Great Neck asset firms' friendly takeover

For 15 years Gerald Appel has been training his son to take over the money management firm he started in 1973. Last month the pair officially started the transition.

The elder Appel, who was a practicing psychoanalyst, founded Signalert Corp. in Great Neck after realizing he enjoyed managing his own money and writing about investing. Since then the firm has grown to manage $260 million for about 500 families.

Marvin Appel had trained as an anesthesiologist, but when he finished his residency in 1996, the New York job market was tight, he says. He'd always seen the family business as an option and decided to join. His father started a new entity, Appel Asset Management, and gave Marvin a group of clients; Gerald was an officer of Marvin's company, giving clients confidence as he taught his son the ins and outs of investing.

"I didn't want to be in a position -- or for him to be in a position where daddy is taking care of his son," Gerald Appel says about starting the second entity. "He was going to be challenged on his own."

A gradual merger

In December they informed their clients they'd be merging the two entities to create Signalert Asset Management Llc. Marvin will manage the day-to-day business in the role of president and chief executive. Gerald will serve as chairman and will be "instrumental" in guiding trading strategies.

"Marvin has been gradually assuming more and more responsibility at the firm," Gerald Appel says, noting that the two companies have shared office space, staff and other resources from the beginning.

Many small-business owners overlook the importance of setting up a succession plan, says Richard Strautman, president of Picus Enterprises, a management-consulting firm in Port Washington. "They don't think about 'What happens if I get hit by a truck tomorrow?' " says Strautman, who advised Marvin Appel on the transition. "This is about passing on what you have spent your life creating."

To set up a smart succession plan, Strautman says, business owners should think through a range of topics: Is a family member or staff member capable of keeping the business running? Are business partners adequately insured? Do clients or customers have a relationship with the successor or will a sudden change come as a shock?

For small-business owners who don't plan properly "there's an infinite number of negative consequences to all stakeholders" -- employees, customers and vendors -- Strautman says.

The Appels' transition requires a lot of attention to legal and regulatory details. As investment advisers, they must be registered with the Securities and Exchange Commission, which has rules specifically governing their industry.

But beyond the technicalities of the merger, the Appels had to seriously think about transferring client trust. With clients relying on them to protect and grow their nest eggs, developing a rapport between Marvin Appel and the clients was key.

New point person

The father-son team has been working to build that relationship since Marvin's early days in the company, but recently they stepped up their efforts. Marvin took over writing the firm's subscription-based investment newsletter and became the point person for prospective new clients.

Both Appels say another advantage to a clear transition plan is that their staff won't have to worry about a change in management.

"I'm 78 years old," Gerald Appel says. "I do not want to leave my staff in a position where, should something happen to me, the structure is not in place." Keeping the business in the family, he says, "is not the same as selling the company to some stranger who fires half the staff."

Although Marvin Appel, 49, expects to be running the firm for the next 20 years, he's already thought about what comes next: His middle child, a daughter, 16, has expressed some interest in the company.