family can force an immediate transition and one not well-exe- cuted. Also because you don’t have anything else to do, don’t have any qualified children or employees to sell to, or can’t find a buyer are not good reasons to delay developing a plan. “It’s vital for future owners to have a designated buyout agree- ment should anything change during and after the transition. On that note, the parent has the right to stay involved, but needs to begin to step back their involvement as the transi- tion moves forward.
“Also, it is important to have
Y-Yard Auto & Truck Inc. celebrated 45 years in their family business. Here they received an award for Member of the Month from their local Cham- ber of Commerce. Pictured are (l to r) Kelly Roepke, President, Mike Nolan, Chairman of Board, and Erin Swingler, Vice President.
the business and property appraised to determine its real value. The value should be based on the current profits and consider the potential in the future. It’s important to determine a fair evaluation of the busi- ness and set your heirs up for success. If the price is unrealistic, it will be impossible for them to keep the business afloat. The retiree should not expect his income and benefits from the business to go unchanged as he exits.” Wright offers the following advice regarding family transition of business:
• Establish if you have qualified and interested chil- dren who can run the business. If yes, proceed with a family transition. If you have interested but not quali- fied children, find other managers who can assist and help your children gain the experience necessary. • Take a business deal approach – keep your emo- tions out of it.
• If no family members are interested, key employ- ees can be excellent candidates to transition the busi- ness through an Employee Purchase Plan. • Develop an estate plan with your financial advisors to avoid higher taxes.
• If no interested family or employees exist, just sell it to an outside investor. It’s not worth the effort to please everyone just to retire. “Remember it’s important to plan for a good tran- sition now before you are a faced with circumstances that necessitate a transition,” said Wright. “Face the challenges head on and develop a good plan. Don’t ignore it, that can be disastrous in the end.”
Y-Yard’s Transition Takes Time The story of sisters Kelly Roepke and Erin Swingler, Y-
Yard Auto & Truck in Effingham, IL, is an example of
a successful transition from one family member to the next gener- ation that is currently underway. Two of four daughters, Kelly and her younger sister, Erin, took over the reins from their father, Mike Nolan, after a health scare. “In November of 2007, my father experienced a mini-stroke,” said Roepke. “For several days we weren’t sure what the problem was. The situation was very scary, enough to serve as a warning sig- nal to my dad to slow down and start thinking about the future. That was a big turning point in his estate planning and the next stage at the Y-Yard.
“The following New Year’s Eve, I remember him calling and asking if I was busy. I mean, who is busy on New Year’s Eve, really? He said he wanted to meet both Erin and I, so we went over to his house that afternoon and he told us that he wanted to start slow- ing down. He was resigning as President of the com- pany and asked if I would take his position, with Erin residing as Vice President. We had all kinds of emo- tions. Excited, scared, nervous, but we proudly accept- ed. He had been grooming us for years for this.” Even though the transition seemed rather sudden, Roepke’s father had indeed been preparing them. Mike and Kathy Nolan purchased the business in 1970. Roepke and her sisters grew up playing in the business while her parents worked. They soon started working there, too, in the maintenance department by mowing grass, painting fences and riding at a young age with their dad to auctions. The reward for their hard earned labor is one most children can appreciate – Dairy Queen ice cream!
Roepke says that before they turned 16, all of the girls had to be able to pass their father’s dismantling test, which involved changing their own wheel and tire in case they were stranded by the side of the road. Most of the sisters worked at Y-Yard part-time during their high school and college years, that included haul- ing cars from auctions during college breaks. “We were all encouraged to get a college education and IF we wanted to work at the Y-Yard, we needed to bring something to the table,” said Roepke. “It was never forced; it was never implied that this is what we would do.
“After graduating and teaching first grade for three years, I decided to take a one year leave of absence to assist the business while my dad had extensive back
September-October 2015 | Automotive Recycling 33
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