What to do if you get pretty rich, pretty fast?
Many of the clients we work with have either sold, or are expecting to sell, their business, or are positioning things for an IPO. All being well - and I appreciate there are a sh*t load of ifs, buts and maybes, let alone a ton of work, to get to this point - then the Founders, C-Suite executives & maybe other staff members with equity or share options, may expect to receive a healthy cash lump sum.
Setting aside the tax implications around selling your business (see earlier blog on Entrepreneurs Relief), you could end up with more money than you‘d ever hoped to obtain, or can possibly even comprehend.
Let’s create a scenario, almost identical to one I have seen before: You’re 38 years old and the tech company you founded has just been acquired by Google. After all the legal BS is said and done, and tax deductions accounted for, you’ve got £20million in the Fish Tank.
You were taking decent money out of the business (£150,000 a year), you have a spouse, two young kids & a dog (everyone should have a dog). Your aims in life up to this point had been to put food on the table, be able to afford nice holidays and create a legacy or business that you can be proud of. Now, suddenly, whichever way you look at it, you’re rich. As f*ck. So what do you do now?
As part 1 of this 4-part blog mini-series, I’ve selected just some of our favourite tips that will help you if you get pretty rich, pretty fast. Introducing the Four D’s:
- Dealing with your Emotions
- Drafting in the Pros.
Part 1: The Don'ts!
In the infamous words of Conor McGregor “You’ll do nuttin”.
Here are a few of the key Don’ts:
Don’t spend it like there is no tomorrow
Cos guess what, there is (hopefully).
We recommend that our clients, in this situation, do not spend lavishly on anything in the first 6 months minimum, ideally up to 12 months. This includes buying a house or a flash new car. It includes treating your family and friends to the Triple H (Homes, Holidays & Harley Davidsons). It also includes investing in new stuff, be it your mate’s start up, or something the bank or a financial adviser is suggesting. Just wait.
Why? Well it’s of paramount importance to firstly work out what you want your life to look like, who it is you want to help and what impact you want to make on this world. Once you have done this, properly, which usually takes 6-12 months, you will be ready to start spending, gifting and investing, with little chance of regret later on.
If something you wanted to do on day 1 is still something you want to do after 12 months, then chances are it's a good thing and it’s really important. Surprisingly often, though, this isn’t the case.
Don't tell everyone
If you’ve sold your business or even IPO'd, many people will find out through various media outlets. But, they won’t necessarily know your equity holding nor how much you netted in the bank.
The best advice is to keep your cards as close to your chest as possible. You don’t need the postman from your childhood home giving you a bell cos he’s short of a few quid or has a fantastic business idea.
For now, the less people that know, the less pressure there will be on you to act. If people ask how much you got or what’s happening, just say, ‘I am not sure yet’.
Don’t give up key elements of your old life
Usually when you sell or IPO your business, you still have a big part to play in the business for the next few years; this is (usually) a good thing. Having a routine and structure to your days and weeks is hugely important. As humans, we need fellow human interaction and mental stimulation. If you just quit everything and go mental, when you finally come back down to earth, it can be a scary and lonely experience.
Again, this tends to only be really necessary for the first 6-12 months. Once you have worked out what you want the next stage of your life to look like, then you can disrupt the routine and structure that you have, but you’ll be doing it intentionally and with purpose.
Look out next week for the DO'S... they're a bit more fun, promise.
Alfie Mullan, March 2019
Want to hold a conversation that will quite literally change your life? Well drop me an email and we can get this new life on the road.