Selling your business and moving on… Now what…?

By , On , In General

Many business owners have discovered that life after the sale of a business is anything but business as usual. The sale of your business is the start of a new chapter in your life. Planning for the changes that happen when you turn over the reins is just as important as finding the right buyer, structuring a good deal, and managing the thousands of details that make for a smooth hand-off.

Whether you are in negotiation now or already completing a sale, it’s time to address how this change in lifestyle will impact your personal and family finances, your long-term wishes, and what you want to do next.

Business owners considering, or who are going through a sale of business transaction – Meet Dustin Serviss and his philosophy (2 Min Video)

Here are four considerations to discuss with your financial advisor if you are planning to sell soon or recently completed a deal:

  1. Your Personal finances

Your business was the engine that produced your annual income. Now, you need to turn the lump-sum of capital from the sale into another engine that works just as hard to produce steady, predictable income for years to come. In the past, you could count on forecasts and past performance to help you estimate your salary and drawings. Now, you need to create an investment plan that recreates your income stream with the right level of risk and reward. If the bulk of your personal wealth was held in the business, this could be new territory and a revised financial plan will need to focus on tax-efficient income generation and long-term wealth preservation.

  1. Family finances

Family members who may have benefited from income splitting or employment in the company may need to adjust their plans for the future. Things can easily get complicated if promises were made about succession or how the proceeds might be shared. Approaching the next phase of your life as a family, and making joint decisions is the ideal way to reduce potential conflicts. A financial advisor can lead that discussion to create an objective, third-party buffer and keep the conversation professional and organized.

  1. Your wishes

A lump-sum of money provides you with a broad range of options to consider about sharing your wealth. Revisiting your Will and Estate Plan is essential as you will need to consider the tax consequences of helping loved ones now versus in the future. Without the business asset to pass on, there may be a role for trusts in your overall plan. A thorough and objective review of your plan will reveal these opportunities.

  1. Your lifestyle

Perhaps the most important question after selling a business is, “What do you want to do now?

It’s critical that your updated financial plan is built to give you every opportunity to travel, volunteer, mentor, or just buy some time off to plan your next move. You probably need to replace some of the insurance coverage, or other benefits, previously provided through the business. And you may have dreams of doing something you’ve put off while you built and managed the company.

So, what’s next?

A confidential conversation with an objective third party can help you coordinate personal and family finances and put a plan in place to help you live the lifestyle you’ve earned.

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