The Entrepreneur’s Guide to Post-Exit Wealth Mastery

In the course of our work at Bridge Private Wealth we’ve had the privilege of guiding numerous entrepreneurs and business owners through the exhilarating yet daunting phase that follows a business exit.

The transition from the rapid-fire world of entrepreneurship to the meticulous art of wealth management can be a seismic shift for many. Through these experiences, three key themes have emerged, offering a blueprint for success in this new chapter of life.

Transition from Entrepreneur to Investor: Mastering a New Domain

Entrepreneurs are celebrated for their ability to navigate uncharted territories, creating value where none existed before. However, the skills that fuel that entrepreneurial success don’t always translate seamlessly into managing personal wealth.

The transition from entrepreneur to investor requires not just a shift in mindset but a whole new skill set - and tempo.

Our clients learn that success in this new domain is underpinned by the cultivation of discipline, patience, and a willingness to learn. Surrounding oneself with a diverse team of professional advisers, from accountants to lawyers and investment specialists, becomes crucial. This network not only provides expertise but also serves as a sounding board, helping to temper the entrepreneurial urge to dive headfirst into high-risk ventures.

In fact, this philosophy is not too dissimilar to relying upon a board of directors in a company. However, for business owners that have been used to making agile unilateral decisions, without the counsel of such a board, it can make steady wealth management feel like a tortoise-paced proposition.

Risk Management and Diversification: The Balancing Act

One of the hallmarks of entrepreneurship is a high tolerance for risk. Yet, in the world of investment, this trait must be tempered with strategic diversification.

Entrepreneurs love to fix things, to make the unworkable work, but investment isn’t about fixing; it’s about balancing. A well-constructed portfolio has multiple uncorrelated return levers, ensuring that when one investment faces a downturn, another can offer stability or even growth.

In other words, some aspects of your portfolio are expected to “break” whilst others are soaring.

This phase teaches our clients the importance of balance. An over-concentration in high-risk ventures or the allure of putting a significant portion of the portfolio into a single strategy can jeopardise not just your broader wealth but the hard work that went into building it.

For the entrepreneurial mind, it can be difficult to patiently sit back without taking significant-sized risks, and without leaning too heavily into that “one product that works”, or in this case, “that one investment making all the returns.”

The goal is to develop a portfolio that consistently drives better returns over time through managed risk. This does not preclude the concept of risks within your portfolio, but instead tempers them against more conservative components.

Legacy and Family Wealth Planning: The Long View

Perhaps the most profound realisation for many entrepreneurs is the impact of their financial decisions on future generations.

Wealth, when managed well, becomes more than just a testament to one’s success—it becomes a legacy. Establishing an investment strategy and portfolio that runs independently is vital, ensuring that the wealth serves as an enabler rather than a constraint for the family’s future aspirations.

We work closely with our clients to educate their families about the nuances of wealth management, emphasising the importance of estate planning and the transmission of values along with wealth. This gradual education process, supported by a team of professionals, fosters unity in decision-making and reinforces the family’s shared goals and aspirations.

Ultimately, you want future generations to remember you as the person who created “that thing” and set the family up for generations after exit from your successful company, rather than the one who then squandered the wealth earned from it.

Embracing a New Chapter

For most entrepreneurs, the sale of a business is not just a financial transaction; it’s the culmination of years of sacrifice, risk, and emotional toil. Transitioning to post-exit wealth management requires a different kind of courage — the courage to learn, to adapt, and to plan not just for one’s own future, but for generations to come.

As financial advisers, we are privileged to accompany you on this journey, offering insights gleaned through the many who have gone before you.

- Neelan Sornalingam