And for many entrepreneurs, their sense of purpose is so intertwined with the business they’ve built over the years that a separation due to sale, despite the significant inflows of new money, creates a deep and tangible sense of loss. And that sense of emotional loss can intensify once the realities of a life that is cash-rich but potentially purpose-poor becomes the new normal.
Life Perspectives Versus Financial Perspectives
To avoid this situation, it's important to determine if it's the right time to sell from a life perspective in additional to a financial one.
As financial advisors, we don’t have a crystal ball, but we can use our insights to determine what the future may hold for our clients. Sometimes, what we see is a situation where selling a business makes perfect sense, and we will work to ensure our client is well prepared to fully monetize their life’s work. But in other cases, the decision to sell does not consider all the consequences. If done for the wrong reasons, selling might be the worst financial decision your client could make.
This is where it is incumbent on the financial advisor to go above and beyond financial, retirement and estate planning. Having conversations that encompass questions that drive a deeper understanding on what your client needs to feel emotionally and personally fulfilled will be crucial in evaluating any potential business sale situation.
Andrew Palmer is managing partner at Evoke Advisors, a Santa Monica, California-based independent wealth management with nearly $25 billion in assets.