Selling your business can be a life-changing event. For years, your focus has been growing your company, spotting opportunities, taking risks, and overcoming challenges.
Post-business planning is essential
Once you’re no longer interacting with the suppliers, customers, employees, even rivals, who formed your social network, your sense of identity can suddenly change. The sale can feel like “the beginning of the end”.
Or, if you’re emotionally and financially prepared, it can feel like “the end of the beginning”. Exiting successfully is just the start of the rest of your life. That’s why creating your post-business plan is just as important as your business plan.
There are so many questions to answer: Do you want to retire immediately? Do you have sufficient funds to do so? Perhaps you’d prefer to become a serial entrepreneur or business angel? Do you have debts or a mortgage that you’d like to pay off? Are there charities or good causes that could benefit from your good fortune and the fruits of your business acumen? Is this the time to set aside some funds for your children or grandchildren?
Through the sale of your company, you’re left with tangible evidence of your success and good judgement. So, perhaps it’s counter-intuitive that many entrepreneurs and business owners feel vulnerable making these decisions, lacking in their usual confidence as they adjust to a large windfall and sudden lifestyle change.
Expert advice can help avoid disputes
In such circumstances, the services and guidance of a trusted adviser can be invaluable, steering you through the upheaval of this new wealth and status. They will help ensure that your money works for you, rather than against you, and bring an unbiased viewpoint on each issue.
Passing on wealth, in particular, can be a highly emotive topic.
Will children or grandchildren be better off in life if they have to build their own futures? Should your wealth skip a generation? Who gets your money if not your immediate family?
When you’ve built your own wealth from the ground up, you may take the view that your children should make their own success rather than being given a helping hand.
Today, though, the advantages enjoyed by the baby boomer generation – affordable property prices, jobs for life and generous pensions – are long gone. Industry research shows as many as one in five are relying on an inheritance to get on the property ladder.
You may have children who are struggling, but you may have others who are financially adept and independent. Should all your children be treated equally? When is the best time to gift money, if at all? How can you do it tax-efficiently?
These questions don’t have easy answers, and when it comes to deciding how to transfer wealth across generations there’s no magic formula.
To avoid disputes and conflict, a neutral perspective is vital. Getting professional advice can help you to see the facts of the matter, defuse an emotionally charged situation, and help you make the decision that’s right for you and your family, objectively.
The information contained in this article does not constitute a personal recommendation and the investment or investment services referred to may not be suitable for all investors. Any opinion or estimate expressed in this publication is Investec Wealth & Investment’s current opinion as of the date of this article and is subject to change without notice. The value of investments and any income from them is not guaranteed and may go down as well as up; you may get back less than the amount invested. Past performance is not an indication of future performance.
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