Dan Gimbel was featured in a recent Bloomberg article. View the article on Bloomberg’s site here.

The Mills family has for decades stayed out of the spotlight, avoiding flashy purchases and society pages while quietly running one of the largest medical-supply companies in the U.S.

That’s all about to change. In the coming days, the Chicago-based clan stands to receive a $28.7 billion windfall, before taxes. It may be the largest liquidity event for a single family, with the proceeds spread among fewer than 30 people and a small group of trusted executives.

The Millses agreed this spring to sell a 79% stake in Medline Industries Inc., whose origins trace to Chicago’s turn-of-the-century slaughter yards, to a consortium of private equity firms in a transaction that valued the company at about $32 billion.

The deal, the largest leveraged buyout since the 2008 financial crisis, is vindication for a family that reclaimed the business twice within the past 60 years, both times convinced they could make it better and more valuable.

“Making health care run better has been our focus for decades,” Chief Executive Officer Charlie Mills said in a statement when the deal was announced in June. The investment from Blackstone Inc., Carlyle Group Inc. and Hellman & Friedman “will accelerate that strategy,” he said. Goldman Sachs Group Inc. and Byron Trott’s BDT Capital Partners advised Medline on the sale.

As the Mills family weighs what to do with an enormous pile of cash, Medline’s managers, old and new, are charged with steering a suddenly debt-laden business through an industry besieged by supply issues without the tailwinds of a raging pandemic.

Investors don’t seem too concerned. September’s offering of more than $14 billion in junk bonds and leveraged loans to finance the deal was met with enthusiasm. The company also raised an additional $2.1 billion of commercial mortgage bonds.

In Medline’s favor, the family executives — CEO Charlie, his cousin Andy Mills and their in-law, Jim Abrams — will remain in their roles and the family will keep a significant stake. The Millses are rolling $3.5 billion of their equity into the business, allowing them to retain 21% of Medline, according to bond documents seen by Bloomberg.

For investors, the continuity is appealing. Family owners with a legacy to protect and institutional knowledge might balance the impulses of private equity owners to load up on more debt and go for short-term profits.

Yet that balance can tip over into tension when it comes time for buyout firms’ exit, according to Patrick Finnegan, an analyst at Fitch Ratings.

Medline has “operated for decades as a private firm and they’ve enjoyed the benefits of private ownership,” Finnegan said. “Now there are third-party owners that have very material expectations. The two parties need to agree on priorities, resources and capabilities to execute strategies, and do that in a manner that’s going to satisfy all sides. You have the risk of dysfunctional relationships.”

The deal means the Millses are worth about $26.7 billion, after taxes, according to the Bloomberg Billionaires Index, catapulting them into the uppermost ranks of the world’s richest families. A Medline spokeswoman declined to comment on the family’s personal financial matters.

It’s an enormous influx of cash for a family whose fortune has been tied to a private company for generations, and must suddenly figure how and where to invest billions in a heated bull market.

Oftentimes a big sale marks an identity shock for longtime family business owners, according to Dan Gimbel, principal at NEPC Private Wealth.

“All of a sudden they’re in a new business — the asset-management business,” he said, speaking generally.

Gimbel counsels sellers to understand how cash will “cascade” post-transaction, funneling to pay tax obligations, filling charitable foundation coffers and, lastly, flowing to the investment portfolio.

Even when offers are irresistibly high — as is the current norm — deliberating over selling can cause friction, Gimbel said. In an interview with the Executives’ Club of Chicago in July, Charlie Mills likened appeasing various family members as “being married to a lot of different people.”

Cash Out

Originally, the Millses planned to sell just a modest piece of Medline, so family members not involved in running the business could cash out, according to a person familiar with the talks, who asked not to be identified discussing financial matters. However, the process led family managers to realize a bigger sale could bolster the company’s growth while allowing them to keep leadership roles and a sizable stake.

President Joe Biden’s plan to boost the capital gains tax on the wealthiest also played a role, Bloomberg reported in June. Had Biden’s proposal to treat capital gains as ordinary income become law, the family would’ve saved more than $4.5 billion by selling this year. The plan ended up being dropped.