Key Takeaways
- Without proper planning, the liquidity from a business sale can lead to countless new challenges, such as tax liabilities, family conflicts and the erosion of wealth.
- A family office approach can help ensure the various aspects of your sale and financial life are coordinated and aligned with your long-term goals.
- A dedicated family office team can support you during the exit process and long into the future.
For many successful business owners, the decision to exit is a difficult one that represents the culmination of decades of hard work and dedication. The exit itself can be an overwhelming and emotionally charged event, yet it is only the beginning. Without proper planning, the liquidity from a business sale can result in a whole new set of challenges, such as significant tax liabilities, family conflicts, investment mistakes and the erosion of the very legacy you have worked so hard to build.
Fortunately, a family office approach can help coordinate the various aspects of your sale and support your financial needs long after the transition. Your family office team will coordinate the financial, legal, operational and emotional elements of your business exit to help ensure the transition strengthens, rather than strains, your family’s generational wealth building capabilities.
The Benefits of a Family Office Approach
Business owners with family office support often achieve smoother transitions and better outcomes, because decisions are made through a coordinated, neutral lens rather than in a vacuum. A family office approach can help optimize your transition at each stage.
During the exit
Family office advisors take a comprehensive approach to exit planning to help ensure all decisions are coordinated and help you achieve your long-term financial and business objectives.
- Team coordination –Your family office team will oversee the advisors guiding the transaction, including investment bankers, tax attorneys, estate planning attorneys, accountants, etc. Having a central source for questions and guidance can ensure the strategies employed by each of these advisors are efficiently aligned with your best interests.
- Tax and estate optimization – A family office approach can integrate sophisticated planning strategies to help minimize your tax exposure while helping to maximize the value of your financial legacy. For example, your team may decide to implement charitable remainder trusts, opportunity zone investments, strategic charitable giving, etc.
- Liquidity and cash flow planning – A family office team can help you establish immediate liquidity plans that balance your short-term needs with the potential for long-term growth. Doing so can help you avoid the pitfalls of making rushed investment decisions, taking on more tax exposure than necessary or investing in an overly conservative portfolio.
Post-exit
Following your business transition, your family office team can support you with the following:
- Diversified portfolio construction –For many business owners, a business sale represents a significant opportunity to be free of concentrated risk. Your family office team can help ensure your assets are invested in a diversified portfolio that aligns with your goals, risk tolerance, time horizon, legacy wishes, etc.
- Family governance and education –The odds of multi-generational wealth success greatly improve with a structured approach to preparing family members. Your family office team can help implement financial literacy training, teach leadership skills and create a sense of shared purpose.
- Charitable giving –Your family office team can support your philanthropic goals by implementing private foundations, donor-advised funds, impact portfolios, charitable remainder trusts and more.
- Ongoing administration –Your family office team can help coordinate ongoing lifestyle and administrative functions, such as accounting and bill pay, travel, concierge support and more.
Is a Family Office Approach Right for You?
A family office approach is best suited to business owners who anticipate generating significant liquidity through their sale — typically more than $20 million. This approach is most appropriate for business owners who seek:
- Integrated, long-term advice that continues beyond the transition process
- Help navigating challenging family dynamics and unique circumstances
- Support managing other financial considerations, such as tax planning, charitable giving, hedging and monetization, trust and estate planning, healthcare planning, etc.
If you could use some help determining whether a family office approach makes sense for your business transition, we would love to have a conversation. Please schedule a call with a member of our team.
