On a crisp Wednesday morning in late May, Midwest Mike fires up his John Deere zero-turn mower to tend his two acres before heading out to the lake with his brother-in-law. Mike grew up in Central Indiana. His older brother stayed on the farm, freeing Mike to leave home and attend Purdue University in Lafayette, where he met his wife of 47 years. After studying engineering, Mike landed a job at Otis Elevator in Bloomington, Indiana. Years later, as Otis prepared to close its doors, Mike launched his own company.
Over time, Mike’s Manufacturing grew to 95 employees, shipping parts to three of the industry’s biggest names. By the time he turned 55, private equity started calling, and they didn’t stop. The pitch was always some version of “you’ve earned this.”
But Mike couldn’t pull the trigger. He’d lie awake thinking about Dave, who had been his right-hand man for more than fifteen years, about Linda in accounting, whose son he’d hired out of Ivy Tech. He knew what might happen if the bottom line was to maximize profits. He wanted an exit plan. The payout sounded really nice, but it wasn’t just about the money. What would millions be worth if he couldn’t tailgate with these folks at IU football games?
Finally, he decided to meet with a financial advisor, half expecting to be talked into the deal. Instead, the advisor printed a document and said, “Take five minutes with it.”
It was a Business Succession Planning Assessment: 10 true-or-false statements that sort owners into one of four exit paths based on what they actually want, rather than a broker’s pitch. The quiz assesses whether you want to walk away clean and let an outsider take the wheel, transition to family or key employees, die in the office, or take a payout in five to ten years. The last indicates an Employee Stock Ownership Plan (ESOP) for those companies with at least 25 employees.
Mike answered “true” to four out of the ten questions (needing liquidity but not all at once, sitting in the top bracket, wanting his team to share in what came next, viewing the company as his legacy). When his advisor gave him the results, he looked up from the page and asked, “So what does that mean?”
John explained, “ESOP is a qualified retirement plan; basically, you sell the company to the employees.” John then described how the ESOP would hold shares of a company on behalf of its employees. It would create short-term liquidity with substantial tax advantages if he defers capital gains on the sale by reinvesting the proceeds into a diversified portfolio of qualifying U.S. securities. The ESOP would allow him to keep the jobs in Bloomington and hand the company over to the welders, engineers, and shipping clerks. Mike would stay with them for several years to help with the transition, then retire in his early sixties. He’ll be the hero who saved jobs!
Mike sold his company at 57 and stayed on for five more years. Now Mike’s Dodge Ram is 20 years old; it was the last vehicle the company bought him. Despite having over $6 million in investable assets, his neighbors would never guess his financial status. Whenever he wants to spend more than $10,000, he calls his advisor. The new girl, Halley, is so sweet. She always takes a message for John, and he always gets a call back. Just that comforting reassurance is all he needed to hear.
“Remember, you could spend twice as much as you spend now and still be fine, so don’t worry.” John reminds him. “You can spend it on trucks, boats, planes, give some away, you can do whatever you want with it.” His advisor, John, reassures him.
So on this late-spring day, Mike is grateful for the fueled-up 14-foot Smoker Craft fishing boat, practical and reliable. He enjoys God’s goodness, rocking gently on Lake Monroe, with two rods sitting in holders, fishing for crappie, beer, and sandwiches in the cooler. Between casts, he and his brother-in-law reminisce about the old days and catch up on the grandkids. Time moves more slowly out on the water, where he feels relaxed in nature. He’s got it made.
If you’re a business owner with succession on your mind, the same ten-question assessment John handed to Mike is the easiest place to start. Schedule an intro call, and we can send it to you. For over two decades, the advisors at Hurlow Wealth Management Group have helped Midwest Millionaires find clarity, make decisions with confidence, and feel comfort in retirement. Call 866-333-4726 or Click Here to schedule a complementary consultation today.
