10 things to do after you sell
By Mark Borkowski
By Mark Borkowski
Oct. 30, 2013, Toronto – Learn the ins and outs of how to manage your financial and personal life after selling your business.
Oct. 30, 2013, Toronto – Have you ever wondered what
it would be like to sell your
To gather some
perspective for you, I spoke to Peter
Churchill-Smith, managing director of
Newport Private Wealth, one of Canada’s
largest independent wealth managers.
He, along with his partners, decided to
conduct a survey of entrepreneurs who
had sold a business to provide some
insight on what the experience is like.
One significant finding was the
admission by entrepreneurs that fewer
than 25 per cent of them had preplanned
the sale of their business. With the
majority describing the selling process
as distracting and exhausting, it should
not be a surprise that many of them
need considerable time to re-engineer
themselves and their money after the
Here are 10 practical suggestions
that were developed based on the results
of the survey.
Take a deep breath
The sale of one’s business often creates a
void that will take time to replace. This
transition period can take a year or more
before you declare yourself ready for the
Your new reality
You are not any wealthier than you were
prior to the sale. However, your balance
sheet has changed dramatically. If you
are working for the new owner, your
wealth is no longer lodged at your place
of work. It is at the bank. Also, it is not
getting the same 24/7 level of attention
that it received before the sale.
Manage your cash
The survey confirmed that a large
proportion of business sellers park their
funds in cash for three months to a
year. For a large amount of money, you
should have access to wholesale rates.
Be like the majority of our surveyed
sellers and ensure that you are dealing
with someone with direct
access to the money market
that can ensure that you
are receiving the rates you
There’s no better time
than now for you to take
stock. Your affairs are
probably more complex
than you would like. You need funds to
live and you need to understand which
funds are best accessed, from a tax
perspective. You may be surprised to
learn that the funds in the family trust
belong to the beneficiaries (such as your
spouse and kids). A detailed balance
sheet will give you an accurate overview
and help you identify issues that require
Your money may be in several places such
as a family trust, a holding company and
several family accounts. Many business
sellers tell us that they are overwhelmed
with the paperwork and it is very difficult
to “keep score.” You might want to
consider hiring a part-time bookkeeper.
They will more than pay for themselves
at tax time.
Many business sellers have emphasized
the importance of communicating their
new reality with key family members. So
much has changed and misunderstandings
can easily arise.
You need to obtain an estimate of your tax
liability. It may be due over several years
and some may be deferred indefinitely.
There are many strategies available,
including insurance and philanthropy.
Focusing on these issues may be the best
way to increase your net worth in the
New estate plan
It is very likely that your estate
plan, including your will and
insurance, do not match your
new circumstances. Does
your will include provisions
for dealing with shares of a
private company now sold?
Are your current executors
capable of handling the
complexity of your new
affairs? These are immediate concerns.
Make the necessary changes so that your
current plans work.
Yes, they know you’ve sold (and they
may even know the sale price). You have
moved up their list and they will now be
soliciting you for a large commitment.
Again, recognize your new reality and
be prepared. Many entrepreneurs find
it helpful to have a gatekeeper who will
handle these requests.
Sooner than you think, a family member
or friend may ask you for a loan. They
may think that the loan is trivial to
you. Sadly, they may feel the same way
about repayment. Do you take security?
Or document the loan? Will it set a
precedent? These are sensitive issues. So,
what is a simple solution? Buy yourself
time by telling them that your money is
tied up with your advisors.
There are many unexpected realities
that entrepreneurs face after selling their
business. Use these suggestions to help
you in the aftermath.
Mark Borkowski is the president of Mercantile
Mergers and Acquisitions
in Toronto. The company specializes in the
sale of privately owned Canadian companies.
Mark can be contacted at mark@
mercantilema.com or visit his website for
more information, www.mercantilemergersacquisitions.