The biggest challenge to founder wealth begins after the business is sold
Scott Carmichael
Founders spend years building a business, and often years preparing it for sale. Escala says too few spend adequate time preparing for the transition and the period immediately after settlement, when concentrated business value is converted into liquid capital.
When managed well, founders can establish a pathway to resilient sustained wealth. Without enough groundwork, the impact can be long-term and compounding.
Founders are selling, but settlement is not the finish line
The complexity of the transition that follows a successful business sale cannot be underestimated. While settlement may feel like the end of the journey, it marks the beginning of a very different set of decisions and adjustments.
Scott Carmichael, Head of Advisory at Escala, said, “Settlement of a business sale or transition can affect every aspect of daily life, with the challenges being just as psychological and emotional as they are financial or operational. For this reason, the plan needs to consider the whole of life alongside investment planning.”
Founders who sell businesses have invariably been consumed by the day-to-day operations of the business and the sale process itself. In many instances, little forward planning has been undertaken.
“The advisor’s role is first and foremost to listen, understand where a founder’s ambitions lie, identify potential risks, and help create a clear vision for what comes next.”
Many founders move from running a business they know intimately to overseeing a significant pool of liquid capital across markets and opportunities that may feel far less familiar.
“That shift can be confronting,” Carmichael said. “Even simple measures, such as establishing a regular ‘salary’, can reduce uncertainty and support better decision-making.”
“Continuity is critical. While founders may have long-standing relationships with accountants, lawyers and other trusted advisors, the wealth advisor is the element that brings these functions together, ensuring they work collectively to formulate a cohesive strategy and a clear vision for the future. Keeping those relationships aligned is an equally important part of managing risk.”
The post-sale strategy is a critical wealth issue
Escala believes the initial post-sale period is one of the most critical, yet often overlooked, stages of the founder wealth journey. A successful exit creates an important opportunity to pause after what is often one of the most significant events of a founder’s life. It provides the time to evaluate personal priorities, family objectives and long-term ambitions before committing capital. It is equally important to recognise that developing a sound strategy for a life-changing event takes time. Over the years following a sale, objectives and vision often become clearer.
“Founders need to understand their liquidity needs, tax position, income requirements, family objectives, retained business interests and long-term investment horizon,” Carmichael said.
“That requires careful consideration. The first question should be what the capital needs to achieve, not where to invest.”
Simon Dawkins, Head of Capital Markets and Escala’s Direct Investment Group, believes without a plan, founders can move too quickly into risk assets, sit too long in cash, or move back towards concentrated direct opportunities because they feel familiar.
Escala’s Direct Investment Group, led by Dawkins, was established to meet Escala’s UHNW client demand for access to institutional-quality direct investment opportunities across all asset classes; and plays a very relevant role in this scenario.
“For example, we see an important role for a curated portfolio of direct investment-grade bonds to provide capital stability, liquidity within two to three days, and materially higher returns than cash. Being in such a liquid strategy to start with allows for quick redeployment into risk assets as prescribed by the client’s advice team,” said Dawkins. “Capital needs to be working from day one, and this strategy gives clients, together with their advice team, time to refine their target risk profile and allow staged investment into less liquid risk assets.”
Carmichael commented that it is not uncommon for the entirety of a founder’s sale proceeds to be directed to the Direct Investment Group on day one.
He added “it is an excellent example of how an integrated model, which combines wholesale advice, Chief Investment Office oversight, and institutional-quality investments can assist the shift from wealth creation to wealth stewardship.”
The role of wholesale advice
Carmichael concludes that a key part of the ongoing advisory relationship, much like the sale, is helping founders create continuity through that next phase. This may involve working alongside spouses, family members, accountants and other trusted advisors to ensure decisions remain aligned and the family’s objectives are clearly understood.
“These are deeply personal matters and, ultimately, the goal is to provide founders with confidence that their wealth is structured not only for today’s needs, but for the people and priorities that will matter long into the future.”
