In a recent article, we set out some of the key steps you should take if you are a business owner looking to sell your company.

However, your financial planning shouldn’t end once the sale has gone through. After all, it could easily be one of the most significant financial events of your life, giving you the opportunity to put the funds to good use to help achieve your future financial security.

Because of that, regardless of your future intentions, you need a detailed, robust plan to ensure the proceeds work effectively for your financial security.

Create an investment strategy that will give you long-term financial security

For the vast majority of people, investing the proceeds of the sale of a business will become central to achieving long-term financial security.

While your wealth was previously tied up in your business, your priorities are likely to change once the sale has completed. This means that rather than focusing on building the value of a single asset, your investment strategy now needs to fulfil a variety of functions, including:

• Supporting your lifestyle
• Preserving your capital
• Providing financial security for the future.

You will need cash reserves for emergencies and to fund short-term goals, but leaving all the proceeds in cash is likely to erode its spending power over time.

That said, although long-term growth is still likely to be an important objective, it should be balanced with capital preservation and, where appropriate, the generation of a sustainable passive income.

The right strategy will depend on factors such as your:

• Financial goals
• Time frame
• Attitude to investment risk.

A globally diversified portfolio can help you manage risk while providing opportunities for long-term growth. Our expert financial planners can help you do this, taking the weight out of your investment decisions.

By ensuring your investments align with your personal objectives rather than the needs of your former business, you can create a portfolio that supports your financial future.

Build your retirement income

If you are selling your business to retire, your overriding financial goal will be to use the proceeds to replace the income your company previously generated.

Developing a sustainable withdrawal strategy can help you feel confident that your wealth will support your lifestyle without unnecessarily depleting your capital.

As mentioned above, creating an investment strategy is a great way to begin – but it’s also a good idea to diversify where your income is generated from, and how often you will need to draw it.

So you may want to consider a blend of income from your portfolio, cash, and other sources, such as businesses you may wish to invest in.

Cashflow forecasting can be particularly valuable in this regard, helping you understand how different spending patterns and investment returns may affect your personal finances over the years ahead.

Anticipate how much tax you will pay

The sale of your business may result in a significant Capital Gains Tax liability. However, the proceeds themselves may also create new tax planning opportunities.

The way you structure the funds, and the income you draw, can have a considerable impact on the amount of tax you pay in the future.

Here are three quick tips to get ahead of tax in retirement:

1. Make full use of available allowances and tax-efficient investment opportunities, which may help improve your overall financial position.
2. Consider future tax you or your estate could be liable for, such as Capital Gains Tax and Capital Acquisitions Tax.
3. Keep reviewing your situation and stay up to date with legislative changes.

Rather than viewing tax as a one-off issue relating to the sale, it should form an ongoing part of your wider financial strategy, and you should be reviewing your arrangements periodically to help ensure they remain appropriate.

Protect the funds from your business sale

Your post-sale financial plan should include measures to protect both your assets and your family’s lifestyle.

These measures could include:

• Reviewing your insurance arrangements
• Updating your will
• Establishing appropriate Powers of Attorney.

Taking proactive steps can help ensure more of your wealth passes to your chosen beneficiaries while reducing unnecessary complexity for your family.

Don’t underestimate the emotional impact of the sale

While not strictly a financial planning issue, the emotional challenges of selling your business can significantly influence your decisions after the sale.

Your company has likely been far more than simply a source of income. It will probably have shaped your identity and given you a strong sense of purpose. Because of this, you should be prepared for a significant period of adjustment as you step away.

So, having a clear vision for life after the sale can be just as important as having a well-structured financial plan. Understanding what you want your wealth to achieve is often the foundation for making sound financial decisions in the years ahead.

Find out more: Learning to let go: Why selling your business is about more than just money

A bespoke retirement plan could ensure you put your hard-earned money to good use

The proceeds from a business sale have the potential to provide financial security for the rest of your life.

An effective financial plan brings all the different factors you have read about here into a single, coordinated strategy centred on your personal goals.

Getting expert advice can help you navigate the complex decisions that follow a business sale. This will give you the confidence and peace of mind that come from knowing that the wealth you’ve worked so hard to create will continue to support the life you want to lead.

If you would like to talk to us about your business plans, please get in touch.

Email us at clients@iqf.ie or call 353 71 915 5560.

Please note

This article is for information only. It does not constitute advice.

It describes the financial planning services iQ Financial can offer you. The Central Bank of Ireland does not regulate financial planning services.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

iQ Financial is not a tax adviser and tax advisory services are not regulated by the Central Bank of Ireland.