were a natural fit for the firm that bought us.” The sale closed just before the recession hit, “fortunately for us, and quite by accident,” he says. He stayed on another six months to complete a mezzanine build-out in the West Roxbury building, for which he’d been responsible, but he did make a clean break.

Michael Blank learned some valuable lessons on management from his years at Arthur Blank. In its incubator-stage years, the owners “had a tough time staying out of each other’s turf.” As the company grew, adding upper-management personnel, the environment became more accountable and professional. “This transition had an impact on me, which I carry to this day,” he says.

“I am much more demanding and critical of myself.” He notes the difference between ground level and 10,000-foot perspectives and the importance of careful analysis.

Today, Braintree Street Realty LLC has carved out a unique market niche and business model. Its tenants include architects, film producers, casting agencies, lawyers, consultants, photographers, video producers, artists, software engineers, internet start-ups and landscape architects, as well as a letterpress printer and a tiny company making handmade soap. Many are long-time tenants, some for decades, which fosters a close-knit business community of about 700 people within the building. Bill Wertz, the property manager, has himself spent two decades at the property after a long career at Cabot, Cabot & Forbes. When he takes a visitor through the building’s seven floors, it’s clear that he regards it as a favorite neighborhood, and many of the tenants do, too.

It almost didn’t happen. In 1986, when the company moved to West Roxbury, the Blank family was an eyelash away from selling 119 Braintree when the buyer backed out at the last minute. The family had to start refitting the building and was leasing it at the same time. And that’s where Blank’s affinity for real estate came in handy. “I always wore a real estate hat, along with my company duties, as we owned large properties besides the plastics business. That was an arena I always enjoyed working in, although it was incredibly tough at first. It was an easy transition for me,” he says.

Blank made a decision to reconfigure the building into small-sized suites ranging from 450 square feet to 3,000 square feet, and charges rent on a gross basis, with 18

Name: Michael Blank Sold: Arthur Blank & Company Sold to: American Banknote Company in 2007 Current Occupation: Principal, Braintree Street Realty Trust LLC

one monthly rent check covering everything except the separately-metered electric. Common-area maintenance charges, including insurance, taxes, heat and snow removal, are part of the package. “If we get another Blizzard of ’78, it’s covered,” he says. “Our tenants appreciate the budget, certainty. I need to manage the variable costs, or I take the financial hit. Commercial properties typically pass through common area expenses. We don’t. Instead, I focus on careful management and cost-efficiency.” That doesn’t mean 119 Braintree has the cheapest rent in the neighborhood — but the building is almost fully leased at

a time when many others are not.

“I was ready to move on and pursue other passions,” Blank says today. “For 33 years I had worked in the world of printed plastics world. It was time. …I have no regrets,” he says. *Michael Blank’s father, the late Arthur Blank, shares the same name as the co-founder of Home Depot and owner of the Atlanta Falcons. “I get asked this every once in a while,” Michael says. “My dad was an entrepreneurial genius, just like the guy from Home Depot. But these are two different guys. We’re Pats fans, not Falcon fans.” n

Q and A: Q: For those who sell to non-family versus family, what are the different priorities in each scenario?

A proper positioning for sale of the business to a non-family entity requires more preparation, including getting the “toys” out of the business: specifically, boats, cars, camps in Maine, and other perk bloat. Some sellers choose to add these items back into the value of the company, so some brokers say don’t worry about them — but a clean-looking company will be less suspicious. Too many toys makes the buyer think that where there’s smoke, there’s fire, in the form of other types of waste they’re not seeing.

Then there’s the task of figuring out the proper salaries that will be paid once the business is out of family hands, more arm’s length terms on compensation for family members remaining in the business. Selling to family requires figuring out the discount or special pricing you’d give to family members (and calculating the right amount to pay the retiring parent, whether it’s “enough to fairly maintain my lifestyle” or “pay me my salary until I die, and then to your mother, and after that, it’s yours” or even “what the business is worth, considering that the child/buyer may be the one who added much of the increase in value”). This is also a touchy discussion, especially if the seller’s retirement or gifting to the children who are not in the business requires the right sales price. But in either case, it’s healthy to get an objective appraisal of the value of the company, to avoid resentment and second guessing.

Q: For family business founders who remain involved in the business: What roles do they take on — advisor, chairman, business development?

Several founders have stepped back to some of the original jobs they liked best from the beginning, like operating a crane or making deliveries.

Others have done the opposite, like researching the cutting-edge future business opportunities — i.e., what business are we really in? Delivery, not pizza; memories, not photography — and how to be best at that. If there’s a way to get back in touch with an aspect of the business that got lost to you when you had to sit behind a desk, that might reignite a passion that could lead to mentoring others who could benefit from your entrepreneurial rebirth.

Ira Bryck is director of the UMass Family Business Center. Here, he discusses the challenges and choices of selling the family business — before, during and after.

Q: For sellers who exit the family business, are all of them looking for retirement-style endeavors, or are they serial entrepreneurs?

Many people sell a company due to burnout, but I think more people who sell are finished with that chapter, but still have fire in the belly for something else. They look to

create something that has many of the pros and much fewer of the cons of what they sold. So it could be a smaller, more hands-on organization, with no “administrivia.” Or if what they sold was something they fell into, but weren’t passionate about, they intuitively do what Gail Sheehy suggested in her novel, Continued on page 22

Lots of advisors suit up, show up and keep up.

But how many know when to speak up?

Team McGladrey Golfer Zach Johnson and his caddie, Damon Green.

Power comes from being understood.

SM

A strong strategic partner should know you and your organization well enough to know when to step up with insights, suggestions and fresh ideas. And when you trust the advice you’re getting, you know your next move is the right move.

This is the power of being understood. This is McGladrey.

Experience the power. Go to zachisunderstood.com.

Or contact Richard Caturano, Office Managing Partner at richard.caturano@mcgladrey.com.

Assurance

n

Tax

n

Consulting

©2010 RSM McGladrey, Inc. and McGladrey & Pullen, LLP. All Rights Reserved. NT10-04477

19

Lori Polep, Rachael Polep Kramer, and Jeff Polep

g n i s i R x i n e Like a Pho

A

By Keith Griffin

J. Polep Becomes A Thriving Business

s the head of a family business now in its fifth generation, Jeff Polep has managed to achieve a balance between family and business that he hopes will keep the Chicopee-based J. Polep thriving for generations to come.

The distributorship started simply in 1890 from the back of a horse-drawn wagon and was continuously owned by the Polep family until 1984, when it was sold by his father and uncle to a national conglomerate that was swallowing up distributors across the country. Two years later that distributor was insolvent and Jeff Polep, now owner, president and CEO of J. Polep, fought Texas bankruptcy court to regain control of the family business.

He was just 31 when he got the business back. At that time, it did $145 million in volume; that number has swelled to more than $800 million. (It is one of the top 15 distributors in the country.) “We’ve had some dramatic increases,” he said, adding the company has acquired 15 other wholesalers in the last 24 years. “Acquisition is good for growth,” Polep said. The business’ footprint includes most of New England and upstate New York.

“We’re distributors. We’re a conduit,” he added. “We’ve been a conduit for 120 years. We’ll be a conduit for another 120 years. Our main goal here is service — all the way around. The competition can produce better prices, sometimes, but not our service levels.”

Jeff is the fourth generation Polep at the helm, with his daughter, Rachael Polep Kramer, and son Eric in the KEITH GRIFFIN IS A FREELANCE WRITER.

fifth generation. Lori Polep, Jeff’s sister, is vice president of computer operations and system management. Adam Kramer, his son-in-law, was head of food service, but is now being trained as an outside tobacco salesperson. Eric Polep, his son, moved from outside sales to working on colleges and universities. Cousins Linda Polep (advertising), Sam Polep (route sales) and Jonathan Polep (route sales) are also involved in the business. Rachael is director of wine and specialty beverage division and marketing specialist. She started out in route sales in Boston, then moved on to chain sales before moving into her new responsibilities.

Non-Filtered Business Model The diverse business based on consumer consumption has 505 employees — ­ most based in Chicopee with some regional cashand-carry locations, as well as cross docks.

Overall, it has locations in Providence, West Haven, Manchester, NH, and Woburn, as well as Albany. J. Polep is Massachusetts’ largest taxpayer by dollar value because of the cigarette taxes it remits to the Commonwealth, according to Polep.

“Taxes are so high in most of the New England states people are going to Southern states, the Internet and reservations at low or no taxes at all. It’s hard to compete. Cigarettes have been a mainstay of the family business,” he said. In fact, the Polep family’s roots in the distribution business track back to the Polep Tobacco Company, founded by Charles Polep in 1890 in Salem, Mass.

Polep has a strong succession plan in place for the next generation. “My plan is to have the kids take over.” Jeff’s two children each now own 12.5 percent of the company.

They’re not just going to waltz into leadership positions, though. “They have to earn it first,” he said. “They have to earn the respect, have the knowledge before they go up

the ladder.”

Polep, who is 56, said he has no set age to retire. “It’s a very, hard, complicated business to learn,” he said, explaining why he will hang around for years to come. “It’s going to take them a while to learn the business.”

The business is complicated by its seasonal nature. Polep said the business runs 90 percent on weather but colleges help smooth out the fall and winter when people are less likely to pop into convenience stores and more likely to consolidate their shopping trips to bigger grocery stores.

Polep is nothing if not a forward thinker.

He has diversified the business that he resuscitated. “Food service has been a nice diversification,” he said. The company also added alcohol and ice cream, as well as natural and organic products. A commissary division, Rachael’s Gourmet, sells sandwiches.

Colleges have been a big expansion for the business — it’s a natural market with high volume, and an outgrowth of the company’s relationship with food service businesses.

The company now offers colleges and universities the natural and organic products they want. It’s a textbook example of how diversification has helped the company, because it’s a market closed to tobacco sales.

Potential family squabbles are smoothly avoided by keeping responsibilities discrete.

“Everybody has their own territory,” Polep said. He also believes in cross-pollination with the next generation learning all aspects of the business. “I own the final decision.

That makes life easier,” he said. “I’m the final say, but we work as a team.”

The company also seeks its own counsel before bringing in outside experts. “We’re doing it all on our own,” Polep said. “We don’t need a consultant at this time. Training is going well.”

During a lengthy conversation at his 400,000 square feet Chicopee headquarters that incorporates four buildings, Polep Continued on next page 21

Rising Like A Phoenix

Q and A

Continued from page 21

Continued from page 19

comes back to training as being an important aspect of the family business. He said cross training helps make the eventual succession that much smoother.

This family business has been helped by having non-family members in the corporate officer positions (besides Jeff’s sister Lori).

“I can see a lot of headaches when there are a lot of family members at the same level,” Polep said.

He points with pride to the fact a number of families are employed at J. Polep with multi-generations of some having worked there over the decades. “We’ve had a lot of parent-child” workers, he said. “We have very little turnover in lots of areas of the company.”

He keeps in mind this maxim, though, when it comes to employing families, even in a family-run business: “If you have a problem with one member of a family, you can have problems with others.”

Polep is also openly pleased by meeting people who have worked for the company or who have had family members work there.

Rachael said the business also helped her and her brother’s friends during the peak summer season. “We always had friends working here in the summer,” she said.

Like most successful company owners,

Passages: do something you were in love with when you were 12, but which you now have the resources to explore in a fuller way. Many others consult in some way, specializing in an aspect of their work that they did with gusto.

Personnel Records Continued from page 13

new notice requirement is interpreted by the Massachusetts Attorney General’s Office and the courts.

Employee Access The statute entitles employees, upon written request, to review their personnel records during normal business hours and/or to obtain a copy of their records. Employers are required to make records available/provide copies to an employee within five business days of such request. The term “employee” under the statute has been interpreted to include both current and former employees. Under the amendments to the stature, employers are not required to make personnel records available to employees “on more than two separate occasions in a calendar year.” However, an employee request for access following notification that negative information was placed in the employee’s personnel record will not count toward the twice-per-year limit. The

22

Jeff Polep ascribes his company’s success to the employees. “Employees are our number one asset. It’s a fact of life. We treat them the best we can within how the economy works.

Even with the economy as terrible as it is, we’re able to take care of our employees.”

There have been successes and failures along the way. “If you don’t [fail], then you can’t succeed,” Jeff Polep said. He candidly pointed out recent failures in the company’s alcohol business, calling it the “biggest letdown” with lots of lines that didn’t sell. He brought his daughter in to oversee the division and jump-start sales. She took a pragmatic approach. “We’ve gotten rid of the things we can’t sell,” she said. n

statute contains no provision for charging employees the cost of copying their records.

Requests For Removal Or Correction An employee may challenge information contained in his or her personnel record. An employee may request that the information be removed or corrected. If the employer refuses the request, the statute gives the employee the right to submit a written statement explaining the employee’s position, and the statute requires the employer to maintain the statement as part of the employee’s personnel record as long as the challenged information is retained in the record. Further, in the event the employer transmits the challenged information to any third party, the employer is required to include the employee’s statement with the challenged information.

Retention Requirements Employers with 20 or more employees are required to retain the complete personnel record of an employee without deletions

Q: For those who mentor, do they join Service Corps of Retired Executives (SCORE) or do their own version?

Both. SCORE is good not only for the mentoring, but also for camaraderie with like-minded retired entrepreneurs. It’s a good think tank.

But their own version could also include serving on a board of a nonprofit, or doing something to give back that they never could afford to do before, like volunteer in schools, or work with a charity.

Q: For those who undertake philanthropic activities, are their adopted causes relevant to what they did in business? Example: Former construction-business founder who is now helping rebuild Haiti.

All sorts of projects come into play here.

Maybe a relative had a certain disease, and working for a cure is helpful and therapeutic.

Or, there is a problem in society that you always complained about, about which you can now do something locally. n

or expungement of information (except by mutual agreement of the employer and the employee) for three years after termination of employment. Further, if an employee brings a legal action against the employer in court or before an administrative agency (e.g., the Massachusetts Commission Against Discrimination), the employer must retain the personnel record until final disposition of the proceeding.

Penalties for Violations The statute provides for a penalty in an amount not less than $500 and not more than $2,500 against “whoever” violates its provisions, and is enforced by the Massachusetts attorney general. While the statute entitles an employee to file suit in court to seek to have false information expunged from his or her personnel record, the statute has been interpreted as providing no civil monetary remedy for violations. n WILLARD KRASNOW AND ROBERT M. SHEA ARE ATTORNEYS WITH HINCKLEY ALLEN SNYDER.

It takes skill to synchronize so many moving parts.

Shouldn’t your portfolio be managed with the same precision?

fi d u Ciary -t rust.Com 1 7 5 F e d eral S tre e t BoSton, M a

investment management | trust services | estate and financial planning | family office services | estate settlement 23

Our 100 years means that wherever you are going, we can guide you there.

/b E]ZT 1][^O\g Oa O ZSORW\U `SUW]\OZ ¿`[ eS ^`WRS ]c`aSZdSa ]\ ]c` W\aWUVbTcZ UcWRO\QS O\R ]c` `Sa^]\aWdS aS`dWQS 4]` ]\S Vc\R`SR gSO`a eS¸dS ^`]dWRSR ]c` QZWS\ba bVS ObbS\bW]\ bVSg RSaS`dS bV`]cUV O bSO[ ]T ^`]TSaaW]\OZa O\R bS\c`SR ZSORS`a RSRWQObSR b] bVS Z]\U bS`[ Q]\bW\cWbg ]T ]c` `SZObW]\aVW^a 7\ bVWa SdS` QVO\UW\U PcaW\Saa S\dW`]\[S\b ]c` /aac`O\QS BOf @WaY ;O\OUS[S\b O\R 0caW\Saa 1]\acZbW\U aS`dWQSa VSZ^ g]c OQVWSdS g]c` U]OZa DWaWb e]ZTO\RQ] Q][ b] ¿\R ]cb []`S