(~ FAMILY COMES FIRST – LaSPINA FAMILY

INTRODUCTION IN ORDER OF APPEARANCE:
VINCENT J. RUSSO
VICTORIA ROBERTS DROGIN
ANTHONY CAPORRINO
JANE MYERS
JOSEPH LaSPINA
JOHN LaSPINA
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MR. RUSSO: Welcome everyone to Family Comes
First. I’m Vincent J. Russo.
MS. DROGIN: I’m victoria Roberts Drogin.
Thanks for joining us today.
Statistics show that only one third of all
family businesses are successfully transferred to
the next generation and only 12 percent are
successfully transferred on to the third generation.
Many family business consultants say that
the primary reason for this low survival rate
is the failure to develop and effectively plan
for the transfer of ownership and management
of the family business.
MR. RUSSO: That is shocking when you think
that this country has been built on the success
of family businesses.
More than 90 percent of all business
enterprises in the united States are family
businesses. They account for 70 percent of all the
new jobs created in the United States. So much
effort goes into making a business successful,
but I’m not sure how much is put into the
transition of the business for the next
generation.
MS. DROGIN: It’s true, and there are many
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1 factors to consider when passing on a family
2 business.
3 There are personal, financial and legal
4 issues that all need to be dealt with.
5 MR. RUSSO: That’s right, Victoria. Today
6 we will be focusing on success.
7 The family business being passed on to the
8 next generation can happen successfully. How do
9 I know this? Today we will take a look into the
10 lives of the LaSpina family. John LaSpina is a
11 second generation owner of Maple Lanes in
12 Brooklyn and five other bowling alleys on Long
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13 Island, and his children are now involved as the
14 business passes to the third generation of
15 LaSpinas.
16 MS. DROGIN: But first we are privileged to
17 have today Anthony Caporrino of Grodsky,
18 Caporrino & Kaufman, P.C., a certified public
19 accountant, and Jane Myers, a business
20 transactional attorney, who will share their
21 insights on how to avoid the pitfalls and
22 successfully pass the family business from
23 one generation to the next.
L/ 24 MR. RUSSO: Thank you both so much for being
25 here.
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1 MS. MYERS: It’s a pleasure. Thank you.
2 MS. DROGIN: Welcome.
3 MR. CAPORRINO: Thank you for having us.
4 MR. RUSSO: This is great because we have
5 clients, and you know, I’m an estate planner,
6 and I’ve got the certified public accountant and
7 the lawyer in the same room, and what we are going
8 to do is talk about how to successfully pass
9 the family business on.
10 I would like to start, Tony, with you with
11 this question.
12 What makes it different when there’s a business
( 13 and you have family members, mom and dad, brother
14 or sister or children, involved working
15 together?
16 MR. CAPORRINO: Most families will have that
17 the family politics revolve more around the family
18 and not necessarily what’s best for the business.
19 They may be sometimes compensated based on needs
20 rather than based on value that they would bring
21 to the business so that could potentially
22 create some friction.
23 The founder or owner tends to be someone who
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probably operates on the seat of their pants type
25 of management style as opposed to a structured
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organization with a board or outside directors
or whatever so they are trying to maintain
the family equilibrium here. And sometimes
the owners would tend to or perhaps avoid
making very difficult decisions that should be
made for what’s best for the business
because sometimes what is best for the business
may not be what’s best for the family that’s
viewed by the rest of the family members.
MR. RUSSO: You are making a great point.
Not only are these small businesses being
challenged with just how to be successful but
then you have the dynamic of the family and
now that’s a second challenge.
How do we make sure the family is happy?
How do we make sure the business is successful?
So let me talk about this transition process from
your perspective.
We’ve got dad, and dad is in his 70s. Dad
is interested in passing the family business
on to his children.
Actually statistically I read a report that
over 80 percent of family business owners want
their children to step in and take over, but I
know how difficult that can be. Dad has been
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controlling this business all those years.
What kind of issues do you get into when
you try to work with the family?
MR. CAPORRINO: They should get the family
and discuss — They should talk together to see what
the children — what their aspirations are,
what their desires are, what their concerns are.
Typically this is not the case because many
the owners may not want to talk about this.
First of all, there’s an issue with the
mortality. The founder owner tends to be
feels that he or she is going to be there forever
because this business cannot run without them.
MR. RUSSO: Excellent point, and that would
be ideal if we could get everybody together.
Sometimes we can’t. I know you work with what
you have which is maybe you’re only working with
dad initially or maybe it’s the children who are
coming to you.
And we’re thrilled because we got the lawyer
in the room.
MS. DROGIN: We do.
MR. RUSSO: How do you help us out?
MS. DROGIN: What are the legal issues that
arise in this circumstance?
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Tony has set forth the timing and sort of the
emotional and psychological issues.
Legally what strategies do you work with
when you’re talking to families in
transition?
MS. MYERS: As a business lawyer I will tell
you one of the highlights of my practice is
being able to work with families as they
transition their businesses and that’s because
we then have the opportunity to plan. Rather
than leave it to chance, we counsel them on how to
have the right documents in place, as you
mentioned.
If the business is organized as a
corporation, then we would want to have
a shareholder’s agreement in place and have
stock issues or perhaps have employment
agreements in place for children that are coming
up through the ranks to be rewarded later on
with stock in the company and then they become
the owners, and so it gives us the opportunity
to eliminate speculation. It manages everyone’s
expectations in the family, and rather than leave
it to circumstance later on where there can
be arguments, there are no arguments. Everyone
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knows what the plan is.
MS. DROGIN: What tips or strategies would
you recommend to a family who comes to you and
says, how do we approach this; what do we do?
MS. MYERS: What we do in that instance is
I try to collaborate always with the accountant,
and we have a meeting. It becomes a team effort.
We put the family in the room with us, and we have
a discussion, and it gives everyone the
opportunity to air what their concerns are and
say things to each other that they might not
otherwise say at the kitchen table when they’re
away from the business and they can voice their
concerns, their questions can get answered, and
that’s how we strategize the transition
process.
MR. RUSSO: Jane, what do we do with the
families where the owner wants to pass it on
to only one child but there are several children?
MS. MYERS: That can be tricky. I wish
I could tell you that that always has a smooth
and happy ending. It takes some finessing.
Sometimes parents will make another arrangement
for a child who may not even be suited. They
may not have a business acumen to run a
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n 1 business and so they make a decision. Perhaps
2 there is some sort of financial package arranged
3 for that particular child as opposed to an
4 ownership interest. It’s delicate.
5 MR. RUSSO: I can see that is. It’s froth
6 with issues later on after dad steps down or
7 mom steps down as the owner or passes away.
8 MS. MYERS: Even more of the reason at
9 that point to make sure the plan is in place
10 at the beginning so that the children don’t
11 fight later on if one is excluded.
12 MR. RUSSO: Right, because we want not only
( 13 the family business to continue successfully, but
14 we also want to have a family that’s happy and
15 understanding of each other and supporting
16 each other.
17 MR. CAPORRINO: Right.
18 MS. DROGIN: Well, it’s so true as Jane has
19 emphasized no one likes to have those
20 confrontations and to have those tough discussions,
21 but if you can bite the bullet, it sounds like
22 that is the approach that will most successfully
23 situate a family to transition the business to
( 24 the next generation.
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25 MS. MYERS: Absolutely.
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MR. RUSSO: I think what I’m hearing is
2 that it’s critical to plan in advance, not when
3 the family is in crisis because something
4 has happened to mom or dad, the owner of the
5 business, and it’s best to have a team
6 of professionals; have the certified public
7 accountant in the room, have the business
8 transactional attorney in the room to work
9 together because as a team, you have the
10 experience and the knowledge of how to try to
11 maneuver through these difficult pathways to
12 ensure that the family business can be successfully
13 passed on.
14 Thank you both for being here on Family
15 Comes First.
16 When we come back we will sit down with the
17 LaSpina family and find out the secrets to
18 their success. Stay tuned.
19 JOHN LaSPINA: It’s always been a family
20 business, and as an ll-year-old I watched
21 my dad who was a house builder, design this
22 bowling facility that was proposed to be built
23 actually in Queens to begin with but wound up in
L) 24 Bensonhurst, Brooklyn. I watched this thing go
25 from a dirt lot to a building to a bowling
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n 1 facility. I threw the first ball a few weeks
2 before I turned 12, and I’ve been there ever
3 since.
4 It’s remarkable when you think about it,
5 but at 52 my father made a career change. He
6 became a bowling proprietor. He had the perfect
7 disposition for dealing with customers, and here
8 we are.
9 I connect that day when I threw the first
10 ball watching my granddaughter bowl who’s three,
11 and I think of that connection between my father
12 and my grandchild and something he did is
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\, 13 affecting her life everyday, and I love that.
14 It’s what makes a family business a family
15 business.
16 Our philosophy is so simple. Things my dad
17 taught me. Treat your customers and your staff
18 as extended family. What does that mean? It means
19 treating people respectfully. Asking real
20 questions and waiting for real answers. Don’t
21 just be superficial; be real. Let them touch
22 you. Let them share their successes and
23 their failures with you and then you wind
~// 24 up having a relationship with people that
25 becomes very, very valuable.
1 I think family and business are
2 indistinguishable with us, and I think because
3 of that, you are who you are.
4 And I spoke about my grandparents earlier.
5 I could see my grandmother, and I was with my
6 grandmother virtually everyday saying the rosary
7 in Italian, teaching us basic things that we
8 carry with us so when we make business
9 decisions today, they are steeped in everything
10 that we’ve learned to this point so how
11 does faith playa part in it? It plays a part
12 in every decision we make. It plays a part in
13 our business philosophy. Community is very
14 important. Being there when people need us is
15 important.
16 What we’ve done is package the bowl-a-thon
17 idea into something we call Cares. The Farmingdale
18 Lanes cares. Jib Lanes cares. Maple Lanes
19 cares, and under that banner we support anyone
20 who wants to do a fundraiser. So, yes, we’ve
21 raised hundreds of thousands of dollars each
22 year. Family businesses have a dynamic (inaudible)
23 You can’t negate that it’s family, that it’s
emotional, that the family relations playa part
in it; go to work, do your job, work harder
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1 than an employee so you set the example for
2 others. That’s how my family has done it for a
3 long time.
4 MS. DROGIN: Welcome back to Family Comes
5 First.
6 Today we are talking about passing on
7 the family business.
8 MR. RUSSO: We are now joined by John LaSpina
9 and his son, Joseph, who run a very successful
10 bowling business on Long Island.
11 Thanks for joining us today.
12 JOHN LaSPINA: Glad to be here.
13 MR. RUSSO: Let me just start with, bravo for
14 putting the word family in business.
15 JOHN LaSPINA: That’s our middle name.
16 Maple Family Centers.
17 MR. RUSSO: There you go. I just want to
18 share how unbelievable your organization is.
19 We recently ran a Theresa Foundation bowling
20 event, and I was just amazed at the community
21 outreach that you do connected to your
22 business raising thousands and thousands of
23 dollars for charities allover Long Island
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so kudos to you.
25 JOHN LaSPINA: Thank you.
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r 1 MR. RUSSO: I’m going to start, John, with
2 you and ask you the upfront question about
3 the culture. You have a family culture; not
4 only your own immediate family but also
5 the community is family to you.
6 Tell us about that.
7 JOHN LaSPINA: As we’ve grown we’ve gone
8 from one community to the other. Our basic,
9 our basic priority is to make our bowling center
10 the community center for that neighborhood
11 or that community. It’s hard to do, but we need
12 to understand their culture, what’s important
13 to them, and when we began the Cares program, it
14 was really formalizing something we’ve done for
15 many, many years. It’s simple. If we could
16 make you successful in your organization, word
17 of mouth is powerful. It comes back to us
18 many times. Please don’t think it’s not
19 without self-interest, but if you win, we win
20 and that’s the right order.
21 MR. RUSSO: You said an important word,
22 cares. You are a caring family that’s connected
23 that to business which makes you successful in
\ 24 my opinion.
‘—–‘
25 Now, we are going to talk about your father,
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the founder of the bowling business, but before
we do, tell me about the tomatoes.
JOHN LaSPINA: Ah, the tomatoes.
It’s better than a psychiatrist actually because
every Mother’s Day or thereabout, I plant
one hundred tomato plants in the back of
Maple Lanes, our first place in Brooklyn, and
I nurture them. I don’t really talk to them, but
I take good care of them.
MR. RUSSO: Maybe you should talk to them.
JOHN LaSPINA: When you bowl well at Maple
Lanes, you get a bag of tomatoes, and it’s funny,
I interview people back there. I have a
walkie-talkie and a telephone. It’s just that
I’m outside enjoying myself a little bit.
MR. RUSSO: Knowing this I would want to go
to your bowling alley just to get the tomatoes.
JOHN LaSPINA: Come.
MS. DROGIN: That really — I’m sure
that’s amazing.
MR. RUSSO: That’s just wonderful.
JOHN LaSPINA: It’s fun.
MR. RUSSO: Tell us about how your father,
the founder, passed the family business on
to you.
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JOHN LaSPINA: A good thing about my
2 father and his family especially is that they
3 were always in business. So family is family
4 and business is business.
5 We have two components; one is the real
6 estate, second is the operation end of it.
7 One is a tenant to the other.
8 The first thing we did was quantify
9 the business. It was my father’s retirement.
10 We actually, you know, sat down, wrote a
11 contract, managed how the cash flow would
12 handle his retirement, bought out the business
13 and at a later date my brother and I bought the
14 real estate of that.
15 MR. RUSSO: He was comfortable giving up
16 control?
17 JOHN LaSPINA: At a certain point, yes.
18 MR. RUSSO: Because I think that would be
19 critical, that control.
20 JOHN LaSPINA: What I think is really great
21 is we get into the family dynamics. It’s easy
22 for Joe because I had his job. I was the son.
23 MR. RUSSO: Right.
I . 24
\’-~/
, MS. DROGIN: Sure.
25 JOHN LaSPINA: And I’ve taken that and I’ve
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(~>’ 1 made sure that I do very basic things. I honor
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2 my father everyday by making sure that we
3 do business right.
4 MS. DROGIN: I’m sure that this has formed
5 your plans in terms of how you are thinking about
6 the succession of the business.
7 Can you speak a little bit about that?
8 JOHN LaSPINA: Sure. The first thing you
9 is we will do is get some good counseling and
10 basic business 101, but from a family point of
11 view, and I can’t tell you how many times I’ve
12 asked my son this question, are you happy doing
13 this; are you sure you want to do this; is
14 this really for you; is the fire in your belly
15 to continue this.
16 MR. RUSSO: What’s it like working for your
17 dad? What’s the inside scoop?
18 JOSEPH LaSPINA: It’s surprisingly normal.
19 A lot of people ask me that. We both do
20 different things. We have different skill sets,
21 and we have a couple of locations. That
22 probably helps so we are not on top of each
23 other all the time.
JOHN LaSPINA: Sixty-five miles sometimes
25 helps.
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(~ 1 JOSEPH LaSPINA: Yes, that helps.
2 MR. RUSSO: There you go.
3 MS. DROGIN: What advice could both of you
4 give, maybe different advice to other families
5 who are in succession with their businesses?
6 JOSEPH LaSPINA: A lot of my friends in the
7 bowling business are in similar situations.
8 I think what helps me is I worked for
9 somebody else, and I would say go work
10 somewhere else before you work in the family
11 business, just be an employee and to understand.
12 Don’t be the bratty kid.
13 MR. RUSSO: Your father had a question he
14 wanted me to ask you and that is what’s your
15 vision of the family business out into the future?
16 JOSEPH LaSPINA: It’s tough. The business
17 is changing. We are fighting — We are not
18 really fighting for people’s money. We are fighting
19 for their free time. We have to position ourselves
20 as a valuable use of people’s time and hopefully
21 we do that.
22 MR. RUSSO: How does technology play in your
23 business?
i \ 0′ 24 JOSEPH LaSPINA: We are a small family
25 business. We have a very good database. We’re
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r: 1 on Twitter. We’re on Facebook. We have e-mail
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2 lists. We are doing all the technology stuff
3 that we have to do under the guise of a
4 mom and pop family business.
5 JOHN LaSPINA: And when I started, it was all
6 about gathering names for mailing lists
7 so I had a scriptomatic, paper-driven addressograph
8 kind of system.
9 MS. DROGIN: It’s changed.
10 JOHN LaSPINA: It was dinosaur age. If you
11 want to reach people, let them know you’re there,
12 and let them share what it is we sell that
(
\ 13 they would enjoy doing.
14 MR. RUSSO: I would think that the technology
15 is not only the bowling lanes and how all
16 that works, which is well beyond me, but also
17 internally. You mentioned that you have over
18 250, 300 —
19 JOHN LaSPINA: Almost 300 employees.
20 MR. RUSSO: 300 employees.
21 JOHN LaSPINA: Many part-time, but many
22 with us a long, long time. What I really like
23 about my son’s involvement in the business and
L 24 my daughter plays a role, as well, as a
25 stay-at-home mom, but my key staff, who have been
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with us a long time, see him as a leader and
respect him not for the fact that he’s my son
but for how he conducts himself everyday. They
see us work. They are not intimidated by
our presence. We are teammates. We don’t
remind them who’s in charge. We just don’t
want them to forget.
MS. DROGIN: And this speaks to what you were
saying about having the credibility that
you’ve earned elsewhere and then bring it back
in-house.
MR. RUSSO: What lessons would you say you’ve
learned from your dad that’s helped you in the
day-to-day business?
JOSEPH LaSPINA: It’s treating — It’s
treating the customers like family and then
everything else falls into place and they feel
at home at our centers. That’s the — The
touchy feely stuff is important. The asking
about grandkids is important, the getting to know -My
high is I’ve been to five wakes in one
week. That’s critical. That’s us showing our
customers that we love them.
JOHN LaSPINA: And appreciate them and
respect them.
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MS. DROGIN: Customers or -JOSEPH
LaSPINA: Customers, family.
MS. DROGIN: Employees?
JOSEPH LaSPINA: Oh, everything.
MS. DROGIN: That’s a really extended family.
JOHN LaSPINA: I can’t tell you how many
weddings we’ve been invited to and how
many celebrations we’ve had because you are
really celebrating people’s accomplishments,
their life moments that are important to them.
The real key to any family business and
I think where they get off track is there is
a lack of accountability, and we’ve had
this attitude about no free rides and we all work
and that’s, you know, holding each other
accountable.
I’m responsible for certain things that
affect everyone else, and there are times I’ll
forget and I’ll do something and they’ll kind
of remind me, oops.
MR. RUSSO: I think what’s so critical and
helpful and you’re an example of this is that
you have your father as a mentor working in
the business as the business is being
transitioned where many people don’t plan for
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this, and it happens when unfortunately the
founder has passed away and everybody is thrown
into a crisis so I think you’re really kind
of blessed I guess to have your dad.
JOSEPH LaSPINA: Yes, I’m blessed.
MR. RUSSO: ‘Isn’t that good, John?
JOHN LaSPINA: There must be a bad story
there.
MS. DROGIN: And it’s true and what you
were saying is about you have the benefit of
having your dad to mentor you, and you’ve reached
out for your own mentors and your advisory
board and your team.
JOHN LaSPINA: I’m honored that he really
likes what he does. As a parent, it is
Father’s Day everyday.
MR. RUSSO: John, on Long Island small
businesses, family businesses are so challenged.
Can you give us a quick thought on how do
we continue to be successful on Long Island with
all the challeng~s that are out there?
JOHN LaSPINA: Lots of challenges. I think
you stay with your mission. You might have
to change your product, change your price,
change how you do things, but our core business
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is very, very simple. It’s a game. It’s
2 something people enjoy. You might not have bowled
3 in the last five years, but you come back and say,
4 you know, this is a lot of fun.
5 So how do you take that basic understanding
6 of what your product is and make it work within
7 all the challenges.
8 MR. RUSSO: And have fun at the same time.
9 That is beautiful.
10 JOHN LaSPINA: Some days are less fun for
11 us than the customers.
12 MR. RUSSO: Thank you John and Joseph so much
( , 13 for being with us today.
14 JOHN LaSPINA: It’s our pleasure.
15 MR. RUSSO: I know your business is going
16 to be so successful for many years to come,
17 and I have a special thank you for you for all
18 the community service that you do. I want
19 to present to you a tomato from my garden, of
20 course. Look at that beautiful tomato.
21 victoria did a good job too. Here’s a
22 tomato.
23 MS. DROGIN: Thank you, Vincent.
L 24 MR. RUSSO: Let’s go bowling.
25 JOHN LaSPINA: I appreciate it.
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n 1 MS. DROGIN: And now let’s check in with
\ ”
2 Monsignor McNamara for a spiritual reflection.
3 MONSIGNOR McNAMARA: Too often business and
4 career overtake men and women to such an extent
5 that marriage and family suffer. We hear too
6 many stories about this in our society today.
7 It’s particularly heartening to hear John
8 talk about his family business where his father
9 set the pace of integration between family and
10 business. This requires strong family values
11 that everybody shares and particularly the key to
12 success are persons who are steeped in faith as
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‘. 13 we hear in this story and seek to live their faith
14 each day. It’s a story about spirituality and
15 the values of the belief that allow them not only
16 to see the customer as a customer but as part of
17 the family.
18 The wonderful fruits of fundraising that
19 this family does in their bowling alley are also
20 evidence of their faith and their family values.
21 MS. DROGIN: Passing on the family business
22 can be a challenge. There are many factors to
23 consider to ensure the founder’s dream for the
G 24 business to stay alive for generations to come.
25 MR. RUSSO: That’s certainly true, Victoria.
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r 1 John LaSpina and his family have beat the odds,
2 I’m sure their story will help many small
3 family businesses.
4 MS. DROGIN: For more information on
5 resources for passing on the family business,
6 please, visit your law firm.
7 MR. RUSSO: Thank you.
8 MS. DROGIN: www.vjrussolaw.com.
9 Today we learned that the family
10 philosophy and a team approach can be the formula
11 for success in passing on a family business.
12 MR. RUSSO: Victoria, this was such a great
( , 13 feel-good story.
14 MS. DROGIN: Absolutely.
15 MR. RUSSO: I hope that it’s contagious to
16 all our viewers.
17 Thank you for joining us today and
18 remember family truly does come first.
19