NORTH BAY – Shelly Rafanelli-Fehlman, winemaker at A. Rafanelli in the Dry Creek Valley, has just finished her 13th harvest at the winery. And at 37, the fourth-generation winemaker is also helping lead the winery through the challenges of estate and succession planning, all aimed at preserving a treasured family business and way of life.
At a recent Business Journal Family Business Succession Planning event titled "Time Waits for No One" and sponsored by Burr Pilger Mayer, Wells Fargo, Carle Mackie Power & Ross and The Zepponi Group, Ms. Rafanelli-Fehlman, spoke about her family’s experience of going through this change. The audience of about 150 included many long-time winery and vineyard owners from Dry Creek, some of whom are facing the challenge of family succession.
Winegrowers of Dry Creek Valley, an association that supports family owned wineries in the Dry Creek Valley, also participated in the event with four wineries pouring at the event, A. Rafanelli included. The other family-owned wineries were Nalle Winery, Puccioni Vineyards, J. Pedroncelli Winery and Mushal Winery & Vineyards.
A. Rafanelli was founded in 1974, though the family had been selling grapes from their vineyards since the early 1900s.
Alberto and Leticia, Ms. Rafanelli-Fehlman’s great grandparents, came to the U.S. from Italy and established their first winery and vineyards in Healdsburg in 1911. Americo, her grandfather, bought the land where the winery is today.
The winery business has remained much the same. Only 11,000 cases are produced per year, and the wine is not available in retail outlets. All tastings are done by appointment only.
So to begin talking about passing the business to the next generation represented a significant challenge.
“It was a very big step for my father,” she said of his even thinking about putting together an estate plan.
She said it was done so that the family could work together in the best interest of the family, not just the best interest of the individuals.
“Part of it is the emotional part of it. Just thinking about all of those issues and figuring what part of the business you want to stay involved in,” Ms. Rafanelli-Fehlman said.
After she told the story of her family, a panel of experts, moderated by John Mackie, partner at Carle Mackie Power & Ross, chimed in with questions for Ms. Rafanelli-Fehlman about the process and answered questions from the audience about the legal, financial and emotional repercussions of family succession planning and how to avoid some of these problems.
The panel discussing the issues included Jim Andersen, partner at Burr Pilger Mayer; Michael Sullivan, senior vice president of Wells Fargo; and Mario Zepponi, principal of the Zepponi Group.
Mr. Sullivan talked about preserving the investment down the line. He stressed the idea that the younger generation go out and get experience with another company before stepping into the managerial role.
“I have never heard a family say this is easy,” he said. “Every family enjoys some dysfunction, and this is where a lot of that will come out.”
Mr. Zepponi talked a bit about what to do in the case of a sale. For a winery, the important question is how to attract a buyer.
Most sales occur confidentially. So he urged winery owners to carefully assess their strengths and weaknesses and match them to potential buyers.
Jim Andersen, who merged his Andersen & Company with BPM Jan. 1, said he has been involved in more than 700 business valuation and litigation assignments.
He said planning starts with putting a value on the business. For families, the depressed values today are not necessarily bad.
“With values down,” he said, “this is exactly the right time for a family sale."
When looking at the way the business will be run, Mr. Andersen said that life is not fair and it is important to ask the hard questions, such as who is going to run the business end of things, and who, in the case of a winery, is going to manage the vineyards.
Sometimes, he said the best thing for a family member is not to be involved in the business at all.
Ms. Rafanelli-Fehlman said it was a breakthrough when the family realized that they didn’t have to talk about the business all the time.
“Sometimes when we are all at dinner at the holidays we find ourselves talking about the business. Sometimes that is not the right thing,” she said.
