Blog adapted from MPMA.com | Written by Melissa DeBilzan

Klesk Metal Stamping had been a family-owned business for three generations — enough time to specialize in precision parts that were sent to the moon. But when cousins Bret and Duke Klesk decided to retire in 2022, there wasn’t a fourth generation to carry the torch, so they made the difficult decision to sell the family business. The challenge, of course, was finding a suitable buyer. Hiring skilled machinists was difficult enough, let alone a new owner and CEO. They wanted a buyer who would recognize their company’s worth and carry on their commitment to 45 employees and hundreds of customers. Confidentiality was important as well. “The sale of our family-owned business was like going into uncharted waters for us,” said Bret Klesk. “It was one of the most difficult decisions of our lives.” To create the best possible exit strategy, the Klesks decided to hire professionals who focused solely on business valuation and sales. After interviewing several firms, they selected True North Mergers & Acquisitions, founded by Sunbelt Business Advisors, based on their long-standing success working with manufacturers.

Finding the Best Match

Drawing from a network of more than 20,000 potential buyers, True North personally contacted nearly 500 individuals based on certain criteria and qualifications. Nine months later, the Klesks had narrowed their decision to one prospect: Duco Capital, LLC. Leadership excellence was more important to the Klesk family than industry experience when evaluating potential buyers. A local, veteran owned company, Duco could draw from an extensive network of military veterans who became business leaders, setting it apart from other potential buyers. The word “Duco” is Latin for “I lead.” “There is a growing pool of military veterans who have advanced degrees and decades of experience in business leadership,” said Caleb Schmidt, a partner at Duco Capital and former Navy SEAL. He was deployed to Afghanistan before obtaining his graduate degree from Carlson School of Business and working in corporate strategy and operations.

“We like to pull from this pool of leaders to facilitate transitions for retiring owners,”

Schmidt said.

“We like to pull from this pool of leaders to facilitate transitions for retiring owners,” Schmidt said. Duco purchased Klesk Metal Stamping in April of 2023 and immediately leveraged its network of military veterans-turned-corporate executives. On day one of Duco’s ownership, the shop named a new CEO: Jeff Marone, a West Point graduate with an MBA in finance and entrepreneurial management who brought 25 years of corporate leadership experience. Over the next six months, Duco made other changes that were subtle, yet impactful: a fractional CFO to sharpen accounting, weekly management team meetings to get everyone aligned and on the same page and an upgraded breakroom to make sure everyone had what they needed to enjoy their downtime. Through the transition, Duco managed to retain all 45 of its employees. “Our goal was to keep everyone from the beginning,” said Ryan Alberg, partner at Duco Capital. “Anyone can step into a company and buy machines, but it takes a lot more effort to build culture. Klesk already had a great team and good systems in place. We’ve been building on that foundation and inspiring people to reach their full potential.”

Planning for the Future

More business owners are recognizing the importance of developing a solid exit plan, according to a recent survey conducted by Sunbelt Business Advisors and the Twin Cities Chapter of the Exit Planning Institute. Nearly one-third of Minnesota business owners surveyed stated that exit planning was a top priority, compared to just 6 percent in 2017, the last time the survey was conducted. The pandemic and economic uncertainty likely contributed to more businesses thinking about exit planning. At the same time, the boomer generation reaching retirement has elevated the conversation, which is opening the door for a younger generation of business owners. Although nearly all owners agree that exit planning is important, the study suggested that few are adequately prepared. Less than half of owners have a formal team or plan in place. Many try to find a buyer on their own, which can be a mistake, according to experts. “I’m always surprised when business owners choose not to use professional services to help sell their company,” said Kevin Szozda, Director of Strategic Relations at True North. “We’re talking about their whole life’s work. If they were to sell their home, they would probably use an agent. And yet their business is far more complex and much more valuable.” On average, Szozda said, sellers who work with True North walk away with 15-20 percent more in proceeds than those who sell on their own. The fees are more than covered. True North’s process typically creates multiple offers, maximizing options for business owners. “We focus on getting sellers the highest net proceeds possible,” Szozda said. “Owners tend to focus on price, but ultimately it comes down to what you net in a transaction, so it’s necessary to look at price, terms and taxes. By negotiating the book value versus the fair market value of assets, you may be able to reduce your tax exposure. “It’s also important to determine what is included and excluded from the sale price. A seller may need to include a certain level of net working capital during negotiations, which is like gas in the tank for new buyers — something many owners don’t consider.” For the Klesk cousins, the relational side of the sale was just as important as the transactional side. In addition to receiving the full asking price, they found buyers who were as committed to people, customer service and quality as their family had been since 1963. “True North made this process much easier and more comfortable than we expected,” said Duke Klesk. “We could not have asked for a smoother transition taking us into the next stage of our journey.”

About True North Mergers & Acquisitions

For over 20 years True North has been helping owners across the Midwest achieve smooth  transitions for themselves and their employees. Many of the firm’s consultants have built and sold successful companies of their own. Based in Minneapolis, the firm prides itself on understanding transition planning needs that are unique to family and founder-owned companies. Having managed the sales process for hundreds of companies, it has become one of the fastest growing firms in the nation.