A significant liquidity event — whether through a business exit, external investment round or inheritance — is a complex financial inflection point.
For entrepreneurs, founders and family business owners, such events often mark the culmination of years of value creation. Yet, despite their sophistication in business operations, many wealth creators enter into these transitions without a cohesive, forward looking post-event plan for personal wealth and legacy management. Failure to adequately arrange this can often undermine successful multi-generational wealth preservation.
In this article Daniel Channing, Group Head of Private Client, outlines some key considerations to implement a comprehensive and strategic approach to post-liquidity event planning.
1. Financial Modelling
Effective planning begins with robust financial modelling aligned to personal objectives. Founders often defer personal financial planning while focusing on business growth. However, the same analytical rigor used in evaluating corporate decisions should be applied to individual wealth. Key elements include:
- Cash flow modelling across various post-exit scenarios
- Probability analysis of achieving long-term personal goals
- Capital sufficiency modelling for philanthropic, entrepreneurial or legacy ambitions
- Analysis around lifestyle, inflation and tax assumptions
This exercise provides clarity on risk capacity, investment strategy and the optimal structuring of proceeds before they are monetised.
2. Defining Post-Liquidity Purpose
A common oversight among wealth creators — particularly younger founders — is the absence of a defined purpose for the newly found liquidity. Paper wealth often exists long before liquidity and it is important for any wealth creator reaching the liquidity inflexion point to understand their goals for their new wealth.
Well in advance of any liquidity event, questions such as ‘What is the purpose of this new wealth?’ and 'Do you want to spend it on yourself, gift it to your family, give it to charity or something else?' should be considered. After a substantial infusion of cash, a person’s goals can become more meaningful to them and those goals may change.
There are also practical questions to consider. Do you want to undertake a fresh entrepreneurial or investment project? What specific causes do you want to support? How do you want your new wealth to be structured and managed?
This is often a time to involve the entire family, enlisting them in goal and planning orientated conversations and, especially, developing collectively the values and mission which may now have developed. This cross generational conversation may also consider the role and involvement of the children or grandchildren as the future stewards and managers of the family wealth. It can also help avoid misunderstanding and even conflict in the future.
3. Governance and Structuring
For founders who anticipate family involvement post-exit — whether as beneficiaries or active stewards — governance planning becomes critical. Liquidity events create new dynamics: sudden wealth can fragment family cohesion or elevate unprepared heirs into significant decision-making roles.
Trust structures and family governance arrangements are powerful tools which can be employed as synergistic components of a comprehensive post-liquidity plan. By combining the legal structure of trust planning with the relational resilience of governance frameworks, clients can implement wealth transitions in a controlled manner with a specific purpose of seeking to preserve family benefit and harmony.
The effectiveness of these structures, however, is heavily dependent on careful drafting, thoughtful selection of trustees (and/or protectors) and, often, expertise in managing the new asset classes to be held.
The most successful strategies are those that align technical structures with the family’s governance philosophy. This integration ensures that the legal tools reflect and support the family’s long-term values and objectives.
4. Family Office Formation
The sale of a business or any sort of sudden surge of family wealth can present many new and complex responsibilities. If that is the case, families may want to establish a family office to help manage these new financial needs. A family office can be especially valuable if the sale of a client’s business means losing access to the services employees have been providing for the family.
The implementation of a family office structure — whether fully staffed or outsourced — can provide an integrated solution for centralised investment and asset management.
Key decision points:
- Build vs. Outsource: Is a single-family office warranted or would an outsourced model be more efficient?
- Scope of services: Should the office include property management, legal and tax coordination, philanthropic advisory, education for heirs and concierge services?
- Technology infrastructure: Choosing systems for consolidated reporting, document management and intergenerational knowledge transfer.
A family office plays a pivotal role in the governance and structuring aspect commented on under 3 above. The family office can further support transitioning the wealth from a founder-centric model to one that endures over generations supported by appropriate structure.
5. Timing and Execution
Crucially, effective post-liquidity planning is not a reactive process. Strategies around succession, tax planning, governance and capital allocation must be executed before deal documents are signed.
Actionable timeline:
- 12–24 months pre-event: Begin succession and governance planning phase and complete financial modelling.
- 6–12 months pre-event: Finalise succession planning structures (i.e. trusts), formalise family governance frameworks, identify advisory support network.
- 0–6 months pre-event: Execute liquidity transaction, onboard advisors, transition to new succession and governance structure.
- Post-event: Reassess investment strategy, review goals and refine succession planning structure.
Conclusion
For many clients, a liquidity event is a transformational moment. With thoughtful, proactive planning, this event can catalyse a legacy that spans generations.
Conversely, failing to plan properly can result in unnecessary fragmented family cohesion and assets held with a lack of defined purpose. By engaging a team of advisors across legal, tax, investment and fiduciary disciplines, families can convert complexity into clarity. The family can implement a structured wealth legacy framed within a common and clear purpose supported by effective governance and robust infrastructure.
Whitmill provides trust, fiduciary and governance services to international families. To speak to Daniel to find out more please contact: daniel@whitmill.com
