“One client who recently sold his business woke up worried every morning because there was no longer a salary coming in."
Nick Pheasey, Private Client Advisory Partner, KPMG
Other clients are more cautious but find that the transition from active business owner to largely passive investor can be stressful.
“One, who recently sold his business, woke up worried every morning because there was no longer a salary coming in,” says Nick. “KPMG offered advice on restructuring his affairs so that he received a monthly amount, allowing him to live well without frittering away too much hard-earned capital.”
For a lot of business owners, the big priority is managing and protecting the wealth they have accrued, for the benefit of future generations. “If you had a very valuable business, you probably didn’t have to worry about inheritance tax because of the tax reliefs,” says Nick. “But as soon as you sell a business, you have a problem if something were to happen to you the following day.
“You need to start thinking about how you pass on that wealth and what you want to do with it. This conjures up different answers. For some, they may feel they want to look at philanthropy. I have a number of clients who set up charitable trusts and foundations.”
In cases of considerable wealth, clients are often concerned about how the next generation will cope. “There can be an element of wanting to motivate the next generation so that they have a purpose,” says Nick.
Some clients will set up companies to manage investments. Essentially, their business moves from manufacturing or delivering services to one of investing the family wealth. Others are more concerned with enjoying retirement in sunny climes.
But whatever your personal objectives, it’s important to make informed choices. Selling a business for a substantial amount of money is generally a once-in-a-lifetime event. “There may only be one time in your life that you take advice from a specialist firm that does this type of thing every day,” says Nick, “but this is the time to do it.”