Your First Big Liquidity Event – Now What?

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Your First Big Liquidity Event – Now What?

Wealth Management  |  March 15, 2018  |  
Ryan Halls

Congratulations! After years of building your company, of working impossible hours and putting every penny back into the business, you finally have an opportunity to recognize some gain for all your efforts – whether through an IPO or a strategic sale to another company. You’re about to receive a large sum of money, maybe more than you thought possible.

What now?

A liquidity event gives you an unparalleled opportunity to take charge of your financial future. Handled carefully, it can ensure financial security for you and your family, while also giving you the wherewithal to plan a legacy, give to charity or even launch another business. But you will need to plan to make the most of this event. Work with us to help you navigate issues including:

Understand your tax liability

How much you pay in taxes, now and over time, will depend on many factors, including whether you are paid in cash or stock in an acquiring company, whether you receive cash all at once, in a lump sum, or through a series of installments. Work with us to prepare and plan for minimizing your future tax burden.

Diversify your investments        

If you’re like most business owners, your wealth has always been concentrated in the single company you’ve devoted your life to. Now that you’ve converted some of your ownership interest to cash, you’ll have the opportunity to build a more broadly diversified portfolio. Talk to us about your needs for income, capital appreciation and risk management, and let us construct a portfolio that can achieve your objectives without taking on an inappropriate amount of risk. Now that you have a larger portfolio, you may be able to invest in specialized assets like private equity, venture capital, and other alternatives, which have been historically provided excellent diversification potential, since they move in different cycles from publicly traded assets.

Plan for your legacy

A liquidity event may be the first step in creating your legacy to future generations, but it doesn’t stop there. Talk to us about gifting and trust strategies that can maximize the value of your loved ones’ inheritance, while keeping estate and gift taxes to a minimum.

Structure your philanthropic commitments

Now is the time to think seriously about how you’ll support the charities that are important to you – whether through a planned gift included in your estate, a charitable lead or remainder trust or by establishing your own family foundation or endowment. We can help you develop a strategy for charitable giving that focuses your efforts for higher impact, while also achieving your wealth planning and tax management objectives.                                                              

Decide what to do next

The liquidity you receive from the sale or public offering of your business can provide capital to launch the next phase of your life, whether you want to retire, devote more time to volunteering or start another company. Talk to us about how you’re financial and life goals have changed as a result of your liquidity event, and develop a plan for achieving your objectives in the years ahead.

The wealth planning issues surrounding liquidity events are complex and highly personal, so any strategy should reflect your unique priorities, preferences and constraints. We can help you develop a plan for meeting your goals, while connecting you to other experts, as needed, to provide technical expertise and insight. For more information about how we may be able to help, contact us at (512) 220-2046.


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