5 key reasons to have a wealth manager pre and during a business exit transaction

We have conducted research with the ICAEW’s Corporate Finance Faculty, the Law Society’s Research Unit and dealt with hundreds of entrepreneurs through their exit.

The consistent findings are that personal wealth decisions should be made well before completion for maximum benefit.  Much of the opportunities are lost once you’ve exited.

Here are our 5 most important considerations for Founders:

  1. Appoint a Personal Financial COO
  2. Know your ‘Magic Number’
  3. Cashflow planning to negotiate with confidence
  4. Maximise allowances and flexibility whilst in the business
  5. Consider your life post-sale

1-Appoint a Personal Financial COO (Pre-sale)

Appointing a wealth manager as your Personal Financial COO means you will never lose sight of your (and your family’s) own personal objectives throughout the process and beyond.  A strong corporate adviser, solicitor, tax accountant and wealth manager, working together, covers all bases.  As your personal financial COO, your wealth manager will translate the advice you receive to how it affects your personal financial plan.

Amongst lots of other things, a common mistake here is missing out on multiple ‘Entrepreneurs Relief’ tax allowances (or BADR as it’s known now) by not re-organising share capital at least 2 years before sale.


2-Magic Number Planning (Pre-sale)

Your ‘magic number’ is the amount of capital you – and other shareholders – would require in order to retire, semi-retire and/or completely de-risk your future plans. Knowing your magic number can help focus your thinking, as to whether you can retire or sooner than expected or whether more work is needed to get your business sale ready.

Knowing this number opens the door to a whole range of planning opportunities which can only be done while you are still a shareholder.  For example, knowing how much of the proceeds you actually need, makes clear if there is any ‘spare’ capital.  Working with an accountant, a recent client has placed £2m of his ‘spare’ shares into trust pre-sale.  This is a good way to move significant assets out of the reach of IHT in one go, something which (because of limits every 7 years) could take over 40 years to achieve if done after the sale.

In this case, it should save £800,000 in tax!

The main mistake here is finding out about this after you’ve agreed a sale.  By then it’s too late.


3-Negotiate Your Sale with Confidence (During sale process)

It’s essential to go into negotiations with confidence of your position and certainty around the numbers.

Working in partnership with your appointed corporate finance adviser, you will ensure that the valuation of your business is maximised, but also that you know that the proceeds of the sale meet your personal needs as a vendor. Taking on some cashflow forecasting to give you this certainty is an hour well spent with your adviser.

Cashflow forecasting is useful in other contexts too. For example, we are currently working with someone who wants to know if they can afford to give away some equity now to finance growth plans or continue to grow organically. Forecasting these two scenarios has helped her assess the risk vs the reward.

4- Maximise Allowances (pre and post sale)

When you are a director or shareholder of a business you have maximum flexibility on how and when to take your remuneration.  You also have more options when it comes to funding your pension, something which can bring significant tax advantages.  Many founders say ‘my business is my pension’ but with the features associated with pensions, it pays to take advice and maximise this opportunity while you’re earning and in control.

Once you exit the business, many of these opportunities are lost and it’s best to start taking advice as early as possible.

There are also corporate structures to explore at this stage, which could house some of the proceeds from the sale.  In conjunction with other professional advisers, we can work with you on tax advantageous structures such as:

  • Private OEICs
  • Family Limited Partnerships
  • Family Investment Companies
  • Private Investment Companies

5- Consider your life after the sale

A lot of founders we speak to value the opportunity to explore what they want the next phase of their life to look like.  This helps to reconcile their own understanding of their long-term lifestyle wants and prepare mentally for being on the other side of the deal.  Knowing what truly motivates you in life is important and can shape how you use your proceeds.

Do you want to become an investor in another venture? Do you have philanthropic aims?  What about those lifestyle assets you’ve always wanted?

By not considering all this before the sale, we often find founders are left with cash sitting in the bank for months on end, earning nothing and being eroded by inflation.  Even if you decide to reinvest some of the proceeds into another venture you may still need advice on how to invest a proportion of that wealth.  Choosing the right investment manager to be the steward of your capital and grow your wealth is important and delegating the day to day responsibility for managing your funds frees up your time to do what you enjoy.

Distilled into a list of some common mistakes we see all the time:

  • Missing out on ‘Entrepreneurs Relief’ tax allowances (or BADR as it’s known now) by not re-organising share capital at least 2 years before sale.
  • Not understanding the Inheritance Tax position of suddenly having capital in your name, maybe look at some form of insurance to cover the liability.
  • Not maximising pension contributions while still in the business. You can start to de-risk your family’s finances earlier by really beefing up your pot by contributing directly from the business.  This works best when you are in control of your own remuneration.  Most VC and Private Equity investors are comfortable with founders making pension contributions.
  • Being uncertain with your finances during the sale negotiations can cause sellers to get cold feet or pull the deal based on a notional value in their heads.  Knowing your ‘magic number’ for certain and being able to play out the ‘what ifs’ during the negotiations is key.
  • Not understanding the various personal tax opportunities pre and post-sale. Can you look at placing shares into a trust pre-sale?  This is a one-off opportunity to potentially save 40% (in inheritance tax) on some of the sale proceeds and many people don’t know until it’s too late.  For those paying school fees out of net income, there are better ways to do this more efficiently, most don’t explore this without advice.
  • Get your ducks in a row so you know what life looks like once you are out of the business. Having a clear plan allows you to stay in control.  A balanced approach is always best if investing some of your sales proceeds, take advice and don’t get your head turned on a whim.  There are a lot of bad advisers out there so do your research and don’t just settle for the status quo.
  • Basically, not taking advice!


The value of investments, and any income from them, can fall and you may get back less than you invested. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Information is provided only as an example and is not a recommendation to pursue a particular strategy. Opinions expressed in this publication are not necessarily the views held throughout RBC Brewin Dolphin. RBC Brewin Dolphin is authorised and regulated by the FCA (Financial Services Register reference number 124444)

  • Richard Morley

    Richard constructs and manages the portfolios of a range of private clients, focusing on business owners, helping them understand their wealth, manage corporate investments, develop a plan for the future and navigate funding and exit decisions. He works closely with Manchester’s Financial Planning team and a network of professional contacts to provide the best service and add value for his clients. He is also Manchester’s Head of Growth, leading the office’s efforts to develop new business.