Even when the deal is done, what you do next could determine the overall success of your decision to sell. Managing your money is just as crucial as maximising your sale price.
Most entrepreneurs have different concepts of what to do with the money once their business has been sold. Although a glass of champagne may be a common theme in the immediate aftermath, ideas can be as diverse as new business ventures, an investment portfolio or a round-the-world holiday, depending on how much the seller made and his or her stage of life, or thousands of other factors.
Very few vendors make enough from the sale to be wealthy for life, however, and deciding what to do with the money can be just as vital as maximising the amount you make from the sale. With interest rates low it’s unlikely you will want to store your hard-earned money in a bank account for your savings to be outstripped by inflation, so what options are available to you? Ensuring you take good advice at this point can be a life-changing decision. Some of the major issues to consider are:
Property
Bricks and mortar has traditionally been viewed as a safe investment, but following the recession the property market is yet to fully recover its confidence. That said, property professionals in the region were largely upbeat about the recent emergency Budget announcements, welcoming no increase in stamp duty and a reduction in corporation tax, which could stimulate business and therefore increase occupier demand. But is the threat of a double-dip recession too great?
Shares
Recent volatility in the markets may not be enough to deter investors, and many experts agree that in the long-term prices are likely to have an upwards trajectory. But investing in shares is all about risk versus reward, sometimes to reap the benefits you need to be more daring with your portfolio. But are you really ready to risk the money you made carefully looking after your company on the strength of someone else’s business plan?
Tax
One of the first things you should do after selling your business is to look at tax liabilities. Will the coalition government’s tweaks to the Capital Gains Tax system ending costing you? How should you invest your money to make it as tax-efficient as possible? If you can’t answer these questions with 100 per cent confidence, the best course of action is to seek professional advice to make sure you’re providing the best care for your nest egg.
