Meador Chrysler Dodge Jeep RAM had smooth running operation.
“The store basically ran itself,” said former owner Ted Hill at last year’s Dallas Smart Business Dealmakers Conference.
When the dealership’s incredible general manager experienced a health issue that would have him out for a long period of time, the family no longer enjoyed the work and decided they didn’t want to train a new person to handle all of this responsibilities. So, a few years ago, they chose instead to sell. However, doing that meant dealing with the many demands for information with possibly the most important internal person unavailable to answer questions. That made the next steps challenging.
Hill, however, knew the business. He’d worked in every department while the rest of the family had come in at a very high level, and “didn't know a lot of how the sausage was made.”
Creating additional challenges, two weeks before the sale, the new people came in and replaced PCs, as well as the dealership management system.
“That was total chaos,” Hill says. “Sometime during that two weeks, there was a letter from the IRS that they were auditing our 401(k) plan for 2021 and 2022. That letter didn't get circulated, and so Laura and I went over to a warehouse with 2,000 legal-sized paper boxes looking for employee files because the new systems hadn't come online yet. And so we spent the last year with Raymond at the IRS. He's good guy. I think he's coming over for Christmas. So, in some ways, you expect the stress when you're in the business. We thought it was going to stop. And for my brother-in-law, it did, because he moved his family to Spain right after the sale. But for my wife and I, we're still cleaning up empty beer bottles around the house, if you will.”
Identifying buyers was fairly easy as they had excellent contacts with other dealers. And they were lucky, he says, because there was a lot of money on the street that was looking to invest.
“We might have gotten more if we had done more and polished the story,” he says.
Still, he says, they got more than enough money to live on from the sale. So, the question became, what do they want to do with the excess? The dealership was making good money for the family, so they didn't do any after-sale or life planning. When the decision to sell was made, they started discussing for the first time what it might be like to have more money than they needed.
“And we'd never let ourselves think about that before,” he says. “So, that was a whole personal journey.”
Fortunately, they had a chance to talk to people of similar resources who were in a situation. They met with a lot of people, and had a small breakout group with six or seven couples to talk about what money meant and what they want to do with it and what their values were. The biggest fear that they and others shared was raising spoiled kids.
“Most of us, our parents said, ‘We can't afford it. Get out.’ How does it change when they know you can afford it, and their friends know you can afford it,” Hill says. “So, there was a lot of discussion about how much you want this money to change your life, and what parts.”
Another issue was philanthropy. While they tried to give every year, they never had the resources that they had post-sale.
“2022 was the right year to make a big donation for the tax savings,” he says. “We'd gone through the sale. It was into December. I didn't want to just write checks to the same people that we did last year.”
His adviser told them about setting up a donor advisory fund.
“We were able to put quite a bit of money into that,” Hill says. “It's sitting there — what's left of it. We got the tax write off that year. But what's been interesting is, since we've sold the store, we've gotten more involved in local projects, and we found out about needs that we didn't know existed a year ago. So, rather than mailing to a large organization, it's been really nice to keep the money at home.”
However, if they had met with an adviser six or seven years before the sale, he says they could have planed to do things like stock transfers at a lower price or otherwise taken advantage of a lot more savings. Still, having an adviser helped.
“But, even on the accelerated timeline, it was so helpful because you can't talk to your friends and family about, ‘I'm about to get a big pile of money, and I'm worried about it.’ Or there's problems,” he says. “So, having somebody to talk to that's been through this that does it all the time [was a big help].”
The other thing he learned was that even when it’s over, it’s not over.
“The sale may not be over when you get the big check,” Hill says. “You can get notice of lawsuits from ex employees that, they may be frivolous, but you still have to respond to them. And again, everybody's gone. There's nobody to help you out. So, prepare for that after the sale.”
