Every liquidity event is different, says Steve Kirk, Executive in Residence at Cleveland State University, former COO at Lubrizol (where he served when the company was acquired by Warren Buffett’s Berkshire Hathaway in 2011) and former Board Chair at Valvoline. So when one happens, what’s next for the business leader involved?
“It depends an awful lot on age,” Kirk said at last year’s Cleveland Smart Business Dealmakers Conference. “In my case, when Warren Buffet bought the company, I was already 62 years old. I was so-called retirement age. Had I been 40 years old, I would have made a different decision.”
The same thing holds true in in private equity sales. Another variable, one that he says he’s seen as a board member for several private equity firms, is the family involvement in the business. Without family employed in the business, he says it’s easy to sell — it can provide liquidity while taking away the concern. But if family is involved, it becomes a little bit more complicated.
“In my PE experience, a number of them have family implications in the business, and I think it's important for the private equity firm that typically buys these companies to be very aware of that and make sure that the family thrives in this situation,” he says.
As he was preparing to transition from executive rolls into his next chapter, Kirk says he was helped by really good advice from a mentor of his — a former boss.
“He said, ‘Don't just retire. Always retire to something,” Kirk says. “’Have a game plan.’”
That boss, he says, after his retirement, devoted virtually every morning to Habitat for Humanity building houses. Kirk had several months to plan when Warren bought the company. He was very active at Cleveland State and he talked with the Dean of the Business School, who created a role for Kirk in the business school, giving him the title of Executive in Residence, which he still holds.
“Whatever it is that you do, whatever you retire to, should be something that you're passionate about, something that makes you feel good,” he says. “In my case, it's all for fun. It has nothing to do with money.”
However, money, and wealth planning, had been on his mind for some time. He says some 20 years ago, he worked with a wealth management firm on taxes, managing sources of income and making sure that he’s not putting himself into tax jeopardies. That early relationship won his confidence, so that when he did have his big liquidity event, he was totally confident that the firm would do a better job in managing those funds than he would.
“I don't want to do that,” Kirk says. “We'll let the pros do it. And they've done a superb job.”
