More than 200 Massachusetts companies have been acquired so far this year. Almost all were privately held. When you are acquired, it’s not just a life-changing liquidity event, it’s validation of your business model and a hard-earned reward for your ideas and long hours. In the big deal, you’ll receive cash, stock and/or incentives to continue working. Then what? Based on my 30 years working with fortunate business sellers, here are three capital R’s to help you get the right kind of guidance from the right kind of advisor.
If you already use a discretionary investment advisor, now is a good time to revisit why you chose that person and whether they are a good fit going forward. Perhaps you are now outside their range of experience and expertise. Or their fees no longer make sense given the size of your account.
If you have never used a discretionary investment manager, now may be the time. As you probably found in building your business, specialized expertise can make all the difference. Think about a $1m portfolio, then $10m, then $100m. At what level do you stop doing it yourself? At what point is professional help a must? Only you know.
Go shopping and compare investment advisors. Ask the same 6 Questions of all candidates and evaluate answers. The 6 questions will quickly reveal real and important differences between the brand name broker-dealer types like Merrill, Goldman or UBS and registered investment advisors like Osbon Capital. Based on your takeover publicity, you’ll probably get many unsolicited offers to meet. Take a few meetings, for fun and education.
Now is the time to assemble, direct and coordinate your wealth trinity – investment advisor, tax expert, and trust expert. Maybe an insurance provider is called for. Consider these steps:
- Plan for the future you want, including tax impact – how much do I pay for things and services, and why?
- Update wills, perhaps create trusts
- Revisit titling of accounts, individual, joint, powers of attorney, beneficiaries, IRAs, 401ks, HSAs, and so on. Now is the time to plan for spouses, companions, family members, charities, and you
- Transfer risk through insurance planning until you have all the money you need and want
Keep it simple
It’s easy to be overwhelmed by the many changes in your business and personal life triggered by an acquisition, not the least of which being the sudden appearance of liquid money where once there was just a piece of paper and anticipation. I’d add another R at this point: Relax. You have plenty of time to figure it all out if you listen to yourself, listen to others and use your best judgment. That’s how you got here in the first place.
PS: Here are three traps to avoid as you put your plans in place:
- Don’t overspend — avoid $10,000 solutions for $100 problems.
- Don’t over-plan — don’t try to fix everything at once, for forever!
- Don’t over-control — trust your family and team; don’t try to stay in charge from your grave.
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