NEWS AND INSIGHTS | INSIGHTS
Liquidity Events: Positioning Portfolios for the Future
octubre 27, 2026
Early action can help align your financial picture with your personal priorities.
For business owners and executives, a sale or IPO can represent the crowning moment in a successful career. However, it can also lead to significant challenges in terms of investment strategy. Addressing them early can help make the road ahead easier and more rewarding.
Based on my experience, sale/IPO scenarios tend to fall into the following categories:
- Continuing in Management. Former owners and executives often stay on as part of business leadership to maintain stability as the company transitions. However, I have found that the period they remain is often shorter than expected; and so, these owners may need a financial reset—and advice—just two to three years after the liquidity event.
- Full Retirement. Abruptly exiting an all-consuming business can lead not only to significant liquidity but a personal question of how to structure retirement life. Often, ex-owners may increase their expenses through purchases—a boat, a plane, a vacation home—as well as travel and other activities they previously had less time for. In some cases, this can lead to a shortfall in available capital.
- Looking for the Next Opportunity. Another set of (often younger) owners may want to retain their proceeds in cash in order to fund a new business venture. They may dismiss the ideas of traditional investing and diversification, thinking they can do better with an entrepreneurial path when it emerges. The challenge, therefore, is often in finding a middle path between their ambitions and financial security.
Time for Reflection—and Action
Regardless of category, are there IPO-oriented investment best practices to consider? As Sam Petrucci notes, assembling the right advisory team well in advance of the sale can help establish a valuable tax and estate planning framework. In my view, it can also help set the table for effective investment and financial decisions over time.
A helpful starting point is to figure out which of the three buckets—or some combination thereof—you fall into, and how that may affect your financial approach. If you remain at the company, you will likely retain regular compensation along with your newfound liquidity. However, you may be well served not to expand your spending based on that combination in case the duration of your stay is shorter than expected. If you are looking to retire, meanwhile, it will be important to think about insulating your savings to some degree, and to be realistic about your level of spending. (While many assume that they will spend less in retirement, in my experience that doesn’t happen—the vacuum of time and interests generally needs to be filled.) And for entrepreneurs, a key idea is to ensure that once freed of past concentration risk, you do not immediately rotate into a new concentrated exposure.
Emphasis on Diversification
Stepping back, we believe it is often crucial to emphasize diversification regardless of which bucket applies. In some cases, transactions may involve both cash and an interest in the new business entity. In that case, broadening risk into assets that are dissimilar to the core holding will likely be part of the planning puzzle, as may navigating the schedule of lock-up periods and/or other conditions on future sales. In all efforts, a close partnership among your investment advisor and tax and estate planning professionals will likely be essential to maximizing the potential for successful outcomes.
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