Maintaining family stability after the business is sold




“How to manage the shift from owner to investor,” by Steve Thorne, Family Business Magazine, March/April 2015

A significant liquidity event need not be destabilizing. The family should acclimate to its newly liquid wealth over time to prevent the kids of radical changed in lifestyle that can occur with sudden wealth. This usually involves restricting access by younger family members to the sale proceeds. One way to do this is by contributing the sale proceeds to family investment partnerships with redemption restrictions. Another strategy is to keep proceeds in the legal entity and make distributions over time.


In a situation in which proceeds are distributed at the time of a sale, many families find it is better to put the pieces back together by creating a family office. This will allow the shareholders to jointly reinvest the proceeds in an organized and cohesive manner. A family office can also be a vehicle to pursue business and philanthropic activities and provide support to family members.

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