After the exit: A new life with wealth

Selling your life’s work can be one of the biggest roller coaster rides in life. On the one hand, you have secured the family’s long-term wealth and at the same time ensured that the company stands strong in a changing world. On the other hand, you may experience a loss of both control and meaningfulness in your working life. Now, you are entering a completely new chapter and a new life as the owner of wealth. We take a closer look at that in this article.

Note that this article is an add-on to a podcast in Danish on the same topic. If you would rather listen than to read, jump directly to the podcast here.

 Where do you start your new life being wealthy?

Gaining access to sudden, sizeable, liquid wealth is somewhat akin to taking over a house which needs to be renovated. To take the best decisions, you need time to stay in the house for a while and assess the lighting, access and general mood of the different rooms. Deciding how to live and structure your life as a wealthy individual also requires patience, time and consideration. All roads are open, but at the same time, you must begin a new chapter, which you may not have fully had the time to prepare for.

A good place to start is to consider the overall purpose of the wealth. Is there a partner, siblings or maybe older and younger generations to think about for the future? How can you find a common pace and engagement? The reasons may vary; we will invest in local entrepreneurship, we will make a difference in the local environment, we will create wealth that can last for generations, but they all have this in common: They create direction, roles and robustness in the ownership.

The considerations of purpose naturally lead to thoughts about structure and involvement – who is willing to take on a role, and are they prepared for it? This is another important conversation to have in the new wealth community.

How is the wealth management structured?

So, what about the funds? How do you ensure that everything you have worked on for decades continues to grow? There are many opportunities – and many individuals and companies ready to help. Will you go to your bank, your accountant, an external asset manager, or will you go all the way and put together your own staff in a family office? The answers depend on personalities, the advisers you have and the amount of wealth. A family office is the most costly solution, but in return, your own staff will also be able to handle much more than asset management.

If you prefer to run a lean organisation, you can start by consulting the bank. There are many skilled bank advisors who have experience from similar situations and who will inquire into much more than banking business to understand how to best advise in this new situation. Another alternative is to meet with a variety of asset managers to find ones where chemistry and visions best match your own purpose and values.

How do you avoid that the funds take away the commitment from the children?

Alongside the joy of having provided your family with financial security and options, there is almost the concern that the next generation will not have any individual drive and will just become ‘trust fund kids’.

However, there are many things you can do to ensure that your children remain personally engaged, interested in their education and individually motivated.

• You can talk to your children about family values. What you stand for and what is important to you. This could entail, for example, taking a student job to experience community and recognition in the workplace or completing projects such as education, work, hobbies, etc.
• Set structure on the transfer of funds and talk with the next generation about it, so they have clarity about whether they can request/use funds for things like travel, housing, moving to part-time work, etc.
• Align expectations with how much space the owned wealth may/should take up in your relationship. Set structure on when you meet about which topics, so that 90% of the time can be entirely family time.
• Respect age-appropriate boundaries for how you show prosperity. Few children want to be different from others, so if they e.g. do not want their schoolmates to see them being picked up in expensive cars, then it is a good idea to listen to them and act accordingly.

Remember also that Copenhagen Business School’s Centre for Owner-managed Businesses’ latest research shows that children of owner-managed businesses have plenty of motivation from their home environment, that they do well both in terms of education and careers, and that most young people do learn how to handle being wealthy, especially when they have support and support from home.

You are welcome to contact us to learn more about what a tailored strategy course could look like in your situation, or you can read more about family office establishment here.