Selling your business can be a mentally as well as a physically exhausting process. When the sale ends, the next phase begins.

Are you ready?These 7 Steps can help you begin the next phase of your life..

What To Do After Selling Your Business

29 W. Susquehanna Ave.Suite 710Towson, MD 21204(443) 438-7211www.celestialwm.com

First off, Congratulations! Getting to this point is a HUGE endeavor! It’s widely believed that the vast majority of small businesses fail in the first year. You have made it to the end. Reflecting on your journey from start to sale is part of the process. You likely devoted a majority of your life to making it a success, putting in crazy hours and making sacrifices along the way.

The future is always uncertain, but maybe more so for an exiting business owner. What is supposed to happen next?

•Are you staying in the business to help the succession?•Will you start a new business?•Will you go back to school?•Will you retire?•Will you consult?

…or maybe it is some combination of these.

To help you lift-off into the next chapter of your life, I created these 7 steps specifically with you in mind. Hopefully, they help you find your path and answer the question, “What Am I Missing?”

Regards,

Colin B. ExelbyPresident, FounderCelestial Wealth Management

3What To Do After Selling Your Business

Self-Reflection

When you are going through the process of selling a business it can be all consuming. Whether you were seeking a buyer or one approached you, the process from start to finish is often the only thing on your mind. Now is the time to step back and reflect upon the journey.

After the sale of your business is complete, you may feel a void that will be difficult to replace right away. It may take some time before you are ready for your next challenge.

The way you manage your cash flow and investments should reflect this new reality. Without an income from the business, your immediate strategy should be on creating a cash flow while you figure out what is next.

It is likely that you haven’t thought about this next phase of your life in detail. Your investment strategy should reflect that uncertainty. Segregating funds into strategies for the short and long-term may make sense. Short-term funds should be focused on preservation of capital or as some call it “return OF your money”.

Step One

www.celestialwm.com

4What To Do After Selling Your Business

Step Two

Recognize that you are not any wealthier than you were before the sale, but your balance sheet has been dramatically changed. Pre-sale, your balance sheet most likely was dominated by a large, illiquid asset…your business.

While the business and business assets could often be used as collateral for loans and provide cash flow for living, the illiquidity of the asset often impacts your freedom.

Now, you may be working for the new owner or you may have distanced yourself from the company….but your wealth is no longer confined to your place of work….it has been moved to a bank.

Most likely, the bank that received the proceeds is the one you have worked with in the past. While the bank may have been great at helping you grow and manage your business, does your bank have the expertise to help you manage your capital in the next phase of your life?

Banks, while offering many services to their clients are often not good at everything.

It is time to re-evaluate your current relationship. Family wealth management will be more important now. Who will be the dedicated point of contact? What level of experience does the team have? What is the bank’s investment strategy? Can it be articulated in a way that makes sense? Is it evidence based?

Recognize Your Balance Sheet Shift

www.celestialwm.com

5What To Do After Selling Your Business

Post-sale, oftentimes business sellers will leave their proceeds in cash from 3 months up to a year before committing to a long-term plan. Successful cash management can improve your net worth.

Your local bank “branch” services “retail” clients. There are often several “layers” between the retail branch deposit rates and the institutional money market. Each of these layers often “scalps” a piece of your investment return. The further away from the source you are, the more your potential return is “scalped”.

Don’t settle for the “retail” rates advertised at the local bank branch. The larger your deposit the easier it may be to bypass these “layers” and go right to the source.

Potential, direct investments include but are not limited to commercial paper, U.S. Treasury securities, Repurchase agreements, Banker’s Acceptance, Certificates of Deposits

The longer you wait so seek out the help of someone familiar with short-term cash management, the more potential return you are forgoing or giving up to the bank. The sooner you seek out an advisor with direct access to those investments the better.

Step ThreeSeek Professional Cash Management

www.celestialwm.com

6

Your new financial life may be more complex than you like. Don’t be intimidated or reclusive. This is the time to seek out professional guidance. You realize you will need capital for daily living expenses but how and when is the best way to access that capital?

This is the time to get organized. Think of your personal financial situation like your business. Use free software tools or subscription based ones to create a detailed balance sheet, income statement and living expense worksheet

A detailed balance sheet can give you a great overview of your asset and liability situation. It can help you identify potential immediate issues. Your funds may now be in several different structures such as a holding company, family trusts, retirement accounts and several individual accounts. Many new clients tell us this recognition part can be overwhelming and they often procrastinate because it is difficult to find the appropriate amount of time to invest in this process.

A personal income statement can help show you what sources of income you have scheduled to occur. When and how to take social security to maximize the family benefit? What annuity income are you scheduled to receive? Are you receiving any consultant or corporate advisory board income? Is there any rental real estate (residential or commercial) that you will be receiving? This is time to take stock of potential income sources and where supplemental income will need to be generated.

A living expense worksheet may be the most tedious but most effective way to manage cash flow. Business owners have an often incredible understanding of what business expenditures they have. However, they often don’t track personal expenditures in the same way. Thankfully, there are a number of great software aggregators out there that will monitor your spending for you, categorize and track it. It’s an incredible way to get a handle on what you are actually spending versus what you think you are spending.

What To Do After Selling Your Business

Step FourAcknowledge The Complexity and Embrace It

www.celestialwm.com

7What To Do After Selling Your Business

It is extremely important to communicate your new economic reality with your immediate family. Your spouse, children and anyone else you care for may not fully understand what has just happened. There may be anxiety, curiosity, and even fear of the unknown. But, if you don’t take the time to discuss what has transpired with your family and don’t give them an opportunity to process it and ask questions, you may be setting yourself up for potential issues.

Often, selling your business is a dramatic change for not only you but your family as well. Misunderstandings can easily arise from a lack of communication. Now may be the time to set up scheduled family meetings away from the dinner table in an open forum where questions can be asked. What is changing? What will stay the same? How may these changes affect the family?

Step FiveCommunicate with Your Family

www.celestialwm.com

8

Work with your accountant to get an estimate of your tax liability. It may be due all at once, or it may be due over several years . There are numerous strategies to minimize or defer tax liability including philanthropy and insurance. You should acquire a working knowledge of your options and work with a competent tax advisor to structure the right course.

Remember, it’s not what you earn, it’s what you keep. Maximizing the after-tax proceeds of the business sale is a key component.

Additionally, it is very likely that your current estate plan doesn’t match the reality of your new circumstances. Your will, your life insurance and any existing trusts may not be sufficient for your new situation. Does your will include provisions that deal with the disposition of shares in a private company that you now have sold? Are your current executors and financial agents acting on your behalf capable and willing to handle the complexities of your new estate? These could be significant issues and are ones that shouldn’t be delayed.

What To Do After Selling Your Business

Step SixTax and Legal Complexities

www.celestialwm.com

9What To Do After Selling Your Business

Believe it or not, selling a business can have a similar effect on a family as lottery winners or professional athletes after their signing bonus and first contract. Many of us have heard the stories of how many professional athletes end up broke or how lottery winners often spend their windfall too fast.

In fact, about 70 percent of people who win a lottery or get a big windfall actually end up broke in a few years, according to the National Endowment for Financial Education.

The sad fact, is that it may not be long before a family member or friend comes to you for a “loan”. According to a 2016 survey from Bankrate.com, most Americans (63%) may not have enough money in savings to cover an unexpected $500 car repair or a $1,000 hospital emergency room visit. Once family and friends hear of your windfall they may “expect” or even believe they are entitled to some of the proceeds.

Step SevenHave a Plan When Family Comes Calling

An additional role of a good financial advisor is to act as a third party gatekeeper. Many business sellers don't turn to anyone to intercept the flood of requests from all of those "close" friends and relatives. Family and friends may think the loan is “trivial” to you and may also think the same way about repayment.

Do you document the loan officially?Do you provide it with no strings attached?Will it set a precedent for family & friends?

These are sensitive issues. A simple solution is enlisting an advisor as your gatekeeper…but having a plan beforehand is important.

www.celestialwm.com

10What To Do After Selling Your Business

Welcome to the next chapter of your life, and for an entrepreneur it can be filled with even larger and more meaningful goals yet to be accomplished!

Securities offered through LPL Financial, Member FINRA/SIPC. Investment Advice offered through ADE, LLC, a registered investment advisor. ADE, LLC and Celestial Wealth Management are separate entities from LPL Financial.The information herein was obtained from various sources and we do not guarantee their accuracy.Neither the information nor any opinion constitutes an offer or an invitation to make an offer, to buy or sell any securities or other financial instruments.This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person.Investors should seek financial advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized.This report should not be regarded by recipients as a substitute for the exercise of their own judgment and readers are encouraged to seek independent, third-party research on any companies covered in or impacted by this report.Investments in general and, derivatives, in particular, involve numerous risks, including, among others, market risk, counter-party default risk and liquidity risk.No security, financial instrument or derivative is suitable for all investors.Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice or to be used by anyone to provide tax advice. Investors are urged to seek tax advice based on their particular circumstances from an independent tax professional.

Colin B. Exelby President, Founder Celestial Wealth Management

www.celestialwm.com