Working With a Family Office After Selling Your Business

Mark Cassell
August 15, 2018

For a small business owner, succession planning can be an emotional and complex decision, especially if you do not plan to keep your business within the family.

This is the third blog in a three-part series that discusses the opportunities and challenges entrepreneurs face after selling a business. 

For a small business owner, succession planning can be an emotional and complex decision, especially if you do not plan to keep your business within the family. However, if you have built a successful company, the upside is that when you eventually sell it, you are rewarded with a meaningful windfall. While you may find yourself faced with the uncertainty of what to do next, preserving the wealth you have worked hard to create is a prudent first step. For many individuals and families, the personalized service of a family office can help achieve this goal.  

A family office is a company that advises and manages the finances and investments of ultra-high net worth investors. In addition to investment management, family offices typically advise on financial planning and budgeting, estate planning, and philanthropic giving, among a multitude of other financial management and administrative matters. If you are an entrepreneur preparing to sell your business—or you already have—working with a team of wealth management professionals can help ease the transition and develop a strategy for the next phase of your life. 

Who can benefit from a family office?

Family offices can generally be divided into two categories—single-family offices and multi-family offices. A single-family office is capitalized by the wealth of one family and provides a host of wealth management services specifically tailored to the family it serves. It is typically recommended that a family have at least $100 million in liquid assets for a single-family office to be cost-effective. According to the 2017 Global State of Family Offices report from consulting firm Capgemini, it can cost more than $1 million each year to run a fully integrated family office once you account for overhead costs such as office space, payroll, IT, and legal and compliance oversight. 

Multi-family offices such as CIBC Private Wealth Management provide family office services to many individuals and families. A multi-family office is typically a more cost-effective solution for those seeking day-to-day and long-term financial management support since the infrastructure is already provided. These firms offer a range of services and strategies to preserve and manage your assets responsibly. 

As you accumulate wealth and your financial needs become more complex, a family office can help you navigate several relevant issues, from investment management to legacy planning and charitable giving strategies. 

What are the benefits of working with a family office?

Depending on your financial circumstances and needs, working with a family office has many advantages over attempting to go it alone or outsourcing each function separately. One of the primary benefits is that a family office integrates many of the wealth management services high net worth families seek, with a team of experienced advisors and financial services professionals coordinating efforts to meet your unique goals. 

Additionally, many high net worth families seek additional resources when it comes to what and when to tell their children about the wealth they have set aside for them. CIBC Private Wealth Management finds that families who successfully transfer their wealth and legacy to future generations do so by establishing trust through candid communication. A family office can provide the tools and resources to educate and engage younger generations in the wealth management and legacy planning process.  

Finally, working with a family office allows you to develop long-term and personal relationships with your financial and wealth planning advisors, which can result in more effective service and better advice over the long run. Furthermore, high net worth families tend to value the client confidentiality that family offices hold paramount. 

Getting Started 

As you transition from business owner to family wealth manager, the following questions may help you determine whether working with a family office makes sense. 

  • What financial planning and wealth management services do you need?
  • What fees are you willing to pay for these services?
  • How involved do you want to be in the wealth management process? 
  • How engaged do you want your family members to be?
  • What is your investment philosophy? Which types of investments do you prefer? 
  • What are your wealth transfer goals?
  • Do you have philanthropic goals? 
  • What do you want your legacy to be? 

While selling your business may present new challenges, it also provides a number of opportunities—for example, diversifying your investment portfolio away from concentrated wealth, focusing on your estate and legacy planning goals, and finding a new identity and path post-sale. Working with a family office can help ease the transition process and work with you to set new goals and develop a strategy for your next phase of life. 

Mark Cassell is a senior relationship manager with the firm. For more than 25 years, Mark has concentrated on meeting the unique needs of the affluent investor. He is a trusted financial advisor to a select group of business owners and other successful individuals and families, providing customized and comprehensive wealth management solutions. Mark is recognized for his commitment to building and sustaining trustworthy relationships and for providing sound strategies to help clients identify and overcome critical challenges to their financial goals.