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Selling Your Business? Put the Windfall in Private Investments Instead of Stocks

There is no time like the present to sell your business.

There is no time like the present to sell your business. Nevertheless, potential sellers might want to consider putting the proceeds into private investments rather than stocks or Treasuries, said Paul Pagnato, partner at Pagnato Karp at HighTower. 'There is half a trillion dollars, an incredible war chest of capital, that has been put in the last two years into private equity and venture capital,' said Pagnato. 'That money is going to be there for the next seven to ten years and that’s principally to buy middle market sized companies.' Pagnato said small or mid-sized business owners should hire a fiduciary well ahead of a sale because once they start the process, their lives will change and pretty soon they will find themselves 'drinking from a firehouse'. 'They are not going to have time to deal with their own personal situation and their family,' said Pagnato. 'They need to start planning at least 24 months ahead of time.' Pagnato added that closing a deal can be the most frustrating part of the process, because sellers are anxious to get out and 'just when they think they have the deal cut, things come out of the blue.' Once the sale is complete, Pagnato said the key to managing that windfall is to preserve capital and find enough yield to live on.