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Estate Planning
Monday | 24 October, 2011 | 9:27 am

After the deal

By Tom Tyndorf

Fourth in a four-part series

October 2011 - This four-part series has discussed opportunities for businesses in terms of gift and estate taxes, understanding the point of view of potential buyers and choosing the right sale process. Now, the opportunity to sell has materialized. After painstaking deliberations, you finally decide to sell and close the deal. Now what?

Your family has labored for years building a successful business. It is the nucleus of your family unit: centralizing decisions, creating social interaction and providing the heartbeat of the family. You never contemplated selling your family’s livelihood, or if you had, you never thought it would happen.

Few resources are available to guide entrepreneurs through the emotional complexities following the sale. However, identifying and thoughtfully addressing the many issues you will face is the first step in a successful navigation from business owner to family steward. Effectively maneuvering through the following land mines can increase the likelihood of keeping the family and its wealth intact.

Reinventing identity
The sale of the family business might be viewed as a success by many; however, the reality for the entrepreneur and his or her family often is the loss of identity and community. Recognizing and coping with the loss and deciding what comes next for the family is the crux of determining how family members will continue to feel productive and valuable inside the family unit after the sale of the business. Understanding these emotional issues and developing a strategy to reinvent oneself are essential for a successful evolution from family-business owner to family steward.

Often, entrepreneurial families are focused singularly on the goals and objectives of their businesses and personal goals and objectives take a back seat. With the sale of the business comes a broadening of the vision for the family. How does a family define its new legacy without the business? The process of developing goals and objectives for the wealth and for family members will serve as a road map to guide the family through this transition.

Implementing a wealth- management strategy
As a family determines its goals and objectives, it will be presented with the often burdensome and never-ending process of protecting and preserving wealth from creditors, taxes and misuse. This requires preparing the money for the family (minimizing taxes, creditor protection, wealth transfer) and the more difficult task of preparing the family for the money (equality issues, who is defined as a family member, what are appropriate lifestyles, how do you motivate younger generations). Guidance from professionals who can assist the family in accomplishing both the preparation of the money and the family is invaluable as you navigate the post-sale transition.

Implementing an investment strategy
Deploying assets in an effective investment strategy and hiring the appropriate advisor and firm are some of the largest challenges an entrepreneur may face after the sale of a family business. Entrepreneurs typically are successful by focusing their efforts and resources in a concentrated business environment. The opposite—diversification and relying on the expertise of others—are traditional principles of successful wealth management.

The right advisor will assist in developing a strategic, long-term framework, laying out a mix of investments with the balance of risk and return that is right for your family. Your family will need thoughtfully tailored advice based on your goals and guidance on determining investment time horizons, income requirements, tolerances for risk and expectations for returns. Finding a seasoned advisor who has experience guiding similarly situated families through this difficult process is essential in preserving and expanding family wealth after the sale.

Many obstacles will present themselves as you make the transition from business owner to family steward. Understanding these obstacles, planning for them and surrounding yourself with experienced professionals will put you on a path to the same successes managing your assets as you experienced building your business. MM

Tom Tyndorf is director of private banking at Credit Suisse in Chicago. David Berek is an advanced planning and family office partner with Handler Thayer LLP and contributed to previous articles. Vince Pappalardo, managing director, and Chris Merley, vice president, Stout Risius Ross, specialize in M&A advisory for companies in the production and distribution of both ferrous and nonferrous metals and alloys and contributed to previous articles. For more information, contact Tom at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or visit www.credit-suisse.com.

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