Liquidity Events

When do you most notice the value of financial planning? When you need it most and it's not there.
 
We are blessed to work with some incredibly successful people in many areas of their lives: financial, personal, charitable, civic, spiritual, intellectual, and others. And in the past few weeks, I've had some business-owner clients go through different stages of the money experience and ask three exciting and challenging questions related to the sale of their business:
  • What do I do while I am going through a liquidity event?
  • What do I do before I go through the liquidity event
  • What do I do after I go through a liquidity event

Let's look at these scenarios:

Before

In building a successful business, Kristen has not planned her retirement; she's planned her next business venture. She's often overwhelmed and feels like the work is greater than she can manage. Sometimes she spends more time worried about her employee's personal issues than her own family! Kristen reminds me of the importance of planning for a life without work, and making it as specific as possible, with details, and then feeling like it's ok to change. We talk and she finds peace in that her business value has already exceeded the value she needs to realize to provide for her family's needs. In other words, she can hire more help, she can take that vacation, she can move ahead with other, more important values!
 
During

Steve and Helga have wanted to sell their business since the crash of 2008, and all of a sudden they find a buyer. Now they really want to be certain that they are getting the most value out of the business. They want to understand the commissions paid to the business broker, and the tax ramifications, and the various finance options of the buyer. We often say that no transaction is complete until it's in the toilet five times--and still, Steve and Helga are focused on asking questions about their future plans. Here, having the financial plans in place allows them to proceed safely, confidently and prudently as they navigate the biggest financial transaction of their lives.

After
Bill and Mary sold their business a few months ago and have already received a nice amount of money. As Bill winds down the business and trains the buyer, he's finding that he is lonely. He has remorseful feelings. In fact, he questions his own value. As he says, he's made payroll for more than 30 years and now, all of a sudden, no one depends upon him. The dollars cannot replace the value that we get from all sorts of areas of our businesses which are, after all, the way we spend our days. Bill now looks for social events, and clubs, and activities, to find new friends with similar interests. They set new goals!
 
This may be surprising, but it is so important. Regardless of our age or stage of life, we all have new goals to set and meet- even in retirement! 
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