One of the ways private banks are economic drivers in our region is by supporting our local small business owners. MetroHartford Alliance Content Manager Nan Price spoke with Key Private Bank Sales Leader Elissa Eddie and Senior Vice President Wealth Advisor John M. Jezowski to learn more.
NAN PRICE: How does Key Private Bank help small businesses with succession planning?
JOHN JEZOWSKI: While business owners are mortal and have a finite life, businesses can be perpetual if managed correctly. Succession planning is the process of evaluating what will happen to the business when ownership changes. It includes both planned occurrences, such as retirement, transitioning to new family members, or a desired sale, and unplanned occurrences, such as illness, death, or other unforeseen circumstances. Succession planning isn’t just for negative circumstances; a good succession plan also puts a business in the position of being ready to take advantage of positive opportunities when they present themselves.
Succession planning can prepare for a variety of business transitions. These generally fall into three groups:
- passing on the business to future generations
- some type of employee or management-led transition i.e., employee stock ownership plans (ESOPs), management by objectives (MBOs), etc.
- an outright sale or harvest to either a synergistic/strategic buyer or a financial buyer such as a private equity sponsor
There are two approaches to succession planning. One is to take an active role in it; the other is to let manifest destiny happen. We think it’s much better to be proactive than reactive. Our team strives to bring structure and diligence to the planning process. When Key Private Bank works with a business owner, we become part of the team participating in the planning discussions to help the business define what’s going to happen next.
ELISSA EDDIE: What we bring to the table is in-depth consultation about where their business is and where they want it to go. We can help them with questions like: If I do want to sell, what does that look like? Who do I need to involve? We also bring in other members of the KeyBank team to handle other aspects for the owner—for example, Key Private Bank will focus on the personal financial needs of the owner while our Commercial Banking team will focus on the business banking needs.
Our goal is to help business owners understand that strategizing and putting a plan into place long before a transaction begins can have profound consequences in the long run. Having the proper planning documents in place before contemplating a sale or transition can help minimize the impact of taxes and ensure the business owner is able to take full benefit from all the hard work they’ve built over a lifetime.
JOHN: The whole succession planning process can be unnerving and overwhelming. So, understandably, a lot of folks delay it. But it’s important to be proactive because it’s not just about loss on the downside, it’s about lost opportunity on the upside. This can be one of the most important events in the lifetime of a business and the owner, and there is tremendous opportunity to realize the true potential and value of the entity.
ELISSA: Many small business owners don’t really know the ins and outs of mergers, acquisitions, investment banking, how you value a company, and what kinds of trust structures you can put in place. Key Private Bank brings in that knowledge and helps to orchestrate the entire planning process.