I remember selling our business, two juice and coffee bars. It took months—finding a buyer, negotiating terms, answering questions, digging up information, contract changes, explaining it to employees, running the business, fearing the deal would fall through any moment, more questions, landlord complications, another concession, nail biting, and finally, signing closing papers.
After the deal was done, I felt like I’d survived a personal purgatory. Throughout the process, I hadn’t dared think about what came next because I didn’t want to jinx the transaction. I simply focused on keeping it all together, right up to the very end.
For anyone in a similar situation, here’s what happens next:
1) Call your tax advisor
No matter your payout, even if small, the first thing you need to do is to call your CPA to find out what your liabilities are. Uncle Sam gets paid first, so find out what you owe, if anything, set that money aside, and consider it off limits.
2) Stash your cash
Our sale resulted in a modest down payment with promissory notes for more later. For us it was a simple matter of depositing a cashier’s check into our checking account, as these were funds we’d need to live on in the coming months.
But if you walk away from a sale with a considerable sum of money, you’ll have more options. Put your money in the bank (or several). Take your time deciding what to do next, understanding that it may take months.
If yours was a big, public sale, people may come out of the woodwork with offers to help you. Thank them, take their card and be politely noncommittal. If they’re pushy, tell them you’re all tied up in CDs. No matter what the markets are doing or what people say, don’t feel rushed to do anything, even by family.
3) Take a deep breath
For three years we’d poured blood, sweat and tears into this restaurant concept that had been successful on many levels, but not financially. The day after the sale, when I no longer had to worry about broken juicers, absent employees, missing money, payroll taxes and phone calls at all hours over teensy little problems—I felt relieved to be out from under it, grateful we hadn’t gone bankrupt.
Hopefully your experience will be better, especially if you’re walking away with a huge check from a business you spent decades building. While you might be happy about the money, you may feel sad about the employees, memories, and sense of purpose you’ve left behind. You will go through a range of emotions, not unlike the five stages of grief.
Give yourself the time and space to think. Go on a trip. It doesn’t have to be extravagant. We took the kids to Disneyland.
One trip won’t solve everything. I spent a month reflecting on all that we’d done in the business for the last three years—the good, the bad, and the ugly.
We’d come up with an innovative concept, but we put the first store in the wrong location. We’d hired good people and bad people and paid too much rent for not enough traffic. I’d given up time with my kids, missed family events, cashed out part of an IRA, and for what? A masters in business from the school of hard knocks.
Your emotional ride will be different, but rest assured, there will be one. Read about the experience of others, join support groups of like-minded people, get a business coach if necessary. Realize it may take some time to work through, but that’s okay.
5) Educate yourself
If you come away with a large sum of money, you’ll need to figure out how to manage it. Whether you’re new to having wealth or you’ve been saving for decades, take the time to reacquaint yourself with the basics of personal finance.
Everybody has opinions. This advisor says one thing, that advisor says another, your hedge fund friend says you must do X, Y and Z, now, before it’s too late.
Read as much as you can to understand the current investing landscape. Various sources won’t necessarily agree, but you’ll get the benefit of different viewpoints and a sense of what rings true given your own life experience. Then you’ll better know what questions to ask when it comes time to invest.
6) Assess your personal situation
Where are you at right now? How low long do you have left on this planet? What do you want to do with your life? Keep working? Retire? Start a new business?
What’s your family situation? Wife, kids, aging parents? What kind of support do you want to provide, now and in the future? What if you’re single and thinking of getting married? Should you get a prenup?
These are the kinds of questions you need to consider. Take the time to think about them, jot down some answers and brainstorm ideas for the future.
7) Update your financial plan
If you fail to plan, you plan to fail—there’s a lot of truth to that. Find a fee-only Certified Financial Planner to help you formulate a financial plan. They’ll sit down with you to discuss circumstances, look at options, and come up with a plan that makes sense for where you’re at and where you want to go in life.
CFPs are a wonderful resource with extensive knowledge of the many tools available for protecting your wealth. They can also connect you to other trusted professionals: insurance agents, estate attorneys, tax advisors, money managers, etc.
8) Implement your plan
Once you’ve decided your direction, get organized. Put your action items on a calendar, communicate with your family and make it happen. Although the many to-dos may seem daunting and dull, just knock them off one-by-one.
When it’s time to invest, think diversified assets for a resilient portfolio—cash, stocks, bonds, real estate and precious metals. A lot of people advocate for one or the other, but it’s prudent to have some of each.
Decide if you’re going to manage your own investments or get help. If you decide to go DIY, consider having some portion of your wealth managed by professionals as a kind of benchmark.
For example, an acquaintance of mine was a money manager at a tech company with billions in cash. A well-known investment bank managed half the company’s cash, while his team managed the other half in-house. Their job was to match or beat their Wall Street counterparts, a good way to keep everyone on their toes, earning the best rates possible.
9) Hire a good money manager
The stock market is volatile, offering endless opportunity for gain or loss. If you choose to go it alone, good luck. If you choose to leave your fortune in the hands of trading robots with the rest of the masses, good luck with that, too.
But consider a counterpoint for the securities portion of your portfolio. Hire a fiduciary money manager who actively manages funds in your best interest. Specifically, you want someone who monitors your account continuously, who can move you to cash at the first sign of trouble.
Once you’ve sifted through your business sale and gotten your financial house in order, your mind will be freed for more creative pursuits—work, travel, philanthropy, a new business, or whatever it is you decide to do.
And then the game begins anew.
My money is actively managed by a talented, portfolio manager. Each month I share my account statements. If you want to see my investment performance and compare it to your own, join my list or ask to see my account details.
All expressions of opinion reflect the judgment of Diane Cohn (DC) an investment advisor representative at Maxim Partners, LLC (MP), at this date and are subject to change. Information has been obtained from sources considered reliable, but we do not guarantee that the foregoing report is accurate or complete. MP or its affiliates may execute transactions in the securities mentioned in this report, which may not be consistent with the report’s conclusions. Links contained within any text are being provided as a convenience and for informational purposes only; they do not constitute an endorsement or an approval by DC or MP of any products, services or opinions of any third-party. DC and MP bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. Contact the external site for answers to questions regarding its content. This document is intended only for those to whom it may lawfully be submitted. There is no assurance that any of the trends mentioned will continue in the future. Past performance is not indicative of future results.