Life After Selling Your Business: What to Do Next? 


Learning event of your life. Unless you use that capital to buy other businesses and try to play the investment game, you will never see that much money at once as in your lifetime. 

That is a massive change for most people, and it’s common for sellers to have no idea what to do after selling a business

Today, we want to go over some of the new challenges you’ll be facing, and the things you need to do to not only protect your wealth but to enjoy life after selling a business, too. 

Let’s get started. 

Common Challenges After Selling Your Business

There are three main problems people face when selling their business if they don’t hire M&A advisors to help them solve any problems that occur through the selling process. As we said, the sale works as a harbinger for an entirely different life. Just a month or two earlier, you were dedicating most of your time to running a business and living fairly modestly. Now, you’re a multi-millionaire with no job. So, the change has an impact on your life. 

First, there’s the challenge of protecting your newly acquired wealth. It’s like winning the lottery. When someone comes into a lot of money suddenly, they’re tempted to start living large. Plus, the legal obligations associated with the accumulation of wealth sneak up on them. You don’t want to let that happen to you. 

Then, there are the problems you’ll face with moving on. After ten, twenty, or even thirty or more years of running a lower middle-market business to support your family, the transition to enjoying your retirement can be difficult.  If your identity is wrapped up in the business, your baby, it’s highly likely you’ll feel a sense of loss, similar to losing a loved one.

Finally, there’s the challenge of acquiring more wealth and staying on after selling your business. Depending on how old you are, your lifestyle, and exactly how much you made from your business sale, you might need to keep building up wealth to ensure you have a legacy to pass on. 

What is life after selling a business?

How to Overcome Those Challenges

There are a number of steps you need to take, along with a multitude of tips that will help you out, on your post-sale journey. 

We’re going to list them so you can be prepared to overcome post-sale challenges and make the most of your life after selling a business

1: Handle Tax Liabilities

First things first, you need to handle your tax liabilities. You didn’t think you were going to suddenly earn millions, and Uncle Sam wouldn’t want his cut, did you? 

This is a complicated process, and it changes dramatically depending on how the sale was conducted. It is highly recommended to get a tax professional to handle your post-sale taxes and prevent any unnecessary run-ins with the IRS. 

Another key advisor is an estate planning attorney who can help you determine whether or not it makes sense to set up a trust (or more) to protect your wealth, minimize or reduce your tax liability, or defer it down the road.

Of course, you can, and should, prepare for this step while you’re setting up the deal since various types of business sales will have different tax liabilities, but even if you do, you still need to get a tax expert to tackle the payment process at the end of it. 

2: Budget Your Wealth

You hear stories of people coming into wealth and promptly going broke again all the time. Those are usually lottery winners, trust fund inheritors, and others who aren’t used to having that much fiscal responsibility. Since you’re experienced with business, you start off with a far better chance of not blowing your wealth. That doesn’t mean you’re safe, though. 

It’s tempting to start ramping up your purchases and loading up on luxuries, and you do deserve to reward yourself. However, you need to think long-term. 

Once your taxes are out of the way, and the transaction is fully wrapped up, you need to get a budget in place. 

You can do this yourself, but it’s not advised. We recommend getting a personal accountant on board to help you plan out your annual expenses in a way that will let you live off your big payday for the rest of your life. Having an expert handle this, as well as reminding you to adhere to the plan, makes you much more likely to keep your wealth after selling a business

This budget can be combined with the long-term wealth plan that a strong financial advisor can put together with you.  The two of them in concert can help you enjoy your life while maintaining fiscal responsibility.

3: Consider Post-Life Wealth Transfers

Do you have a spouse or children who rely on you? If so, you want to leave them your legacy, or the wealth you’ve accumulated over the span of your lifetime. This will help take care of your spouse and any struggling or underage children you have upon your death. Even if your children are independent, passing down your wealth will help strengthen your family line for generations to come. 

Unfortunately, these somewhat morbid plans need to be made before you’re on your deathbed. In fact, they need to be made as early as possible, and now that you’ve had your largest earning event possible, it’s the perfect time to properly get this addressed. It’s all about risk mitigation and peace of mind. You never know when something unexpected can happen, and you don’t want to procrastinate and potentially leave your family to bicker over your legacy.

Documents you should be looking into are your will, any trusts you want to create, and estate management plans. You should also speak to the proper professionals for handling digital estate transfers. As life has moved to a more digital-friendly era, many of your most valuable assets, such as website domains, investment portfolios, accounts, and more are held online, and unless you set up a proper transfer-upon-death plan, those can be lost forever. We’ve already seen it with families losing photos, multi-million-dollar crypto portfolios, and various other digital materials. 

Again, you don’t know what life has in store for you and your family, and you can unexpectedly die or otherwise become incapacitated,  so please get these things done now, while you’re still able to. 

Life after selling a business can be good if you know what to do next.

4: Consider Your Investment Portfolio

You just got the largest sum of cash you’ll probably ever see. Immediately focusing on making more money seems like pushing your luck or getting greedy to some people, but it’s actually one of the smartest things you can do. 

If you make ten million dollars off the sale of your business, and then you start paying off all your debts, setting yourself up for a comfortable retirement, and taking time to enjoy the fruits of your labor, you’ll quickly find out that your ten-million-dollar profit doesn’t go too far. You might end up with nothing if you live longer than expected, or worse, you won’t have anything left to leave to your family. 

Making smart investments will keep you from going back to work or leaving your family empty-handed. 

We recommend getting professional help when it comes to investing a portion of your money into a portfolio. A proper investment professional will help you craft a portfolio that is stable, gains value, and has minimal risk, allowing you to safely follow your budgeting plan while still making income. 

Of course, this is a personal choice, and if you don’t feel comfortable investing, that’s on you. However, it is highly advised to do this immediately to maximize your potential payouts when needed and ensure you have the capital to make powerful investments instead of doing it when you’re starting to run low. 

With business sales that create multi-generational wealth, it’s vital that you look beyond traditional investments and consider alternative investment strategies as well that diversity your investment portfolio and offer you the opportunities for attractive returns.  Of course, seeking the right investment advisor is crucial and goes without saying.

5: Pay Debts and Increase Your Quality of Life

You just got a massive payday, and it is finally time to pay off any debts you have while increasing your quality of life. 

Debt is a part of almost everyone’s life. You’ve probably accrued some of it to operate your business, hold yourself over during hard financial times, etc. Now is when you want to pay it off. You have the money to do so, and you don’t want it creeping up on you when you are years into your retirement. 

It might be ideal to continue making payments because some forms of debt penalize early payoffs.We’d suggest transfering the money into a separate checking account and create monthly online bill payments until the debt is completely paid off.  

Then, you want to handle problems you’ve been putting off. The old car you have that is constantly breaking down, your leaky roof, and similar things in your life should be handled while you have a massive surplus of money. This will prevent them from becoming much bigger problems down the line, when you’re not as prepared to handle them. 

6: Safety Net

Don’t forget that life likes to throw wrenches into your best made plans. Just because you’re settling down to an easy life doesn’t mean you’re immune to sudden emergencies, health problems, and random problems occurring. You need to have a safety net in place to keep you protected in those events. 

Of course, any good accountant/CPA will factor this into your annual budget planning. However, it’s still a good idea to mention how important it is in case you opt to forego an accountant. 

Your safety net should ideally cover six months of living expenses. That includes paying your bills, putting food on the table, and generally maintaining everything you have. Some advisors say one year of cash and/or semi-liquid assets that can be readily converted into cash is the best safety net for most situations.

Your safety net can be used in case you develop an injury or illness that your insurance doesn’t fully cover, handle post-crisis repairs and replacements after storms and other disasters, etc. When those things happen, and they will, having a safety net will let you handle them without diving into the funds you have budgeted for a normal life. 

So, don’t let the idea that you aren’t worried about losing a job anymore prevent you from budgeting one in. There are a lot more reasons for a safety net than just a sudden job loss. 

7: Get a Hobby

After heading into your business five, six, or even seven days a week for the majority of your life, you will feel a bit off. 

It’s important to find a hobby you can dedicate your time to enjoy to ensure you take the transition well.  You can re-engage with your favorite charities or mentor other aspiring entrepreneurs.

Many people who don’t find something to fill their spare time in these situations end up with depression, or just feeling poorly in general. That’s not what you want to do during a time that you’ve been waiting for your whole life. 

Traveling, outdoor hobbies, learning new skills such as woodworking, and other things that will take up a considerable amount of time while still letting you have a ton of fun are ideal. Sit down and think about what you really enjoy, and you’ll come up with something better than sitting around watching TV. 

8: Live a Little

Finally, we have reached our final tip for what to do after selling a business: live a little. You have just spent years, if not decades, nurturing and running a business. Now that you’ve sold it and earned your big payday, it’s time to relax a little bit. 

Yes, we realize that we spent the bulk of this article covering things designed to help you save money and protect yourself, but it’s important not to get so caught up in that, that you don’t even enjoy the reward you’ve created for yourself. 

Make sure you take time to plan out the things you really want to do in life, such as visiting another country or going on various cruises and then talk to your accountant about how you can make that happen without going off-budget.

You’ve spent a large portion of your life working hard and building a legacy. Now, it’s time to enjoy it. 

Take the Right Steps and Enjoy Life After Business

If you take the right steps and follow the tips we’ve listed here, you’ll find that life after selling a business is an amazing experience. You won’t have financial worries, you’ll have plenty of time to do the things you love, and in general, you’ll be able to enjoy the fruits of your labor. 

If you’re still a little confused about exactly what you need to be doing, contact a professional team specializing in business sales