Situation

Robin Van Zeeland, the president of family-owned Van Zeeland Manufacturing, was looking to transition his business to his adult children. Because two of his children worked in the business and one did not, how to make the transition fair to all three — while keeping the business primed for future success — was one of the biggest questions that needed answering. How Robin could set himself up for retirement was another.

Having engaged Wipfli to perform a valuation of the business in 2014 for shareholder planning purposes, Robin knew the Wipfli team was up to the task.

Strategy

Wipfli’s first step was to update the previous valuation to gain an accurate picture of what Van Zeeland Manufacturing was worth. That let the team outline options allowing the two children involved in the business to buy into it and what it would mean for the business’s future cash flows.

By performing projections and going through options, Wipfli developed a plan to not only enable a tax-efficient transition but also set Robin up for retirement success.

Because Van Zeeland Manufacturing had zero debt, Robin could take cash out of the business and invest it elsewhere. Doing this would diversify his assets, while also lowering the value of the company and thus making the transition to his children more tax efficient. Robin could then gift a portion of the business to his children and sell the remainder to them while knowing that the business would stay financially stable during the transition.

A fair transition that kept the peace was also a big focus. Wipfli took into account the goals of the three children, as well as Robin’s retirement goals, and came to a solution that not only financially benefited each of Robin’s three children equally but also made sure the company could handle the structure of the buyout. 

Results

With a well-thought-out plan in place, Robin feels comfortable with his upcoming retirement. And with two of his children now leaders in and part owners of the business, he has been able to transition management decisions and take more time off. 

He also has peace of mind knowing he has a long-term buyout plan that keeps his company on a successful growth path. Lastly, he knows the buyout plan is structured to be tax efficient and minimize transition difficulties. Both he and his children are set up for future success, just like Van Zeeland Manufacturing as a whole.

Impressed by how well the transition planning went, Van Zeeland Manufacturing has since engaged Wipfli for job costing workshops, operational assessments and accounting and tax work.

Client profile

Relationships are the foundation of this family-owned business located in Little Chute, Wisconsin. Van Zeeland Manufacturing produces precision, made-to-order power transmission products. Guided by their core values, they offer exceptional customer service and 99% on-time delivery. They continually invest in state-of-the-art equipment and technology and provide their employees with the tools, training and resources they need to do quality work.

Relationship Executive(s)

Lisa M. Cribben, CPA/ABV, ASA, CMA , Partner, Business Valuation and Transaction Support Services