Carson Wealth Management
For 37 years, Mike Kabarec has been assisting investors with managing their finances. And while he may want to slow down some, he has no plans of stepping aside from the business he created. In fact, he talks enthusiastically about expanding and adding financial advisors.
It’s clear from a conversation with Kabarec, a senior wealth advisor at Carson Wealth Palatine in Chicago, that he loves what he does and seems to cherish these days at work, more so than in the past, and understandably so. But in the years after the financial crisis, Kabarec, 70, was traveling weekly to Minnesota to attend to a sour deal after selling his firm in 2008.
These days, however, he is back to taking care of clients and getting in a round of golf as often as he can.
“We have come from the dark of night to the morning of sunshine,” says the soft-spoken Kabarec, referring to a period of turbulence with the sale of his former firm, Kabarec Financial Advisors Ltd., in October 2008 to the principals of Minnetonka, Minn.-based Mesa Holdings Inc. and Mesa Financial Advisors Inc.
Kabarec’s relationship with his firm’s parent consolidator quickly became contentious. He was the sole shareholder in Kabarec Financial when he sold it. He says he perceived the period leading up to the sale to be a sincere courtship. He sold 100% of the stock in his firm in the fall of 2008 and got roughly $2 million for the deal. “We did our due diligence. Everything was hunky-dory … we concluded it was going to be a good fit,” Kabarec says, explaining that the agreement called for him and his partners to continue running the firm while Mesa took over all the back-end operations.
But the deal soon began to fall apart. Mesa had fallen into financial difficulty, and the first payment was missed. “We took back all our operations,” he recalls.
Even bigger problems arose when Mesa failed, since his stock was cross-collateralized several times over and people had legitimate claims against it. It was the fall of 2008 and even highly rated giant companies like General Electric were finding it impossible to access the debt markets.
It took six years of wrangling, but Kabarec finally signed off in federal court in Minneapolis in 2014 to get his business back.
“Between legal fees, payments to several individuals and plenty of red wine, it cost me $1 million to get the business back,” Kabarec says, noting that his only payment was $350,000. The rest went to legal fees and other expenses.