Topics: Business sale planning, transfer planning, equity compensation planning, tax planning, estate planning
For many people, the ability to benefit from wealth accumulation is gradual.
For others, it isn't.
A business gets sold. Restricted stock vests. A private company goes public. A family property changes hands.
In these situations, a substantial portion of usable lifetime wealth can be created in a relatively short period of time.
One thing I've noticed over the years is that people often think the important planning happens when the transaction occurs. In reality, many of the most valuable planning opportunities exist (and sometimes only exist) before the event takes place.
The reason is fairly straightforward: a lot of planning strategies actually require uncertainty.
Once a deal is effectively done, many decisions become irreversible. Assets already owned personally generally stay personally owned. Tax consequences become difficult or impossible to restructure. Estate planning opportunities may disappear entirely.
This is why I often think of the 12 to 24 months (or more) before a major liquidity event as the most important planning window.
Mental Work & Integration - Before the Liquidity Event
The first step is understanding what the event actually means financially.
Questions that sound simple often aren't:
- How much is likely to be received?
- What portion is taxable?
- What does the after-tax number look like?
- Is there concentrated risk remaining afterward? If so, how will that be handled and over what period?
- How does the transaction affect long-term goals?
- Where is this asset (or the income from the proceeds of this asset) expected to end up in the long-run?
From there, several planning areas tend to become relevant simultaneously.
Tax Planning
Business owners and executives often focus heavily on maximizing transaction value. Understandably so; the reasons are intuitive and obvious.
However, a slightly better tax outcome can sometimes create as much economic value as a higher headline sale price.
State tax considerations, trust planning, charitable strategies, entity structure, and transaction design may all become relevant depending on the circumstances.
Estate Planning
Many people think estate planning starts after wealth has been created.
Often the opposite is true.
In situations involving a rapidly appreciating asset, planning before a liquidity event may allow future appreciation to be transferred outside of a taxable estate. The timing matters.
To tie this in with the above, understanding where an asset is intended to end up in the long-run and what purpose it serves can change the way an entity or transaction is structured, and it should be enabled to by looking ahead and asking the right questions.
Investment Planning
The goal isn't necessarily to determine how to invest sale proceeds.
The goal is to understand what you want life to look like afterward.
A business owner who has spent decades with most of their net worth concentrated in a single asset may suddenly find themselves responsible for managing a portfolio instead of a company.
A person who has "won the financial game" in terms of the ability to be financially independent will have a lot of choices for what comes next. Will one want to preserve that security and independence at all costs or shoot for the moon and try to achieve multi-generational, more transformational wealth. Neither answer is wrong, and people vary greatly on their answer.
What's most worth noting for our purposes here is that many, if not most people, have not done the emotional and psychological work required to make a sound decision. Just ask lottery winners. It takes time. Some people think the work to be done is learning about investment strategies that have now become available. It isn't. The work to be done is thinking about what you really want so your plan can be designed to actually support it. The rest can fall into place gracefully.
This kind of transition deserves planning.
Planning for Change - After the Liquidity Event
The most common mistake I see is feeling pressure to make immediate decisions.
Sudden liquidity creates a tendency to want every dollar invested, allocated, transferred, or optimized right away. And there can be a lot of pressure from outside sources to make that happen, as well.
Usually, there is more benefit in spending time understanding the new reality before making large changes.
The questions become different:
- What does financial independence look like now?
- What role does work continue to play?
- How much risk is actually necessary going forward?
- What opportunities now exist for family, philanthropy, or future business ventures?
The transaction itself is often the beginning of the next planning phase, not the end of the previous one.
Final Thoughts
Major liquidity events are relatively rare.
Because of that, people may naturally focus on negotiating the deal, closing the transaction, or reaching the finish line.
But what tends to matter as much, if not more, to achieving long-term positive outcomes is the planning that comes before and immediately afterward.
For many families, a significant percentage of lifetime tax planning, estate planning, and investment planning opportunities can be traced back to a relatively short window surrounding one major event.
The earlier that planning begins, the more options tend to exist. And the more time and mental and emotional energy are put into thinking about actions before rushing into taking them, the more positive results are available to your life and the lives of those around you.
2026-9001659.1 Exp 07/2028