Succession Planning: Opportunities to Build Wealth and Keep Jobs in Local Communities (Senate Small Business Committee hearing, January 24, 2024)
Summary
The printed record of S. Hrg. 118–382, a Senate Committee on Small Business and Entrepreneurship hearing titled Succession Planning: Opportunities to Build Wealth and Keep Jobs in Local Communities, held January 24, 2024 and printed in 2024. The committee met at 2:15 p.m. in Room SR–428A with Chair Jeanne Shaheen presiding; Shaheen and Ranking Member Joni Ernst gave opening statements. Four witnesses testified: Scott Snider, President of the Exit Planning Institute, Westlake, OH; Theresa Hildreth, Executive Director of the Calhoun County Economic Development Corporation, Rockwell City, IA; Tabitha Croscut, Shareholder at Devine, Millimet and Branch, P.A., Manchester, NH; and Palmer Schoening, Chairman of the Family Business Coalition. Statements for the record came from the Small Business Investor Alliance and LaTanya White. The hearing adjourned at 3:34 p.m.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“Succession Planning: Opportunities to Build Wealth and Keep Jobs in Local Communities (Senate Small Business Committee hearing, January 24, 2024).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/succession-planning-opportunities-to-build-wealth-and-keep-jobs-in-loc-6580c73438/
, SHA-256 d921ebc3413fc042c860f15095c4b15c579e84146065eb549a0fb7e06668f3d8.Full text
S. HRG. 118–382
SUCCESSION PLANNING:
OPPORTUNITIES TO BUILD WEALTH
AND KEEP JOBS IN LOCAL COMMUNITIES
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
OF THE
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
JANUARY 24, 2024
Printed for the use of the Committee on Small Business and Entrepreneurship
(
Available via the World Wide Web: http://www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
56–455 WASHINGTON : 2024
jgilmore on DSK126QN23PROD with REPORTS
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 E:\HR\OC\A455.XXX A455
COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED EIGHTEENTH CONGRESS
JEANNE SHAHEEN, New Hampshire, Chair
JONI ERNST, Iowa, Ranking Member
MARIA CANTWELL, Washington MARCO RUBIO, Florida
BENJAMIN L. CARDIN, Maryland JAMES E. RISCH, Idaho
EDWARD J. MARKEY, Massachusetts RAND PAUL, Kentucky
CORY A. BOOKER, New Jersey TIM SCOTT, South Carolina
CHRISTOPHER A. COONS, Delaware TODD YOUNG, Indiana
MAZIE K. HIRONO, Hawaii JOHN KENNEDY, Louisiana
TAMMY DUCKWORTH, Illinois JOSH HAWLEY, Missouri
JOHN W. HICKENLOOPER, Colorado TED BUDD, North Carolina
SEAN MOORE, Democratic Staff Director
MEREDITH WEST, Republican Staff Director
jgilmore on DSK126QN23PROD with REPORTS
(II)
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 E:\HR\OC\A455.XXX A455
CONTENTS
OPENING STATEMENTS
Page
Jeanne Shaheen, U.S. Senator from New Hampshire .......................................... 1
Joni Ernst, U.S. Senator from Iowa ....................................................................... 2
WITNESSES
Mr. Scott Snider, President, Exit Planning Institute, Westlake, OH ................. 4
Prepared Statement ......................................................................................... 7
Ms. Theresa Hildreth, Executive Director, Calhoun County Economic Develop-
ment Corporation, Rockwell City, IA ................................................................. 9
Prepared Statement ......................................................................................... 11
Ms. Tabitha Croscut, Shareholder, Devine, Millimet and Branch, P.A., Man-
chester, NH ........................................................................................................... 16
Prepared Statement ......................................................................................... 18
Mr. Palmer Schoening, Chairman, Family Business Coalition, Washington,
D.C. ........................................................................................................................ 26
Prepared Statement ......................................................................................... 28
ADDITIONAL LETTERS/STATEMENTS FOR THE RECORD
Small Business Investor Alliance
Statement dated January 24, 2024 ................................................................. 48
White, LaTanya
Statement dated January 24, 2024 ................................................................. 52
jgilmore on DSK126QN23PROD with REPORTS
(III)
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 E:\HR\OC\A455.XXX A455
jgilmore on DSK126QN23PROD with REPORTS
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 E:\HR\OC\A455.XXX A455
SUCCESSION PLANNING:
OPPORTUNITIES TO BUILD WEALTH
AND KEEP JOBS IN LOCAL COMMUNITIES
WEDNESDAY, JANUARY 24, 2024
UNITED STATES SENATE,
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP,
Washington, DC.
The Committee met, pursuant to notice, at 2:15 p.m., in Room
SR–428A, Russell Senate Office Building, Hon. Jeanne Shaheen,
Chair of the Committee, presiding.
Present: Senators Shaheen [presiding], Cardin, Rosen,
Hickenlooper, Ernst, Young, and Hawley.
OPENING STATEMENT OF SENATOR SHAHEEN
Chair SHAHEEN. Well, good afternoon, and thank you all for your
patience. If it is Wednesday afternoon, we have got to be in the
middle of votes, so we have had one vote, and we will have another
one in probably the next 30 or 40 minutes. So I assume at that
point, we will take turns and try and go out and vote but not dis-
rupt the hearing. So again, thank you all.
The Senate Committee on Small Business and Entrepreneurship
will come to order.
It is really wonderful to have you all joining us today to talk
about something that is really a challenging issue for so many
small businesses. We will be introducing our witnesses, but before
we do that, we are going to have opening statements by myself as
Chair and the Ranking Member, Senator Ernst.
Every day, more than 10,000 baby boomers turn 65. In my State
of New Hampshire, our aging population outpaces the rest of the
country. We are in a phenomenon that is referred to as the silver
tsunami that is going to affect our country’s small business eco-
system and local economies. Nationwide, more than half of all pri-
vate employer businesses are owned by individuals over the age of
55. They employ more than 32 million Americans and receive $6-
and-a-half trillion in revenue a year. Failing to properly transition
these firms means that local communities will lose businesses that
have been in neighborhoods for generations. It will put at risk
countless jobs and literally trillions of dollars in assets.
Unfortunately, most small business owners are ill-prepared to
exit their businesses. They have dedicated most of their time in
business to building a successful company, and they do not have
the information or resources to think about next steps. It is some-
jgilmore on DSK126QN23PROD with REPORTS
(1)
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HR\OC\A455.XXX A455
2
thing that I see in my own family, where we have a number of fam-
ily members who are looking at the next generation of taking over,
and, in some cases, there isn’t anybody to take over, so how to deal
with that succession is a real challenge.
According to a 2023 survey, about 80 percent of small business
owners did not have a formal succession plan before putting their
businesses on the market, and among those that did, most engaged
in planning for less than a year before getting to a sale. This hear-
ing is an opportunity to think about how we help those small busi-
ness owners transition their businesses. How do we help them re-
tain the legacy of those family businesses? How do we help them
save for retirement and ensure that jobs remain in local commu-
nities?
So again, we are delighted to have you all join us today, and I
look forward to your statements. And I will now turn it over to
Senator Ernst.
STATEMENT OF SENATOR ERNST
Senator ERNST. Great. Thank you. Good afternoon, and thank
you, Chair Shaheen, and to all of our witnesses for being here
today. I also want to give a special thank you to my fellow Iowan,
Ms. Theresa Hildreth, who is the executive director of the Calhoun
County Economic Development Corporation, for coming to Wash-
ington to share your insights with us. Thank you, Theresa.
Small businesses are key drivers of local enterprise and commu-
nity life. These hardworking and dedicated small business owners
pour their lives into building their companies. For many entre-
preneurs, succession planning is a way to plan for retirement and
ensure their business and legacy continues to thrive. According to
Guidant Financial, nearly 40 percent of small businesses are owned
by older folks who may soon be looking to retire and start their
life’s next chapter. So the phrase that you used, Senator, ‘‘the silver
tsunami’’—maybe in Iowa it is the silver cyclone, I am thinking.
[Laughter.]
Senator ERNST. For our family-owned businesses, especially
farms and other rural small businesses, succession planning is
deeply personal. It is more than a conversation about family fi-
nances or selling a business to the highest bidder. It is a process
that must consider the business’ role in their community. According
to the National Federation of Independent Business, nearly one-
third of business owners plan to pass their business to a family
member. Despite often being tent poles of families and commu-
nities, small business owners can face significant challenges in
keeping their business’ operations going from one generation to the
next. The complex, burdensome process can require expensive at-
torneys, accountants, and business advisors. Navigating the red
tape discourages folks. Making, selling off, or shutting down their
enterprise is less of a headache than keeping it open or passing it
on to their family.
The death tax is a major burden during succession planning, es-
pecially for farmers. I was proud to support the Tax Cuts and Jobs
Act, which eased the burden on small businesses by nearly dou-
bling the death tax exemption and adjusting it for inflation. Unfor-
jgilmore on DSK126QN23PROD with REPORTS
tunately, this provision expires in 2025. If we let it lapse, it will
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00006 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
3
heap even more burdens on hardworking entrepreneurs, not to
mention create a great deal of uncertainty for small business own-
ers who are looking to retire in the coming years.
Meanwhile, Bidenomics continues to punish Main Street. Rising
prices, high interest rates, and skyrocketing operating costs are
pushing small business owners to delay succession planning. How-
ever, my home State of Iowa continues to lead the charge to even
the playing field for small business owners. At the State level, Gov-
ernor Reynolds and the legislature phased out the inheritance tax,
another reason folks choose to move to Iowa to live and work. On
the Federal level, I have long supported repealing the death tax al-
together. I am proud of my friend and colleague from Iowa, Con-
gressman Randy Feenstra, who is leading the charge in the House.
It has long past time to end the practice of death being a taxable
event. Are Americans not taxed enough while they are alive? Do we
really need to penalize family members who are grieving their
loved ones?
Small business succession planning should be easy to under-
stand, easy to navigate, and easy to do. A locally-led approach in-
formed by the owner’s priorities and vision must be the standard.
Ensuring small business owners are in control and well informed
is critical to the well-being of the communities they serve. As we
start to hear from our witnesses, I am looking forward to learning
how this Committee can better help small business owners navi-
gate business succession planning. Thanks to all of our witnesses,
and thank you, Chair Shaheen, for delving into this important
topic.
Chairwoman SHAHEEN. Well, thank you very much, Senator
Ernst, and, again, I want to welcome our witnesses. I will begin by
introducing Scott Snider, who is the president of the Exit Planning
Institute, EPI. EPI focuses on improving succession planning out-
comes for small to mid-sized companies, including through certi-
fying exit planning advisors. I understand you also conduct sur-
veys, and you are going to have one that is coming out in March
that will give us some very interesting information, so we hope you
will share that with the Committee when it is finished. Mr. Snider
is also passionate about guiding small business owners in their suc-
cession planning journey, having been an entrepreneur himself
with firsthand experience in transitioning from his own business,
so I am looking forward to hearing your testimony.
I am also delighted to welcome from Manchester, New Hamp-
shire, Tabitha Croscut, who is a shareholder and attorney at
Devine-Millimet & Branch in Manchester. Tabitha has a national
legal practice focused on utilizing employee stock ownership plans,
or ESOPs, as a succession plan. She has been practicing in that
area for more than 20 years. Ms. Croscut also sits on the boards
of numerous ESOP organizations and frequently speaks out about
those transactions at conferences and seminars. So we are de-
lighted to have your expertise from New Hampshire, and I am also
pleased to turn it over to the Ranking Member to welcome the
other two witnesses.
Senator ERNST. Great. Thank you very much, and welcome, Mr.
jgilmore on DSK126QN23PROD with REPORTS
Snider and Ms. Croscut. Thank you for joining us as well.
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00007 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
4
I know—I now have the pleasure of introducing the rest of our
witnesses who are testifying today, including my fellow Iowan, Ms.
Theresa Hildreth. Ms. Hildreth is serving as the executive director
of the Calhoun County Economic Development Corporation. She
works with small business owners, community groups, and local
leaders to foster economic development in rural Iowa. Ms. Hildreth
is also the CFO of Martin Hildreth Company, a 70-year-old family-
owned and operated small business. Ms. Hildreth has served on
several local boards, including as vice chair of the Stewart Memo-
rial Community Hospital board of directors. She earned a degree
from Iowa Central Community College. Ms. Hildreth is also a mili-
tary mom with children who have served in the Iowa Air National
Guard and U.S. Air Force. And, Sarah, we want to welcome you to
the Committee today with your mother as well, so thank you very
much.
And on a personal note, I have known Theresa for a number of
years. She works within our Iowa State legislature and the Iowa
Senate with the senators there, and I had also served in the Iowa
State Senate, so we have many friends in common.
Next, I want to introduce Mr. Palmer Schoening, and Mr. Palmer
Schoening is the chairman of the Family Business Coalition, or
FBC, so thank you, Palmer, for being here, which is a collection of
over 150 small business associations dedicated to protecting Amer-
ica’s family-owned businesses and farms. Mr. Schoening earned de-
grees from George Mason University and Hillsdale College. Thank
you for making the time to share with this Committee how we can
better help small businesses with succession planning in Iowa as
well as across the country. Thank you all so much to our witnesses.
Thank you, Chair.
Chair SHAHEEN. Thank you, Senator Ernst and Mr. Snider, we
will start with you.
STATEMENT OF SCOTT SNIDER, PRESIDENT,
EXIT PLANNING INSTITUTE, WESTLAKE, OHIO
Mr. SNIDER. Thank you, Chair Shaheen, Ranking Member Ernst,
and all members of this Committee. It is an incredible honor to be
here with you today. My name is Scott Snider, and I am the presi-
dent and co-owner of the Exit Planning Institute, an Ohio-based,
privately-held family business that supports professional advisors
who help business owners successfully transition their companies.
We provide advisors with a professional network, regional and na-
tional conferences, continuing education courses, and, most notably,
a credential. We began in 2005 and today serve over 5,000 certified
exit planning advisors and another 10,000 professionals throughout
the world.
As this Committee well knows, there are over 30 million small
businesses in the U.S. that employ nearly 62 percent of Americans.
For these business owners, nearly 90 percent of their wealth is
trapped inside of their largest asset—their company—wealth that
will be critical for them to harvest to move into the next phase of
their lives, and even more, wealth that has a deep impact on social
and economic elements that make up our country today. According
to the most recent National State of Owner Readiness Survey, this
jgilmore on DSK126QN23PROD with REPORTS
wealth is projected to total nearly $18 trillion, with $14 trillion
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00008 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
5
alone coming to market in the next 10 years as 73 percent of own-
ers report they want to exit from their companies within that time
frame.
Historically, there has been a low success rate of privately-held
company transitions, an indication to me that business owners are
ill-prepared for this eventual exit. According to the same research,
60 percent of owners do not understand their exit options, 80 per-
cent do not have a formal exit strategy, and 50 percent of owners
have no plan at all. Worse yet, 70 percent of the companies put on
the market do not sell, and 50 percent of the exits are involuntary
due to external elements that force business owners to close or sell.
These stats remind me of a fellow owner, a business owned by
three sisters in Pennsylvania. One of them, in tears, approached
me after a speaking engagement and she said she was trying to fig-
ure out what was next in her life. One of her sisters had just re-
cently passed away from a cancer diagnosis. She had been the vi-
sionary and heartbeat of the company, and without her, the re-
maining two could not operate the business and closed their doors
only 2 months after their sister’s passing. Sadly, they became own-
ers who fell to the involuntary exit, something that I believe is pre-
ventable by appropriate planning.
To understand the problem, we must understand the mindset of
the business owner. As owners, we are trained to grow a successful
company, one with great employees, great customers, meaningful
products and services, a strong balance sheet, and a net profit, but
when we go to transition those companies, we are kind of slapped
in the face with a harsh and unexpected reality. Though we, in
fact, grew something of success, we did not build anything of sig-
nificance. All our intellectual capital is locked within us, never
transferred to anyone else or any one thing. What is a significant
company? It is one aligned to the business owner’s business, per-
sonal, and financial goals. It is ready and attractive with an owner
who is well prepared. Most importantly, a significant company is
highly valuable and transferrable at any time.
Being in the unique position of both teaching the pathway to sig-
nificant companies but also living it myself as a business owner
daily, I see three key opportunities for us to better those who are
transitioning their companies. First, educational programming that
brings exit strategy into the—into the present. Incorporating it
early and often makes a company stronger at point of transition
while making a better company today. At EPI, we have worked
with SCORE and the Small Business Development Centers of
America in educating both advisors and owners.
Secondly, we need greater access to coaching and services. Sev-
enty-eight percent of owners have not formed a transition advisory
team that embraces those the three key elements for significance:
business, personal, and financial. And lastly, data and research.
Policymakers need to better understand succession planning gaps
that impact small businesses sales, transitions, and closures. These
simple actions, I believe, help to change the owner’s mindset, keep
small businesses active in our local communities, and put us on a
pathway to positively impact our economy, an important conversa-
tion, I think, to be had given the number of owners that will transi-
jgilmore on DSK126QN23PROD with REPORTS
tion in the next 5 to 10 years.
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00009 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
6
I thank you for the privilege and honor of sharing my testimony
with you today and happy to answer questions as they come.
Thanks.
[The prepared statement of Mr. Snider follows:]
jgilmore on DSK126QN23PROD with REPORTS
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00010 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
7
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 17 here 56455EC.001
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00011 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
8
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 18 here 56455EC.002
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00012 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
9
Chair SHAHEEN. Thank you very much. Ms. Hildreth.
STATEMENT OF THERESA HILDRETH, EXECUTIVE DIRECTOR,
CALHOUN COUNTY ECONOMIC DEVELOPMENT CORPORA-
TION, ROCKWELL CITY, IOWA
Ms. HILDRETH. Honorable Chair Shaheen, Honorable Ranking
Member Ernst, members of the Committee, and all the distin-
guished guests that are here, thank you for the opportunity to tes-
tify today on the critical topic of succession planning and the chal-
lenges facing small business owners, especially in my State of Iowa.
My succession planning assessment in rural Iowa is multifaceted,
shaped by my personal, my professional, and policy perspectives.
Addressing challenges related to retirement and ensuring a smooth
transition for our family business is not a—not only a personal con-
cern, but also has broader implications for my local community. In
economic development, my role involves aiding sustainability and
growth of a rural economic area designated as an opportunity zone.
Succession planning on a broader scale becomes essential for the
economic well-being of the entire community. My policy perspective
shares great concern for the current State of the Nation’s economic
future with succession planning involving policy advocacy.
My family’s business, Martin Hildreth Company, is a three-gen-
eration, 70-year-old underground utility contracting business. We
are—we currently are facing the complexities in transitioning now
to our third generation. Due to our current economic concern and
uncertainties, we have decided to extend our succession plan to 5
years rather than our original 3 years, unless we see big changes
after the election in 2024. As we compare today’s challenges to the
previous generation transition in 2009, we find a much harsher
economic landscape. Concern with today’s inflation, company valu-
ation, and long-term success adds to that complexity. My inter-
actions with other business leaders, particularly aging farmers, re-
veal that these are common concerns and challenges and reflect—
reflective of a broader issue impacting rural economic development.
As in our business, farmers often prioritize inheritance over sell-
ing assets in succession planning to mitigate capital gains tax.
Iowa’s recent inheritance tax initiatives is reflective of a positive
step towards supporting retirees and succession plans. Many busi-
nesses struggle to access available programs and grants for oppor-
tunities and growth. A 2023 study by the Rural Policy Research In-
stitute found that 42 percent of rural businesses lack awareness of
available government programs. The agricultural sector and many
rural small businesses face a scarcity of qualified and available em-
ployees. The USDA’s 2021 Census of agriculture reports the aver-
age age today of Iowa’s farmer at 57 years. Four times as many
farmers are over the age of 65 than under the age of 35. In 2022,
the USDA National Institute of Food and Agriculture reported
sites—report sites of 30-percent decline in young farmers since
2010.
Beyond capital gains tax, many small businesses struggle with
the rising cost of doing business, high interest rates, supply chain
issues, insurance, and that ever fluctuating fuel cost. National Fed-
eration of Independent Businesses reports that 82 percent of small
jgilmore on DSK126QN23PROD with REPORTS
businesses are concerned about inflation impacting their oper-
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00013 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
10
ations. This point directly relates to risk and the concern for entre-
preneurs to assume great risk in economic endeavors.
Specifically in Calhoun County, the economic landscape bears the
scars of a 17-year decline. Our once thriving county is steadily
shrinking, a startling 15 percent loss of businesses. The lack of suc-
cession of business is a vital component in this downward trend,
casting a long shadow on tax revenue, essential services, and the
very spirit of our towns. This is not merely a statistic. It is a
human story unfolding before our eyes. One example of the human
story of economic decline in Rockwell City, the county seat of Cal-
houn County, is the loss of a second-generation plumber. The 52-
year-old plumbing professional suddenly passed away this past De-
cember. Now his 73-year-old father has abandoned retirement to
resume leadership of the only plumbing business in the community.
These challenges, while impacting individual businesses, reso-
nates with the larger economic issues facing rural communities.
Engaging with political stakeholders and advocating for supportive
policies becomes crucial. We need policy alignment. We need col-
laborative approach. Through collaborative efforts and supportive
policies, we can build a more resilient and sustainable future for
rural communities and enhance business succession planning.
Thank you for allowing me to share my testimony with you. I
may not be a silver cyclone, but I am a silver Hawkeye. [Laughter.]
[The prepared statement of Ms. Hildreth follows:]
jgilmore on DSK126QN23PROD with REPORTS
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00014 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
11
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 24 here 56455EC.003
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00015 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
12
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 25 here 56455EC.004
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00016 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
13
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 26 here 56455EC.005
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00017 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
14
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 27 here 56455EC.006
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00018 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
15
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 28 here 56455EC.007
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
16
Chair SHAHEEN. Thank you, Ms. Hildreth. Ms. Croscut.
STATEMENT OF TABITHA CROSCUT, SHAREHOLDER/ATTOR-
NEY, DEVINE-MILLIMET & BRANCH, MANCHESTER, NEW
HAMPSHIRE
Ms. CROSCUT. Good afternoon, Chair Shaheen, Ranking Mem-
ber Ernst, and members of the committee. My name is Tabatha
Croscut, and I am a shareholder at the New Hampshire law firm
of Devine-Millimet & Branch. For over 20 years, I have helped my
clients who are business owners of both small and large privately-
held businesses to assess, consider, and navigate the feasibility of
implementing, employee stock ownership plans as an ownership
succession strategy. I would like to thank you for the opportunity
to appear before you to discuss the importance of succession plan-
ning and for allowing me to share with you how and why ESOPs
can be a better option for many business owners looking for a sus-
tainable and impactful succession strategy.
As a result of a lack of planning, each year many companies in
New Hampshire and across the U.S. bought up by third parties,
and some even close their doors when they are unable to find a
buyer. This is a challenge not only for the business owners, but
also for the many families and communities that rely on their busi-
nesses. It is my position that ESOPs can be and should be a power-
ful tool for solving succession planning issues for such businesses.
In the Granite State, there are approximately 30 ESOPs and pri-
vately-held companies. Of these ESOPs, approximately 27 are
headquartered in small towns in the Monadnock region or White
Mountains, cities like Manchester or Salem. These are companies
that are staying in New Hampshire and are heavily invested in the
success of their communities. Those 30 New Hampshire ESOP-
owned companies cover over 4,600 participants. Most are smaller
businesses. In fact, more than two-thirds have under 100 employ-
ees.
You might be wondering why are there only 30 ESOP-owned
companies in New Hampshire? I see two primary obstacles to the
utilization of ESOPs as a succession strategy, not only in New
Hampshire, but across the U.S. First, there is a low public and pro-
fessional awareness about ESOPs. Second, there is a shortage and/
or absence of lending capital for ESOP formations and the related
stock acquisitions from business owners. Before discussing how we
can address those obstacles, I would like to take a minute to share
with you an ESOP success story from New Hampshire.
Based in rural Dublin, New Hampshire, Yankee Publishing is an
88-year-old family business that publishes the ‘‘Old Farmer’s Alma-
nac,’’ the oldest continuously published periodical in North Amer-
ica. ‘‘Yankee Magazine,’’ ‘‘New Hampshire Magazine,’’ and the
‘‘New Hampshire Business Review,’’ to name a few others, are pub-
lished by Yankee Publishing. It employs approximately 75 people
in a region of New Hampshire where the town populations typically
consist of 2,000 people or less. When it came time to start seriously
considering an ownership succession plan, Yankee Publishing had
11 third-generation shareholders, two of which worked in manage-
jgilmore on DSK126QN23PROD with REPORTS
ment. The combined ownership was looking ahead to around 22
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00020 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
17
children, none of whom were particularly interested in running the
company.
The need for a viable ownership transition strategy became
pressing. Ownership considered all of the standard succession op-
tions: a shareholder buyout, a management buyout, selling the
company to a third party. However, ownership felt that they had
a duty to continue to preserve not only the family legacy, but also
Yankee Publishing’s commitment to the community. As such, they
spent some time researching and decided to go forward with the
sale of the company stock to an ESOP for the benefit of the com-
pany’s employees. Today, the company is a hundred percent ESOP
owned.
While Yankee Publishing is a great example of a successful own-
ership transition utilizing an ESOP, we continue to struggle with
the challenges of access to capital for ESOP transactions and a
greater awareness of the ESOP succession strategy. Chair Shaheen
and others have supported several bipartisan policy solutions to ad-
dress these issues, including the Main Street Ownership Act
passed in 2019 and the Worker Ownership Readiness and Knowl-
edge Act in 2023, but more is needed.
The Mainstream Ownership Act passed in 2019, was championed
as a win for ESOPs, but it was, in fact, slow in providing additional
access to capital for ESOP transitions through SBA’s 7(a) lending
program, which, due to certain procedural requirements, actually
had minimal impact on ESOP loans funded by the program. We
must continue to streamline the SBA 7(a) loan process to make it
more appealing to small business owners.
As previously mentioned, awareness of ESOPs is a primary bar-
rier to businesses utilizing the ESOP for their ownership transi-
tions. If a business owner and their professional advisors are un-
aware of how ESOPs work or that ESOPs even exists, they will
lose out on the opportunity to transition ownership to an ESOP,
and, instead, many end up selling to a third-party buyer or simply
shut down the company. While the recently passed Main Street
Ownership Act directs the SBA to promote such awareness, a step
in the right direction, that only helps when the SBA has adequate
support, structure, and resources to implement that directive. The
numbers show that if we can support the expansion of State cen-
ters throughout the United States, while also empowering the
SBA’s promotion of ESOPs through small business development
centers, business owners will have more access and be better edu-
cated on the ESOP succession option, which will lead to stable jobs
and stronger communities.
In conclusion, there is a significant challenge for all privately-
held businesses across the U.S.: ownership succession. I propose to
you that ESOPs should be a great part of that solution, which will
keep good jobs intact and strengthen local communities. With more
awareness of the ESOP option, we can ensure this once-in-a-life-
time decision for many business owners to sell their companies is
also a win-win for employees and the communities in which they
live and work. I appreciate the opportunity to appear before the
committee, and I look forward to answering any questions you may
have.
jgilmore on DSK126QN23PROD with REPORTS
[The prepared statement of Ms. Croscut follows:]
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00021 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
18
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 35 here 56455EC.008
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00022 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
19
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 36 here 56455EC.009
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00023 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
20
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 37 here 56455EC.010
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00024 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
21
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 38 here 56455EC.011
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00025 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
22
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 39 here 56455EC.012
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00026 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
23
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 40 here 56455EC.013
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00027 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
24
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 41 here 56455EC.014
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00028 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
25
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 42 here 56455EC.015
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00029 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
26
Chair SHAHEEN. Thank you, Ms. Croscut, and thank you for
mentioning Yankee Publishing because it points to not just the jobs
and the assets that are involved in the community, but the real
cultural contributions that so many of our small businesses make
that sometimes get lost when they cannot do the succession plan-
ning. So Mr. Schoening.
STATEMENT OF PALMER SCHOENING, CHAIRMAN,
FAMILY BUSINESS COALITION, WASHINGTON, D.C.
Mr. SCHOENING. Chair Shaheen, Ranking Member Ernst and
members of the U.S. Committee on Small Business and Entrepre-
neurship, thank you for the opportunity to address the important
topic of small business succession here today. I currently serve as
chairman of the Family Business Coalition, FBC. Our mission is to
protect family-owned and operated businesses across the country.
Family businesses are the lifeblood of the American economy,
providing good-paying jobs and enriching the lives of those in their
communities. When a family business closes its doors, it is not only
the employees who suffer. It is the little league baseball team that
the local family business sponsors. It is the new wing of the Chil-
dren’s Hospital being built with the local support of family busi-
nesses that now has to be put on hold. It is the soul of Main Street
that withers away when family businesses are sold off to multi-
national corporations or forced to close their doors for good.
Family businesses that we work with consider their employees to
be family as well. When times get tough, both owners and employ-
ees tighten their belts to keep the business running. When times
are prosperous, the employees of family businesses are the first to
benefit. Most family business owners specialize in running their
businesses but not in legal paperwork. Succession planning re-
quires hiring expensive accountants, lawyers, and estate planning
attorneys. Even business owners that plan effectively must remain
on their toes because of constantly changing tax laws and regula-
tions. All this diverted time, money, and energy could be better di-
rected towards growing their family business, upgrading equip-
ment, hiring more workers, or supporting their communities.
I show in Figure 1 of my testimony that fees can range between
$5,000 to $15,000 just to set up a simple trust, and more sophisti-
cated estate planning for larger family businesses can cost hun-
dreds of thousands of dollars. It is easy to see how family farms
or local mom-and-pop shops can be quickly overwhelmed by both
the cost and time required to plan for the next generation.
The 2017 Tax Cuts and Jobs Act, TCJA, made important im-
provements to the Tax Code for passthrough businesses, including
lowering marginal tax rates, creating a new small business tax de-
duction, and doubling the estate tax exemption. FBC supports
making these changes permanent to provide predictability for fam-
ily-owned businesses that have been forced to grapple with an ever-
changing Tax Code over the past 25 years.
Congress is now quickly approaching another moment of crisis as
most individual side tax relief will expire at the end of 2025. An-
other last-minute game of chicken between the parties approaching
this deadline is the last thing that family businesses need. The
jgilmore on DSK126QN23PROD with REPORTS
Federal estate tax, commonly referred to as the death tax, presents
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00030 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
27
a potential succession challenge for family businesses, especially in-
ventory or land rich, but cash poor businesses that tend to operate
on low margins, like family farms. When a family does not have
the cash on hand to pay the estate tax, they may be forced to fire
workers, sell off parts of the business, or, in the worst cases, close
the doors of their family business permanently. As family business
owners and farmers will tell you, annual expenses related to estate
planning are a constant drag on business. According to the Tax
Foundation, compliance costs related to estate and gift taxes to-
taled $18.9 billion in 2023. According to IRS data, collection from
estate taxes totaled only $18.4 billion in 2021. These numbers show
that the estate tax costs more to comply with than the government
collects annually in estate tax revenue.
Given these massive compliance costs, the estate tax’s negative
impact on job growth, and the tiny amount of revenue that the tax
collects, the Family Business Coalition stands in strong support of
Senator Thune and Senator Ernst’s efforts to eliminate the tax.
Our FBC letter of support for the Death Tax Repeal Act included
150 signers, including groups like the Associated Billers and Con-
tractors, Wine and Spirits Wholesalers, National Association of
Electrical Distributors, and more. Ranking Member Ernst deserves
credit for continuing to build consensus on this important issue and
move the legislation forward in the Senate. FBC has also opposed
a number of tax proposals that would make succession more dif-
ficult for family businesses, including eliminating step-up in basis
and creating a new tax on unrealized capital gains.
If Congress hopes to improve the chances for family business suc-
cession, permanent tax relief for small businesses should be an im-
mediate priority. FBC looks forward to continuing to work with
both parties in Congress to help America’s family businesses and
farms pass to the next generation of ownership.
Thank you for calling this important hearing, and I look forward
to the discussion here today.
[The prepared statement of Mr. Schoening follows:]
jgilmore on DSK126QN23PROD with REPORTS
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00031 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
28
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 48 here 56455EC.016
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00032 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
29
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 49 here 56455EC.017
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00033 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
30
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 50 here 56455EC.018
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00034 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
31
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 51 here 56455EC.019
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00035 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
32
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 52 here 56455EC.020
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00036 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
33
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 53 here 56455EC.021
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00037 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
34
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 54 here 56455EC.022
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00038 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
35
Chairwoman SHAHEEN. Thank you all very much for your testi-
mony. I want to ask each of you to tell us—each of you provided
a number of options for what we should think about as we are look-
ing at succession planning, but as each of you think about what is
the most important thing that this Committee could do to promote
more succession planning for families, what is the one thing that
you would say, Mr. Snider?
Mr. SNIDER. I would say educational programming. I think that
most owners, as you heard in my testimony, do grow successful
companies, but they are not relating that to the overall value and
an eventual transition. It is not necessarily because they are bad
owners. I think, generally, because, I think as an owner myself,
you are kind of just taught as an entrepreneur to do kind of what
you heard in my testimony, grow something of success. So I think
having educational programming that is available, readily avail-
able, I think is a critical first step in just generally changing the
owner’s mindset.
Chair SHAHEEN. Ms. Hildreth.
Ms. HILDRETH. Thank you for that question. I would say, based
on what I see every day, we have to save our family farms. We feed
the world, and succession planning for our farmers is critical. As
I said in my testimony, we are old, and we need these young, vi-
brant, willing, and able-to-work farmers to step forward, and if
they cannot—if they cannot own the land, we have seen where
some of these not so nice people from other countries want to come
in and buy up our land, and we just cannot allow that to happen.
Chairwoman SHAHEEN. And how do we get more young people
interested in family farming?
Ms. HILDRETH. The young—I think the young people are there.
It is all about risk. Will the banker take the risk of the young kid
who cannot buy the entire farm because half of it has to go towards
paying capital gains tax? So if we can fix that—kids who grow up
on the farm really do not want to leave the farm, but they are
forced to because land costs, equipment costs. I will tell you what.
If you talk to kids that grew up on the farm where I am from, they
all want to stay there, and if they can, they do. They have to find
a way, and we have to help them to find the way to stay on the
farm, own the land, and continue to feed the world like Iowa does.
Chair SHAHEEN. Ms. Croscut.
Ms. CROSCUT. So I am going to go back to education. I do think
it is all about education, and not only providing it, but helping
other organizations to provide that education so that it gets wide-
spread, whether it is about ESOPs or estate tax, or it is about dif-
ferent succession options, I think it is all about making sure that
the business owner knows what is out there, right? They cannot
plan around anything if they do not understand what the options
are. And so to me, I would agree. I think the number one is the
education aspects of everything we are talking about and being
able to spread the word.
Chair SHAHEEN. And do you see a role for—is that something you
see that the Small Business Administration should help do?
Ms. CROSCUT. Absolutely. Yeah.
jgilmore on DSK126QN23PROD with REPORTS
Chair SHAHEEN. Mr. Schoening.
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00039 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
36
Mr. SCHOENING. My number one recommendation would be per-
manent tax policy. If you look like—look at policies such as the es-
tate tax, over the past 25 years, the exemption and rate has
changed 20 times. It makes it incredibly difficult to plan if family
business owners cannot project forward at least 10 years with re-
spect to tax policy.
Chair SHAHEEN. So, Mr. Snider, as you are talking about edu-
cating people around estate planning, how does the estate tax fac-
tor in your discussions with small business owners?
Mr. SNIDER. Certainly. So I think the estate tax is obviously a
critical conversation, but, for me, I just step all the way back. If
you look at small business owners, 70 percent of them have no es-
tate plan, and something like 76, I think it is, they do—they do not
have a will. So I think, obviously, the estate tax conversation is a
critical one, but I think we got to go all the way back to say most
of them do not even the estate plan, so are they even considering
the tax yet?
Chair SHAHEEN. And so what—how do you advise people when
you hear that from the small business owner?
Mr. SNIDER. From the standpoint of not having a—having an es-
tate plan?
Chair SHAHEEN. What do they tell you is the reason why, num-
ber one——
Mr. SNIDER. Sure.
Chair SHAHEEN [continuing]. And then what—how do you con-
vince them that this is something that they really need to do?
Mr. SNIDER. This goes back to education and the change of the
owner’s mindset, right? So I think it first starts with a conversa-
tion. I think, again, most owners are concentrated on that daily, es-
pecially the small business owners and that lifestyle company.
What they are not thinking about is this value creator mindset.
Whether you are the big manufacturing company or the dry clean-
ers or the auto mechanics shop on the corner, they are in the day-
to-day. They are not looking long term. So when we sit down with
a business owner, we try to look at it across all three elements—
business, personal, and financial—and have a more of a long-term
value type conversation with them.
Chair SHAHEEN. Thank you. Senator Ernst.
Senator ERNST. Thank you very much. Ms. Hildreth, let us start
with you, and thanks again for being with us today and sharing
your work on behalf of Iowa’s small businesses and your personal
experience with succession planning for your own business. As the
executive director of Calhoun County Economic Development Cor-
poration and a small business owner yourself, you do have that
firsthand knowledge on the taxes that small business owners face.
Can you explain in more detail the concerns that small business
owners and farmers have about capital gains taxes during the suc-
cession process?
Ms. HILDRETH. Thank you, Senator Ernst. From my own experi-
ence, I grew up on the family farm, and when my parents passed
away—my mother passed away in 1992, my father, 15 years
later—I inherited, along with my brothers and sisters, the family
farm. What a glorious day, and my tax attorney—when I got that
jgilmore on DSK126QN23PROD with REPORTS
check, the tax attorney said to me, now, take 25 percent of that
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00040 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
37
and put it away because you are going to have to pay your capital
gains tax, and at that time, inheritance tax at the same time. What
a blow. And I questioned, my parents worked for 50 years building
this farm. Every dime went back into the farm other than what we
needed to live, and we did not live an extravagant lifestyle.
Senator ERNST. Mm-hmm.
Ms. HILDRETH. And my father paid taxes the entire time—prop-
erty taxes, income tax, profit tax—and it is unfair, in my opinion,
that when that passed along to his children, we were taxed again.
In Iowa right now, capital gains tax is 6 percent, but at the Federal
level, it is either zero percent, 15 percent, or 20 percent, based on
your income level, so now potentially 26 percent again for capital
gains. It inhibits the progression of the family farm for those land-
owners, and I just do not want to see those family farms go away.
I live in rural Iowa by choice, and that is where I want to stay,
and I want my neighbors to do well. And as economic development
director, I see them everywhere, and everybody knows everybody in
my community, and if somebody is suffering, we all know about it,
and it is devastating to the environment. It is devastating to the
community.
My personal business, we are an underground utility contractor.
You got a sewage problem, who are you going to call? You are going
to call us, and that is devastating if you are in the midst of it, and
we want to make sure that my company, as other essential service
providers, are here to handle those details, those messy details. A
lot of times for our future, it is all about our future.
Senator ERNST. Yeah. Thank you. Thank you, Ms. Hildreth, and,
Mr. Schoening, thanks again for joining us, and I am glad that you
are working to support our small family-owned businesses. In 2017,
we did pass the TCJA, a tax reform law that helped Main Street
and the American middle class. This included doubling the death
tax exemption and indexing it to inflation. These provisions are set
to expire at the end of 2025. What issues do you see small business
owners facing if Congress allows the reforms we made to the death
tax in the TCJA to expire?
Mr. SCHOENING. Well, if that relief expires, Senator, we can
count on more family farms and businesses being in the crosshairs
of the estate tax certainly, and as you know, it is not only the es-
tate tax exemption that expires. It is the 199A small business de-
duction. It is marginal tax rates across the board. It is even the
standard deduction. And so this is overwhelming to think about for
our business owners, and that is why we are pushing for a perma-
nent extension of the current policy.
Senator ERNST. Okay. Thank you, and I will yield back. Thank
you.
Chair SHAHEEN. Senator Cardin.
Senator CARDIN. Thank you, Madam Chair, and let me thank all
of our witnesses, and thank you for this hearing. To me, it is an
extremely important aspect.
Small business owners, yes, education is important, but when
you are at the beginning stages of a small business, your entire at-
tention is towards making your business viable, doing everything
you need to keep the business going. You cannot really take that
jgilmore on DSK126QN23PROD with REPORTS
much time to try to figure out what is going to happen 20 years
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00041 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
38
from now or 30 years from now. That is understandable, and you
do not have consultants on staff that can help you deal with those
types of challenges. So the reality is that small business owners
start a business, it grows, and then at some point, they realize they
have an issue they have to deal with.
And secession planning is challenging for many different reasons.
Some of it is a family-owned small business, you can have family
dynamics that make succession a challenge, and as you get to gen-
eration two or generation three, it gets more and more complicated,
particularly if you have large families, and I am not against large
families, but it does make it more complicated. Add to that that
you have principals in the business that have now reached an age
where they would like to step back. Do they have retirement secu-
rity? Do they have to take the equity out of their company in order
to deal with their retirement needs, which affect the succession of
their small business? These are all challenges that we have to fig-
ure out how do we deal with as we go forward? We try to deal with
some of this on Secure 2.0 by offering additional retirement options
for smaller companies so that they could participate without the
cost or burdens that larger—the requirements on larger companies.
So, Mr. Snider, I would like to just have you dwell on that a little
bit. Is there more that we can do to deal with the legitimate con-
cerns of retirement security for small business owners so that they
can get engaged at an earlier stage, recognizing years go by pretty
quickly?
Mr. SNIDER. Yeah. Certainly, I think, going back to the education
topic, I do. I ran—I started my first business when I was 16 out
of the—out of my desk in the geometry class. I probably should
have been paying attention more in geometry class——
[Laughter.]
Mr. SNIDER [continuing]. But nonetheless, I was certainly start-
ing that landscaping company. But I think what we could do early
and often, I think if you look at professional advisors, that is in the
area that EPI works, having them also understand the exit plan-
ning process so you could have that conversation early and often.
What we say at EPI is that exit strategy is business strategy.
There is really nothing different, is that if you think about the
things that you are doing, whether you are first starting or you
have a more mature company, you are doing things in your busi-
ness every single day that eventually will affect your exit from a
business, personal, or financial standpoint.
To your point, owners aren’t thinking about that early and—
early and often, but I think that if—when they turn to their board,
they turn to their mentors, they turn to something like the SBDC,
the family enterprise center, if those folks that surround those
owners are also educated in the process, they can begin that con-
versation early and often. My father is sitting behind me, and I am
lucky enough to have a dad that is a certified exit planning advi-
sor, so it becomes a lot more natural for me to have, but it was a
conversation that Dad had with me early in my business career.
Senator CARDIN. A suggestion in regards to the services offered
by resource partners is an area—that is an area, I think, that could
significantly improve their services to small businesses, whether it
jgilmore on DSK126QN23PROD with REPORTS
is women’s business centers or the small business development cen-
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00042 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
39
ters. I think they could do a more effective job, or it could have a
higher priority on these type of issues, our veterans outreach busi-
ness centers.
There is one tool that I have found that can be particularly help-
ful. There have been many companies in Maryland that have con-
verted to ESOPs as an effort to provide a way in which the man-
agement owners can retire, have retirement security, and can keep
the company going with its current workforce as co-owners. We
have tried to make ESOPs more available and transitions into
ESOPs easier. There are some times appraisal issues. We dealt
with that in Secure 2.0 to make that a little bit easier. Do you see
ESOPs as being a viable way that we could strengthen that tool
to make it easier for small companies to have succession plans that
keep their workforce intact, ownership intact, but allow their senior
management to be able to have retirement security?
Mr. SNIDER. I would certainly have our ESOP expert to comment
on that, too, but, yes, I think ESOPs, more so than ever in our
country, are a strong exit option for many companies, something
that Dad and I have even considered in our own business.
Senator CARDIN. Do you want to comment on that?
Ms. CROSCUT. Of course. [Laughter.]
Senator CARDIN. You have been identified as our ESOP expert.
Ms. CROSCUT. I absolutely agree with that. I would say that, you
know, an ESOP is not the right tool for every company, right?
Those of us who work in the ESOP space agree with that, acknowl-
edge that. There are other options out there that are perhaps bet-
ter depending on the company. But absolutely, having everyone
who is included in the business owners’ life and helping to advise
them be aware of the options, including an ESOP, is really impor-
tant. And I do believe there are many companies that are not
aware of the ESOP option and they should be, and they would
probably select the ESOP if they knew it.
Senator CARDIN. Thank you. Thank you, Madam Chair.
Chair SHAHEEN. Thank you, Senator Cardin. I would just point
out that the second vote started at 2:59, and so Senator Ernst has
gone to vote. When she comes back, I will go, but for others who
have not voted, just be aware of that. I also want to welcome Mr.
Snider’s dad to the hearing. Make sure he does a good job.
Voice. [Inaudible.]
Chairwoman SHAHEEN. Yeah. Senator Hawley.
Senator HAWLEY. Thank you, Madam Chair. Thanks for having
this hearing, and thanks to all of the witnesses for being here. Ms.
Hildreth, I want to start with you, because I was just so struck by
your opening remarks, and then your back and forth with Senator
Ernst, particularly as it relates to farmers and the challenges that
they are facing.
Missouri, which is the State I represent, we have 95,000, about,
family farms in the State, and we are very proud of that. That
makes us the second most by number in the entire United States,
not by proportion, but by number, and, you know, we are not one
of the biggest States in the country, so we are very proud of that.
And I come from a farming background and so does my wife, so it
jgilmore on DSK126QN23PROD with REPORTS
is something that is very near and dear to my heart. And I just
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00043 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
40
want to ask you a couple of things related to that and some of the
comments that you made.
Let us just start maybe, though, with the capital gains issue and
how that factors into succession planning that you have seen, you
know, just your own experience. I mean, what does—you talked a
little bit about your own experience with this and the unfairness
and surprise of being told that, you know, here is—here is this
farm that you have inherited but that you are also now responsible
for, and the first thing is you have got a massive tax bill that you
now have to pay. So just in your own observation and from your
own experience, what is that like, and how do you think that af-
fects farmers who are saying, boy, I want to—I want to keep this
farm in the family, I want to give my son or daughter a shot at
farming, but we have got to get around this obstacle, and just talk
to us about that.
Ms. HILDRETH. Thank you, Senator Hawley. I have a very good
friend. His name is State Senator Dan Zumbach, and he is in this
situation with his son right now, and he was explaining to me the
other day in the chamber, he says, we cannot succession plan and
sell our land to our son. It just cannot work. We have to wait until
I die, and then he and his three siblings will inherit, and then he
will have to deal with buying them out, even though they have no
interest in farming. And now the burden is to him, and it is—it has
really put them in a place where they are frustrated, and as a
State senator, I know he is looking at what can we do at the State
level. So that is my experience as I talk to some of my colleagues.
Senator HAWLEY. Yeah.
Ms. HILDRETH. And my role is executive director of Calhoun
County Economic Development. Well, I am 7 months into this job,
so education is really key for me as a leader, as a community lead-
er, and there is so much to learn. Everything that you are all talk-
ing about today are things that I need to go home and I need to
learn more about. So I think it is from our leadership as well, you
as a—as a senator, our representatives, our mayors, our county su-
pervisors, to educate themselves and have these conversations at
the church coffee——
Senator HAWLEY. Mm-hmm.
Ms. HILDRETH [continuing]. You know, at the fellowships, at the
Sweet Corn Day celebration, you know, whatever it is. But I—it is
really education——
Senator HAWLEY. Yeah.
Ms. HILDRETH [continuing]. And knowing what is there and find-
ing, I am sorry, but back doors around things——
Senator HAWLEY. Mm-hmm.
Ms. HILDRETH [continuing]. Because we know all those back
doors do exist. We just got to find them.
Senator HAWLEY. Mm-hmm. Let me ask you. Well, I just want
to say it should not be that farmers or any other small business
owner should have to go to a back door in order to pass along their
business to their family, and, particularly, as you pointed out, with
the land issue. I mean, you would think in this country—I think
people who do not know anything about farming often think, oh,
there is plenty of land. There is no—there is no land problem.
jgilmore on DSK126QN23PROD with REPORTS
There are gobs of land out there. Boy, you go tell that to a young
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00044 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
41
farmer and trying to find land, trying to buy land. Nobody can af-
ford land. Nobody can get a shot at it. I mean, so this is a huge,
huge obstacle that we have got to solve.
I want to ask you in my brief remaining time here one other
thing actually related to land that you brought up. You mentioned
foreign ownership of land.
Ms. HILDRETH. Mm-hmm.
Senator HAWLEY. To me, this is such a huge issue. At a time
when our younger folks cannot afford to buy land, farmland in our
country, to have foreign nations and foreign corporations coming in
and buying up that land, it just seems unbelievable. You mentioned
it. I would just like to give you a chance to say something more
about that. What is your perspective on it?
Ms. HILDRETH. It will kill the family farm. These foreign adver-
saries, they are going to come in, and if given the opportunity, they
are going to suck up the good land, and who knows what they are
going to do with it? Our farmers, our Iowa farmers, as I am sure
our Missouri farmers, are stewards of the land. They take care of
the land. They reinvest in the land. They are worried about water
quality. They are worried about cover crops. They are stewards of
the land, and my fear is some of these other companies that come
in and buy land, they are not going to be stewards of our land.
Senator HAWLEY. Thank you, Madam Chair.
Chairwoman SHAHEEN. Thank you, Senator Hawley. Senator
Rosen.
Senator ROSEN. Well, thank you, Madam Chair, really, for hold-
ing this hearing today, and thank you for the witnesses for being
here. I am going to thank the dad as well and, of course, all your
parents, spouses, siblings, your whole families.
But, you know, this issue is so important because small business
is the backbone of America. It really is part of the American
Dream, and I can tell you that in Nevada, 99 percent of businesses
are small businesses, and so that just continues to grow, and it is
a backbone of my State as well. And we have a really deep rural
frontier State in so many ways, and small businesses, they just
play a crucial role in my rural communities all across Nevada. And
they are key employers from the backbone of our local economies.
They help create wealth through long-term family business owner-
ship, just like you are talking about, whether it is a family farm
or some other kind of business. And so it is critical that we create
the environment for our rural communities so those businesses can
continue operating and serving the residents even after a change
in ownership.
So, Mr. Snider, you are getting all the questions here today. Can
you discuss the importance—you did talk about the importance of
succession planning, but in rural communities, we have in Iowa,
New Hampshire. You know, D.C., I guess we have—around us is
rural, but rural communities may not have as many resources as
maybe some of our urban communities just to seek out as far as
even from the SBA or attorneys and the like. What can we do to
be sure our rural communities do not get left behind?
Mr. SNIDER. I like the conversation around, like, economic devel-
opment centers, family enterprise centers. Even think about, like,
jgilmore on DSK126QN23PROD with REPORTS
your schools, like, alumni associations.
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00045 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
42
Senator ROSEN. Oh——
Mr. SNIDER. So there is, like—we have worked with colleges and
universities——
Senator ROSEN. Uh-huh.
Mr. SNIDER [continuing]. And perhaps there is a committee on
entrepreneurship——
Senator ROSEN. Right.
Mr. SNIDER [continuing]. That that alumni association has. So,
again, I know it is kind of maybe——
Senator ROSEN. A community college——
Mr. SNIDER. Like a community college.
Senator ROSEN. Yeah. Yeah.
Mr. SNIDER. Yeah. Sure. So I think it is critical for the—for the
rural communities because there is just less businesses there.
Senator ROSEN. Mm-hmm.
Mr. SNIDER. And to your earlier point, really the backbone of
that community. I think you were talking in your testimony about
the little league baseball team and the things that business owners
do, particularly in those smaller communities.
So I think I go back—I know I have said it 3 times now here in
this hearing, but I think it goes back to education and just that
critical mindset shift for the business owners and the people that
surround them provided through smaller organizations like an
SBDC, alumni association, and again, changing that conversation.
Senator ROSEN. Being sure they get out to our rural communities
is particularly important.
Mr. SNIDER. Right.
Senator ROSEN. And we do know they sponsor all the—all the
sports teams——
Mr. SNIDER. Yeah.
Senator ROSEN [continuing]. And so many other things. A lot of
our social services are also sponsored——
Mr. SNIDER. Sure.
Senator ROSEN [continuing]. And supported—local social services
by our philanthropies by our philanthropies, by our business com-
munity as well. And in Nevada, we are a younger State. We have
a lot of first-generation business owners all through the state,
280,000 small businesses, like I said, and about 20 of them are—
20 percent of them are Latino owned and many more are minority
owned in general, and so they are incredibly small businesses, fam-
ily-run businesses, first-generation businesses.
And only half—particularly our Latino community, only half of
our Latino business owners have a succession plan in place, and I
am concerned about the long-term success of these businesses. And
so, Ms. Croscut, we are going to move over to you this time. What
challenges do you think first-generation small business owners, es-
pecially those maybe from some of our minority communities, face
when navigating the complexities of succession planning?
Ms. CROSCUT. I am assuming it is overwhelming, you know, for
any first-generation who is probably trying to figure out how to run
the business and not really thinking about the exit strategy there,
but I think there are a lot of those companies out there, right?
jgilmore on DSK126QN23PROD with REPORTS
Senator ROSEN. Mm-hmm.
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00046 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
43
Ms. CROSCUT. There are probably as many as there are retirees
transitioning, and they need the same level of assistance from their
advisors. There are all kinds of, you know, potential challenges,
right?
Senator ROSEN. Yeah.
Ms. CROSCUT [continuing]. Whether it is getting financing for
what they need for the business, whether it is figuring out what
the exit strategy will be, getting labor. You know, there are labor
shortages.
Senator ROSEN. Labor shortages. Very hard in our rural commu-
nities.
Ms. CROSCUT. Absolutely.
Senator ROSEN. Yeah.
Ms. CROSCUT. So just the—just the day-to-day is a lot, right, for
any first-gen business, and then to sort of figure out what am I
going to do next when the business has run its course and I need
to retire, so.
Senator ROSEN. Well, I see that my time is just about up, so I
will yield back because—are you quite ready there, Senator
Hickenlooper?
Senator HICKENLOOPER [continuing]. 30 seconds.
Senator ROSEN. I will turn it back to——
Senator HICKENLOOPER [continuing]. 10 seconds.
Senator ROSEN. I will back to—we will filibuster here. [Laugh-
ter.]
Senator ROSEN. Thank you all again for being here. I yield my
time back to Chair Shaheen. Thank you.
Chair SHAHEEN. Senator Hickenlooper, if you are not ready, I
think Senator Ernst and I are going to do another round. So if you
are ready——
Senator HICKENLOOPER. No, I am ready.
Chair SHAHEEN. Go ahead. Okay.
Senator HICKENLOOPER. I am ready. So I have been looking for-
ward to this as someone who has loved looking at things like
ESOP. You know, Colorado has a wonderful brewing company
called New Belgian Brewing Company, and the founders of that
were old friends of mine from my early days. I always point out
that they were a couple of years after we were. But anyway, that
notion of being able to take a workforce that often functions like
a family and basically include it as part of your estate planning,
and figuring out a way to make sure that that magic and that
chemistry is preserved and, at the same time, creating opportuni-
ties is a big deal.
I will start with Ms. Croscut. Back in 2007, I sold the—my brew
pub. We didn’t use an ESOP, but I sold out to my partner and then
a number of our senior employees, and they were able to—he guar-
anteed to take them on and function in a similar way. These days,
transitioning to employee ownership probably is easier ever in Col-
orado, thanks to the State has an employee ownership office. There
is a commission on employee ownership and an employee owner-
ship tax credit that have all been put into place kind of at the end
of when I was governor and now. What elements of Colorado’s sys-
tem to support employee ownership should the Federal Govern-
jgilmore on DSK126QN23PROD with REPORTS
ment consider adopting?
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00047 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
44
Ms. CROSCUT. Thank you for raising that question. I think there
are many aspects to what Colorado is doing that the Federal Gov-
ernment can take as sort of a path, a strategy. One of those is just
the idea of setting up State centers with State funding or govern-
ment funding. We have seen that in the ESOP community at large,
that the centers in various States—I sit on the board of the
Vermont Employee Ownership Center as an example. Centers that
are set up in schools, colleges, you know, their financial issues are
different than the centers that are set up with Federal-State fund-
ing availability. They are—they are more consistent, right, and
they can do things that other centers that are outside of that and
not getting that funding might not be able to do.
They also bring somewhat of a sense of sort of a stamp of ap-
proval, right, to the people who utilize them, because if they are
set up as a sort of government entity of sorts. When a business
owner reaches out to them, it is sort of like, okay, well, this entity
offering ESOP education or employee ownership education has that
sort of sense of approval versus maybe a consultant who is in a
not-for-profit or something like that. So there are just some really
large benefits, we think, from that structure.
Senator HICKENLOOPER. Good.
Ms. CROSCUT. Yeah.
Senator HICKENLOOPER. Great. I would ask each of you, there
was a book called the ‘‘Great Game of Business.’’ I am sure some
of you have seen that, but it is talking about the Springfield Re-
manufacturing Company, which I actually went to visit at one
point when I was still in the private sector just because I wanted
to see about them. But one of the—one of the, I thought, great
things about ESOP and that kind of transition is that it leads you
to open book management, whereby, you know, you do not know
the details of what your coworkers are getting paid, but you are
able to see what the revenues are, what your costs are, and how
well you are doing, which I found to be very beneficial. What is
your take on that in terms of that open book management?
Mr. SNIDER. It is something that we have in our own—our busi-
ness is not a—is not an ESOP, but I would challenge any business
owner to be more open with their employees and create that cul-
ture. I think certainly in the ESOP world, more open than ever be-
cause you have to be, but I think that kind of open book culture,
especially for younger generations, who, I think, look for ownership
or ownership in some form. I think a critical path for creating a
great business is kind of an open book, open culture policy.
Senator HICKENLOOPER. Right.
Ms. HILDRETH. Thank you, Senator, for that question. I am a
small business owner, and our employees see a number on a
whiteboard in my office, and these are young men, not out of col-
lege very long, great employees, salt of the earth, great people. But
they walked in my office one day and they said, what does that
$159.87 mean—hundred and fifty-nine and eighty-seven cents—
and I said to them, that is how much money we need to bill every
day, 365 days a year to cover our insurance cost. I need them to
be aware of things like that, that as an employee, you do not worry
about general liability insurance or workman’s comp insurance.
jgilmore on DSK126QN23PROD with REPORTS
You are worried if you are going to get a paycheck.
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00048 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
45
So I think it is mentorship, and it is going to the basic founda-
tions of operating a business and educating your employees. These
are the challenges. This is why it is so important that you do this
or you do that or why I do this so you get paid.
Senator HICKENLOOPER. Yeah, I agree, and that is one of the
open book lens of that kind of mentoring. Anything to add?
Mr. SCHOENING. I think you will find, generally, with family
businesses, they do have an open book policy, even if it is not man-
datory. When things go wrong in a family business or times get
tough, everybody tightens their belts together. That is somewhat
different than a multinational corporation where the executives’
pay may be tied to the stock performance or something like that,
but it is a much different dynamic in a family business or a family
farm, and I would say, for the most part, I would associate myself
with what Theresa said. She runs an open book type policy, and
I think a lot of our family businesses do as well.
Senator HICKENLOOPER. Right. So interesting. I am out of time,
but I will leave you with just the one thought, that a couple of dif-
ferent polls have gone out and talked to people about the primary
motivation that people use to start a business. And I was shocked
that, you know, over three-quarters of people, it is not to make
more money. It is because they do not want to have a boss, and
I believe that so deeply, and when I finally understood that, it real-
ly changed my worldview about small business and what an impor-
tant and powerful thing it is. Thank you. Thank you all for coming
in today.
Chair SHAHEEN. So how does that track with the fact that now
that you are in the Senate, you have thousands of bosses in your
constituents?
Senator HICKENLOOPER. No, no, no. I view myself as their serv-
ant——
Chair SHAHEEN. Okay.
Senator HICKENLOOPER [continuing]. In the same way that as a
restaurant, I try to serve all my staff.
Chair SHAHEEN. Good.
Senator HICKENLOOPER. But I still think I am the boss of my life.
Chair SHAHEEN. Thank you, Senator Hickenlooper. I have—Sen-
ator Ernst had another engagement, so she needs to leave, and I
have to go vote, but I do have one final question, Ms. Croscut, that
I would like to ask you, because in your opening statement, you
talked about the 7(a) Loan Program and changes that have been
made to try and make those more helpful to ESOPs. Have you seen
that that has made a difference in terms of interest in using the
program?
Ms. CROSCUT. Excellent question. So I think I would respond to
that in two ways. The level of interest, I think, is related to, again,
back to education, unfortunately, right? We had some struggles
with that program, but you do not get to the program until you
first hear about ESOP, so if you are not hearing about ESOP, you
are not getting to that stage of using the 7(a) loan.
What I have seen in my recent experience is that the program
has improved, that we were able to use it, at least in a recent en-
gagement, to transition to a hundred-percent ESOP ownership in
jgilmore on DSK126QN23PROD with REPORTS
a successful way that was not traumatic. In previous experiences,
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00049 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
46
it was a little bit traumatic. It was very drawn out. There were a
lot of requirements that were difficult for us to really provide to
SBA, but there have been certainly some improvements, and I
think it is just going to take some time and some additional edu-
cation to be able to utilize that fully in the new state that it is
being offered.
Chair SHAHEEN. Thank you. That is helpful, and as we are talk-
ing about education, virtually all of you have mentioned the impor-
tance of educating small business owners about the challenges of
succession planning, and I think we would all agree that SBA has
a role to play in that. The resource agencies, the women’s business
centers, SBDCs also have a role to play. Is there more that could
be done by those agencies, or should we be asking them to partner
with other entities or organizations to try and get the word out
about the resources that are available to people? Any thoughts
about—final thoughts, Ms. Hildreth?
Ms. HILDRETH. In Iowa, we have a program that is starting up
not too far from me. It involves nine counties, and it is called Hub
7 1–2. It is federally funded. It is a 2-and-a-half-year program. I
do not know a lot about the backside of it.
Chair SHAHEEN. Do you know who funds it, through what agen-
cy? Is it funded through rural development, or through——
Ms. HILDRETH. I think it is through rural development, and it—
the process has been going on. The Greater Carroll Economic De-
velopment Corporation is leading that for Carroll County and eight
counties surrounding that. And Hub 7 1–2, it is all about growing
entrepreneurs and bringing to them the tools that they are not
finding someplace else. Maybe they do not know where to look, but
the backbone of it is mentorship, and I think mentorship, it goes
to the heart of us as leaders and wanting to grow. Why not ask the
guy who has been through it all and through this program?
Chair SHAHEEN. Yeah.
Ms. HILDRETH. And through this program—like I—like I said, I
know it is federally funded. It is going to launch. I think they are
going to name all the entrepreneur or the leaders in February.
That is going to be a great day for Iowans and others across the
United States that are going to have these hubs to help them help
our entrepreneurs.
Chair SHAHEEN. Other thoughts? That is a great example. Mr.
Snider.
Mr. SNIDER. Yeah, Senator, if I may, I would say I think any
great organization has grown through partnerships. So in Colorado,
actually, we have a local chapter, so the Exit Planning Institute
has about 30 chapters across the United States where business
owners and business advisors come together to talk about exit
planning and gain partnerships and gain further education around
the topic. Governor Polis there actually funded a regional State of
Owner Readiness Survey so that he could better understand the
business owners within his State, and through that, the ESOP or-
ganization, through the government, has now worked with our or-
ganization to fund things like online education, something easy and
simple that an owner can come online to and take owners forums,
jgilmore on DSK126QN23PROD with REPORTS
further research, and whatnot.
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00050 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
47
So yes, the short answer is absolutely, and I think the agencies
and the organizations locally should look to partner to bring that—
to bring more awareness and education to business owners.
Chair SHAHEEN. Great. Mr. Schoening, Ms. Croscut.
Ms. CROSCUT. All right. I will jump in. I think the Main Street
Ownership Act actually directed the SBA to help with the edu-
cation around ESOPs, employee ownership in general. We have
seen some of that, but it hasn’t been as full, I guess I would say,
as we would like it to be. So I would say, yes, there is more to be
done. The act certainly was helpful in sort of providing the direc-
tive, but we would love to see more of that outreach and probably
more education for those SBDCs. For example, you know, if they
do not have the knowledge, they cannot share it, so.
Chair SHAHEEN. So maybe this Committee should direct the SBA
in doing more succession planning.
Ms. CROSCUT. That would be fantastic.
Chair SHAHEEN. Mr. Schoening, the last word.
Mr. SCHOENING. So from our perspective, family-owned and oper-
ated businesses, a lot of them work with local colleges on career
and technical education. For example, an electrical company may
partner with a college that already has this equipment on hand,
and they can train people in exactly how to use it, exactly how to
repair it. So there may be some opportunity there to pair up with
local colleges that specialize in estate planning and do some more
education in terms of what they need to do, the will they need to
have in place, the plan they need to have in place, and things like
that.
So yes, I do think that there is more of an opportunity for us to
educate our members, especially family business owners and farm-
ers, who, as we have heard here today, simply aren’t prepared for
succession.
Chair SHAHEEN. Well, thank you. I agree. We have a—we have
a great example at the University of New Hampshire, a center that
helps with succession planning, but one of the challenges is helping
people know it is there, and I think getting the word out, as you
have all mentioned, is really important.
So thank you all very much again for being here today and for
your testimony. We look forward to staying in touch and hope that,
Mr. Snider, you will share with us the results of your survey when
you get it, and as all of you are working in your areas, that you
will think about sharing with this Committee any ideas that you
have.
The record—the official record will remain open for 2 weeks for
any additional questions and statements.
[The information follows:]
jgilmore on DSK126QN23PROD with REPORTS
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00051 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
48
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 88 here 56455EC.023
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00052 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
49
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 89 here 56455EC.024
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00053 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
50
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 90 here 56455EC.025
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00054 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
51
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 91 here 56455EC.026
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00055 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
52
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 92 here 56455EC.027
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00056 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
53
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 93 here 56455EC.028
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00057 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
54
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 94 here 56455EC.029
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00058 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
55
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 95 here 56455EC.030
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00059 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
56
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 96 here 56455EC.031
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00060 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
57
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 97 here 56455EC.032
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00061 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
58
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 98 here 56455EC.033
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00062 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
59
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 99 here 56455EC.034
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00063 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
60
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 100 here 56455EC.035
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00064 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
61
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 101 here 56455EC.036
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00065 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
62
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 102 here 56455EC.037
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00066 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
63
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 103 here 56455EC.038
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00067 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
64
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 104 here 56455EC.039
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00068 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
65
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 105 here 56455EC.040
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00069 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
66
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 106 here 56455EC.041
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00070 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
67
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 107 here 56455EC.042
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00071 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
68
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 108 here 56455EC.043
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00072 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
69
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 109 here 56455EC.044
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00073 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
70
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 110 here 56455EC.045
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00074 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
71
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 111 here 56455EC.046
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00075 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
72
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 112 here 56455EC.047
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00076 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
73
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 113 here 56455EC.048
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00077 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
74
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 114 here 56455EC.049
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00078 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
75
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 115 here 56455EC.050
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00079 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
76
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 116 here 56455EC.051
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00080 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
77
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 117 here 56455EC.052
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00081 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
78
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 118 here 56455EC.053
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00082 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
79
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 119 here 56455EC.054
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00083 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
80
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 120 here 56455EC.055
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00084 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
81
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 121 here 56455EC.056
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00085 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
82
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 122 here 56455EC.057
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00086 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
83
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 123 here 56455EC.058
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00087 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
84
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 124 here 56455EC.059
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00088 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
85
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 125 here 56455EC.060
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00089 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
86
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 126 here 56455EC.061
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00090 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
87
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 127 here 56455EC.062
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00091 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
88
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 128 here 56455EC.063
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00092 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
89
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 129 here 56455EC.064
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00093 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
90
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 130 here 56455EC.065
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00094 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
91
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 131 here 56455EC.066
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00095 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
92
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 132 here 56455EC.067
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00096 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
93
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 133 here 56455EC.068
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00097 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
94
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 134 here 56455EC.069
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00098 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
95
jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 135 here 56455EC.070
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00099 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
96
Chairwoman SHAHEEN. And with that, the Committee stands ad-
journed. Thank you again.
[Whereupon, at 3:34 p.m., the Committee was adjourned.]
jgilmore on DSK126QN23PROD with REPORTS
VerDate Sep 11 2014 01:47 Oct 31, 2024 Jkt 056455 PO 00000 Frm 00100 Fmt 6633 Sfmt 6602 E:\HR\OC\A455.XXX A455
File and source
- File
- CHRG-118shrg56455.pdf
- Size
- 31,658,200 bytes
- SHA-256
- d921ebc3413fc042c860f15095c4b15c579e84146065eb549a0fb7e06668f3d8
- Our copy
- CHRG-118shrg56455.pdf
- Original
- www.govinfo.gov