Planning to exit your business is about more than just financials. It is about planning for the life that you and your family want beyond the point of sale.
Whilst an exit marks a significant milestone of success for an entrepreneur, the reality can often represent a loss of identity and community. Rather than financial rewards, most entrepreneurs measure their success by the degree of freedom and potential legacy that their success allows them. However, newfound freedom post-exit can be difficult to adjust to and some entrepreneurs struggle with how best to use it, this period of adjustment can often take time.
Developing a vision for your personal journey and legacy which your wealth can support is key, and the right combination of professional advisers (wealth, legal and tax) can help greatly with this complex and, at times, daunting process. This is especially true when they are prepared to communicate effectively and share ideas.
With that in mind, here are three key considerations to keep in mind.
01. THIS IS A NEW ERA AND EXPERTISE MATTERS
What many people don’t realise is the complexities of managing wealth increase significantly after selling a business: issues such as tax planning and wealth structuring become paramount.
In many cases, you will find yourself needing answers to big questions, such as:
- What is the best way to structure your newfound wealth?
- How much do you need to support your quality of life?
- Are you prepared for any forthcoming tax changes for high income earners?
- Will you use some of your wealth to invest in new ventures?
- Do you want to make charitable donations?
Setting about answering these questions can seem like a daunting process, which is what makes the choice of adviser crucial. Having someone beside you who has a strong understanding of the often protracted process of selling a business, can help you structure your wealth in a way that protects your assets and enhances your lifestyle.
If a company seems to offer you everything and anything in the wealth management space, take the time to really understand how they will work with you. As a successful entrepreneur, rarely will an off-the-shelf solution be the most appropriate fit for you. You should be able to demand more of your wealth manager and ensure a specialised approach that works for you.
Investing this time to find the right fit for you will generally mean stronger working relationships and ultimately better outcomes.
02. EXITING A BUSINESS DOESN’T MEAN GOING IT ALONE
For some entrepreneurs, selling a business can bring on mixed emotions. Once the deal is complete, a new chapter begins and this can be unfamiliar territory compared to what you have been used to.
It does not mean you have to navigate this new period of life on your own. This is where professional advisers – wealth, tax and legal – can help you navigate what can at first seem like a complex and daunting process.
The right cultural fit is essential. If you enjoy the feeling of working in a small or medium-sized business that is nimble on its feet and adopts the latest technology, you may be seeking the same qualities in your wealth manager.
It can be invaluable to partner with an owner-managed wealth manager that appreciates an entrepreneurial business environment, alongside the importance of a highly personalised approach.
Wealth managers need to appreciate the time and energy that entrepreneurs put into growing their businesses, and respect that risk management is key. Staying wealthy is often more important than chasing further upside by running unnecessary levels of risk.
03. WHO SAID ANYTHING ABOUT RETIREMENT?
The stereotype of a business owner in the past was someone who ran the family company until it was time to retire, at which point they handed the reins to the next generation or perhaps they sold parts of the business. Whilst, these entrepreneurs are still very much present in the market, the rise of the ‘serial entrepreneur’, those who sell companies within a few years of being founded and start multiple businesses during their careers mean that your route, post-sale, will be a personal one.
Having sold your business, suddenly you have the ultimate luxury: time. Time to step back and think about what really matters to you – whether it is retirement, starting a new business, or becoming an angel investor. The key is to make sure you’re working with an organisation which understands your competing financial demands and wants, helping you to structure your wealth in way which affords you the ability to move in the direction you want to.