Protecting a Legacy, Planning for the Future

“Having everyone under one roof made it simple and seamless, and even though I’m not their biggest customer, they really spent the time getting to know us and our goals.” – Owner

After a long career in sales, the president and sole owner of a medium-sized manufacturing firm based in the Midwest was ready to enjoy a much-deserved retirement. But first, he had one more thing to sell: his company. He wanted a fair price. But even more, he hoped to retire with peace of mind that his employees — and his family’s finances — were in the right hands. “My business is located in a small town, and we employ dozens of people,” the owner said of his business. “We’re part of the community, so we wanted to make sure our employees were taken care of and the business continued on.”

He knew he’d need help investing the proceeds of the sale to assure his own future, too. He envisioned a retirement spent traveling with his wife, restoring cars, and serving on local nonprofit boards.

He needed a way to fit all these pieces together — while maintaining focus on the day-to- day operations of his company.

“When you own a business, it’s a very emotional decision to transition. But, you’re either going to go out feet first, or you can make sure you have a say in how it works,” he said. “I think it’s a necessary and vital process, but I wanted someone to guide me.” Instead, he got an entire team.

Comprehensive services, full support

After researching other firms, the owner found Hilliard Lyons.

The full-service model meant a dedicated lineup of almost a dozen experienced professionals to help the owner plan his estate and retirement, value his business, and sell it. The team included estate and financial planning professionals, wealth managers, and an experienced investment banking team.

Hilliard Lyons’ capability “before the deal” is among the things that sets it apart. From detailed planning to strategic wealth management, the firm can provide a realistic valuation and determine how it will impact the owner’s financial future.

“Having everyone under one roof made it simple and seamless, and even though I’m not their biggest customer, they really spent the time getting to know us and our goals,” the owner said.

“Everyone I dealt with was very capable, provided clear guidance, and was transparent in their approach.”

‘They really did their homework’

First, Hilliard Lyons worked with the owner and his wife to identify their existing assets and ideal retirement lifestyle. They incorporated the proceeds of the sale of the business into a financial plan, based on the firm’s valuation and expected timeline of the sale. Then, working with the couple’s outside tax and legal advisers, they helped them review their wills and trusts in light of their personal and familial objectives.

Next, Hilliard Lyons visited the facility to see it firsthand. They drafted a detailed summary and, with confidentiality agreements in place, presented it to strategic buyers in the industry and private equity firms.

The result was 20 preliminary offers for the owner and his wife to consider.

Hilliard Lyons believes that multiple offers creates competition, giving the seller choice and driving more favorable terms.

“They really did their homework to know the players in my industry,” the owner said. “They were selective in who they wanted to market my company to, and they didn’t just blanket private equity firms.” In conjunction with the Investment Banking team and an in-depth review at Hilliard’s office of each interested party, the owner narrowed the list to eight for in-person meetings and a video tour of the facility. He joked that it felt like he was dating again: “We met some really good people, and with others, we knew instantly it wasn’t a fit,” he said, with a laugh.

Closing the right deal

Hilliard Lyons’ team approach allowed the owner to run his business as usual throughout the nine-month process. The firm provided a clear list of needed information, along with a roadmap that allowed the owner to “check things off” along the way. It’s crucial that a business continues to run smoothly while up for sale — with increased scrutiny, it isn’t the time for bumps in the road.

“It’s a lengthy, detailed process, but Hilliard Lyons kept it moving along the entire way,” he said. “I realized that if I were trying to do it myself, it would not get done.”

In the end, the owner accepted an offer from the world’s leading manufacturer of equipment in his specific industry. It wasn’t the highest offer, but it was the best fit for his employees and his family. The deal also allowed him to retire sooner — after a one-year period, compared to the five to seven years requested in other offers.

More to do after the deal

Before the sale of their business, almost all of the owners’ wealth was tied up in one asset— their company. So after the deal closed, they had some work to do to diversify into a portfolio of investments that would support their future plans, including their estate plans. Hilliard Lyons brought in relationship managers from Hilliard Lyons Trust Company (HLTC) and its Wealth and Family Office Group. With investment managers and estate planners on board, the relationship managers did a complete financial plan, including “stress testing” different scenarios before settling on one that matched the couple’s risk profile and investment objectives.

The team was able to diversify the sale proceeds pursuant to HLTC’s established investment approach.

The discovery and planning process will continue, with estate planning and gifting strategies to be developed and updated through the years.

A continuum of help

“The team from Hilliard Lyons guided me all the way through, but when it came down to it, the final decision was mine,” the seller said. “Not only did we come to a successful conclusion, but now I’ve got some really good friends at the firm.”

The seller said he’s already recommended Hilliard Lyons to other business owners he knows are nearing retirement: “I’m a big advocate of what they do.”

As the sellers near retirement, they know the company and employees are in good hands, and their community benefits from the continued presence of this robust manufacturing company. Hilliard Lyons was pleased to provide a spectrum of resources needed to navigate today’s complex markets.