Business Transaction Basics: You’ve Closed the Deal, Now What? (Clayton & McKervey)

Business Opportunities
October 20, 2021 - Clayton & McKervey PC

This is a thought leadership article exploring challenges and strategies related to managing and protecting assets from business sales by PrimeGlobal member firm Clayton & McKervey in North America. 

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Business sales are large liquidation events and involve substantial transfers of cash to a small group of individuals, sometimes totalling tens of millions of dollars. A liquidity injection of that magnitude is life changing, and though it brings with it a lot of good, it also comes with challenges related to managing and protecting those assets.

Detailed below are some strategies to implement with clients, including those who may have recently closed a mergers and acquisitions (M&A) deal.

Assemble the Right Team

Having the right people by your side to support your finances is one of the most critical decisions you can make after selling a business and creating liquidity within your substantial assets. This kind of wealth can increase the legal and financial challenges. Therefore, it is important to assemble a team to help you navigate these challenges and plan for the future while maintaining the lifestyle you want. Generally, a team includes:

  • An accountant that is the de facto quarterback of your financial team. They will lead the procurement of financial documents, help with tax planning and preparation, and support you as you make the shift from traditional wage income sources to living off of your investments.
  • An investment advisor who will help develop a long-term financial plan. This includes cash flow planning and decisions around major future life events, in addition to a general investment portfolio management and investing.
  • An estate planning attorney manages the composition of estate documents, including wills, trusts, and power of attorney. They will also assist with asset protection matters, and work through vehicles like trusts and LLCs that can be used to protect wealth and mitigate risk.

What’s Next?

You’ve sold your business, what do you do now? Will you live from your investments? Start a new venture? Increase your gifting? Do nothing at all and spend time with family?

No matter what you choose to do, speaking with your financial team is a great first step. They will help you review everything from expenses for a new venture to health insurance costs that you will need to absorb without an employer.

Net Worth and Estate Planning

Net worth is more than what sits in a bank account. It includes investments, real estate, liabilities, and anything else that holds value. Understanding your net worth is a critical tool to help with estate planning. Your accountant and financial advisor both play a role in understanding your net worth and in developing your overall plan. They can help you retain as much or as little control of your money as possible, even when you pass.

Charitable and Other Giving

Many individuals who have substantial wealth after a large liquidity event turn to giving to support others in a manner never available to them before. This could include family and future generations or charitable organizations, and can take many different forms.

Trusts, donor advised funds, and private foundations are only a few of the options available. Your accountant or financial advisor can help you understand the benefits of each.

We know that there is plenty more work to do, even after closing on the sale of your business. Having the right team in place will help you maximize your time and assets, all while living the lifestyle that you have earned.

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Clayton & McKervey PC

Headquartered near the international border of the U.S. and Canada, Clayton & McKervey is a Detroit-based, full-service accounting and business advisory firm focused on global business. The firm’s clientele includes closely held, middle-market, growth-oriented companies. Since 1953, Clayton & McKervey has created a strong reputation, both domestically and internationally, with four types of clients, U.S. entities with operations in other countries, foreign entities expanding to the U.S., businesses with international growth plans and clients in need of transfer pricing service.

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