When You Are Acquired: the Three R’s

Print Friendly

OSBON_017More than 20 Boston area 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 of experience working with fortunate business sellers, here are three capital R’s to guide you.

Review
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.MW-BE153_advice_20130614173008_MG

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 $1m, then $10m, then $100m.  At what level do you stop doing it yourself, or doing it haphazardly?  Only you know.

Repeat
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 (Merrill, Goldman, 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.

Refresh
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, but most of that can be done low cost via the internet these days. Consider these steps:

  • Plan for the future you want, including tax impact – how much do I pay 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 ($10,000 solutions for $100 problems)
Don’t over-plan (I’ll fix it now, for forever!)
Don’t over-control (I will still be in charge from beyond my grave)

John Osbon – josbon@osboncapital.com


This article may include forward-looking statements. All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.

Nothing in this article is intended to be or should be construed as individualized investment advice. All content is of a general nature. Individual investors should consult their investment adviser, accountant, and/or attorney for specifically tailored advice.

Any references to third-party data or opinions are listed for informational purposes only and have not been verified for accuracy by the Adviser. Adviser does not endorse the statements, services or performance of any third-party vendor without specifically assessing the suitability of a third-party to a client’s or a prospective client’s needs and objectives.

Past performance is not indicative of future results.  Investment in securities, including mutual funds and ETFs, may result in loss of income and/or principal.

An investment cannot be made directly in an index.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!