Five tips for owners asking ‘what next?’ after selling to an EOT | London & Capital guest blog

London & Capital has provided a series of tips to help owners consider what to do next after completing the sale of their business to an Employee Ownership Trust (EOT).

The wealth management firm, a supporter member of the Employee Ownership Association (EOA), works with clients to “organise their affairs into a coherent global strategy, invest assets for preservation and growth, and provide clear, concise global consolidated reporting”.

Dan Sawyerr, Executive Director at London & Capital, pictured, has spoken to the EOA to offer advice to owners considering investing the proceeds of their sale.

He says building an investment strategy can differ for owners selling to an EOT as often they will stay involved in the business in some capacity post-sale, especially while the Trust pays back the loan, but admits most of the tips London & Capital provides clients still apply.

Here, Dan shares five tips he would give to an owner considering their next steps following the sale:

1. Don’t rush the ‘what next’

Immediately post-sale, the best advice is to take your time, there’s no rush around making any major changes or life decisions around what comes next.

Spend time doing things you enjoy with family or friends, do the things that you perhaps have not been able to do because you’ve been busy in the business, and then the ‘what next’ will come.

2. Seek out peer-to-peer interactions

It’s important to speak, where possible, with other individuals who are doing or have done similar transactions to compare experiences and challenges to get a sense of relatability.

One of the things we love about the EOA is the scope and bandwidth to bring people together. What we’ve found in dealing with entrepreneurial clients is they very much enjoy sharing stories and meeting people with similar experiences. We run a number of events where we try to bring our clients and contacts together to do just that.

3. Speak to advisers

Speaking to professional advisers, even on an informal basis, about the personal side of the balance sheet and how that will be impacted as a result of the transaction can be key. An EOT-structured exit is slightly different, so working with a manager that understands how the structure works and what the liquidity profile looks like would be useful.

In terms of the best time to engage a wealth manager, it varies from transaction to transaction, but I would say the earlier the better to get advice pre-sale. It’s not always that easy as it can be a stressful time with lots of plates spinning, but there is certainly value to be had in at least having a sense check discussion in advance of a transaction.

4. Why investing makes sense

Our start point is asking, ‘what is the purpose of this capital from the sale?’ Everything else can flow from there and we can look at the structures that best meet a client’s objectives.

Almost always, particularly now with a reasonably high inflationary environment and interest rates for cash on deposits reasonably low, it makes sense to invest in some way shape or form. The key is understanding a client’s return objectives and putting in place and managing a strategy based around these.

In terms of an investment strategy, we’re big believers in preserving and compounding over time and one of the ways you’re able to do that is by being properly diversified, so looking at a portfolio in the round as opposed to necessarily charging into a particular sector.

5. Consider your attitude to risk

In a lot of cases, clients have the lion’s share of their wealth tied up in a single, unlisted, privately owned business up until the point they sell it. That requires a slightly nuanced approach because there’s an immediate propensity to be quite protectionist around the capital after that exit and attitudes to risk very quickly shift.

It’s understanding a client’s tolerance for risk alongside the level of risk necessary to take in order to meet their objectives. We place a great deal of emphasis on controlling our clients’ exposure to risk and a reasonably conservative, sleep-at-night style of investment management lends itself well in the context of a business exit, making for a far smoother journey along the way.

London & Capital’s Dan Sawyerr appeared in Episode 5 of the EOA Podcast, which you can listen to by clicking here >>

About London & Capital

London & Capital, which was founded in 1986 and prides itself on its values of ‘integrity, partnership, excellence, and family’, manages more than $5 billion of assets on behalf of its clients and has “always had, in part due to the fact we are privately owned, an affinity with the creators of wealth, as opposed to the guardians of wealth, and entrepreneurial clients”, says Dan.

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