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What's Their Next Chapter?

lisa-and-brentLisa and Brent Dillard

In Transition

For nearly 40 years, Brent has been at the helm of the family’s privately-owned forklift supply company, while Lisa has done her own heavy lifting as a homemaker raising children and managing the household finances. While Brent had no plans to retire, an unanticipated medical condition has accelerated his timeline, resulting in the need to quickly transition the business.

Brent and Lisa suddenly found themselves faced with numerous challenges. Their youngest son, Dave, the only one of their five children interested in the family business, joined the company three years ago after receiving his business degree. While they had no plans to sell the business, they needed a strategy to take money out of the company to provide a steady stream of income once Brent retired. They also knew they had a serious leadership issue: while Brent was grooming Dave to run the business, Dave wasn’t yet experienced enough to step into his father’s shoes in a leadership role. They were also concerned about making sure their legacy was shared in an equitable manner among all five of their children.

Seeking objective advice and guidance, the couple shared their concerns with Planned Financial Services. We worked with them to develop a comprehensive strategy to address each of their concerns.

We suggested that Brent appoint a Board of Advisors to provide guidance, assist with decision-making, and continue to groom Dave to take over as CEO at a specific point in the future. We showed Brent and Lisa how they could take the money they needed for daily living expenses out of the company by recapitalizing through an ESOP, which also vested key employees to help manage towards the company’s vision, mission, and values.

To protect their legacy for all five children, which was largely tied up in the business, we demonstrated how issuing preferred stock with voting rights to Brent, Lisa, and Dave, and a second class of stock with no voting rights to the remaining four children (who would not be provided a controlling interest in the business), may help them access the money they needed while ensuring the business would remain solvent.

Case studies are provided for illustrative purposes only and are not intended as financial or investment advice. The names used do not represent actual clients. To determine which investment or financial strategies may be appropriate for you, consult your financial advisor, CPA, or attorney.

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