After the Business Sale: How to Invest, Protect, and Grow an Entrepreneur’s Wealth

• A liquidity event demands discipline, structure, and a plan beyond simply reallocating assets
• One major sale can reshape decades of outcomes—if decisions are made deliberately, not emotionally
• True success comes from aligning newfound wealth with mission, legacy, and purpose beyond the balance sheet

After winning the 1997 Masters, a 21-year-old Tiger Woods donned his first green jacket on the Augusta National lawn. His victory speech to club members and tournament patrons was inspiring and “one for the ages,” as Jim Nantz might say. But it was also off the cuff. Tiger remarked that he never got that far in his dreams to a post-round address. His focus was always on that final tap-in to seal victory—not so much what came immediately after.

For small business owners, it’s common to keep your nose to the grindstone, build your dream, increase revenue, expand operations, and one day seek the most profitable sale. I find that the proverbial green jacket ceremony (and the events thereafter) are often overlooked. The truth is, you need a post-exit investment plan. What’s more, you must have goals and ambitions in retirement.

Some people are wired to launch an enterprise, work to see it flourish, sell it (or transition out of ownership), then begin anew. Others have one business they craft for years, working alongside the same handful of trusted colleagues—friends—for years or decades. In both situations, there must be an eye on what happens after the sale.

But you don’t have to go it alone. In fact, you can outsource much of that planning to a trusted advisor while you handle business growth in the here and now. Periodically reviewing your financial plan should include a discussion of post-sale options... before and after you slip on your small-business green jacket. 

Let’s dive into what that might look like—from funding retirement and pursuing another career to supporting family, giving back to your church, community, or other causes, or simply preserving wealth.

Begin With a Fresh Financial Plan

A smart investment strategy after the sale is not simply reallocating your portfolio. A phone app can do that. Building a broader financial plan is the goal. You see, your situation changes the moment you ink the final deal, transferring ownership. While anticipated, a major cash influx presents new opportunities—and perhaps challenges—when it comes to maximizing contentment, meaning, and personal fulfillment.

Before allocating to various asset classes or getting involved in a new real estate deal, you must take stock of your goals and money values: 

• What lifestyle do you seek in this new phase?
• What are your spending time horizons?
• How much of a cash safety net do you want, need, or desire?
• Beyond the dollars and cents, do you plan to work in some capacity, or are you ready to take on retirement full steam ahead?

Gaming out life on your terms post-sale defines how much cash you’ll need to meet everyday spending throughout the year and how much can be invested for growth. That goes for someone in their 40s just as much as it does for a seasoned small business owner in their 70s and beyond.

Balancing Safety and Growth

In the financial advice world, there’s the old rule of thumb “100 minus your age” when it comes to how much someone should allocate to stocks and bonds. If you’re 20 years old, it’s an 80/20 mix of equities/fixed income. An 80-year-old should have just 20% in stocks. It’s not an optimal approach, and it absolutely does not apply to business owners after an exit. Why? Your ultimate time horizon may be generational—potentially infinite—depending on your legacy goals.

So yes, some capital preservation is prudent, but there’s a high chance that most of your investable assets should be allocated aggressively to maximize long-term value. Cash and bonds should be sufficient to cover only a few years of spending and contingencies, while spending needs and giving plans five years or more into the future should be allocated to stocks or other growth areas. Getting this part right can mean millions more in wealth for you, your heirs, and cherished causes.

Tax “Alpha”

Tax planning begins years before you sell your business—if you have a proper financial plan. Capital gains taxes are usually the largest expense associated with an exit. At Clear Harbor, we partner with CPAs and tax attorneys to help individuals owe as little tax as possible by putting the business in the ideal structure and implementing strategies before, during, and after the sale.

Tax alpha is the amount kept in your pocket and portfolio—not sent off to Uncle Sam—and it helps seed a lucrative wealth plan post-exit.

Your Money, Your Life

We can go down the tax rabbit hole all day long, but we’ll keep it to a few sentences here. Tax alpha primarily lives in spreadsheets and in the minds of egghead CPAs. Conversely, maximizing meaning and preserving purpose require personal reflection—tasks no algorithm can accomplish. 

• Begin by thinking big. Are you plotting another career?
• A new business in a different industry?
• Are you stepping off the gas, maybe into a consulting role?
• Are golden years finally upon you?

Your portfolio design must reflect your ensuing life stages. Sometimes, your investment mix doesn’t change all that much after a business sale. Yes, there may be potentially millions of dollars to put to work, but that cash may simply be allocated similarly to the original portfolio. In short, there could be wholesale changes—or sometimes none at all. It all depends on your life goals.

Managing Concentration Risk… and Emotions

Where planning does get complex is with a large equity position. Your wealth may remain tied up in the company’s shares when you sell the business. Of course, heavy concentration in any single asset presents increased risk—even if you know that asset through and through. Here, exposure should be reduced gradually in a tax-smart and portfolio-savvy manner.

This situation is often emotional, too. Entrepreneurs may have devoted their careers to seeing the company thrive, working each day to deliver value to customers and provide for employees and their families. Simply selling the stock can feel like severing ties to a part of your life. There’s no optimal financial planning technique here. Rather, it’s a process that blends numbers-crunching with financial and emotional wellness.

Exit-stage emotions are not just the touchy-feely ones. Fear, greed, pride, uncertainty, and relief can all lead those going it alone to make costly mistakes. A disciplined investment framework should be constructed years before you sign on the dotted line. A plan helps prevent emotions from seeping into the calculated aspects of a deal and strategy.

A large windfall can feel like winning the lottery, and that initial “high” may result in unsteady emotions that sabotage a long-term plan. Working with an experienced advisor who understands both the emotional and financial implications of post-exit wealth can be invaluable.

Legacy Planning Begins Now

Many of our clients don’t want to “die with zero.” Some do (and that’s totally fine) but business founders and their families often desire lasting impact. They are on a mission. That’s where legacy planning comes into the equation. Tools like trusts, family limited partnerships, and structured charitable giving vehicles can be used to do the most good now and for generations to come.

For me, this is among the most rewarding aspects of financial planning for small business owners: seeing wealth created and earned over decades being used for enduring causes. That’s what brings true meaning and purpose that lasts a lifetime for Clear Harbor clients.

The Bottom Line

Selling your business is both an ending and a beginning. Sale proceeds represent freedom and possibility—but also responsibility. A comprehensive plan incorporates both financial and emotional considerations, including tax strategy, diversification based on goals and time horizons, and aligning wealth with your desired lifestyle. For many of our clients, it also centers on legacy, family, and causes.

Done right, post-exit investing and planning is as much about the portfolio as it is about reflecting your financial goals and personal values.