Your Financial Game Plan After Selling the Business

Inspired by my recent conversation with Jacob Oros on M&A Talk

Beyond Financial Freedom: Understanding Your True Freedom Point

During my recent appearance on M&A Talk, host Jacob Oros asked me about the biggest mistakes business owners make when planning their exit. In my years working with business owners, I've noticed four critical errors that can turn what should be a triumphant transition into a source of lasting regret.

The most fundamental mistake? Not understanding your "Freedom Point."

What Is Your Freedom Point?

The Freedom Point is essentially having enough money to live the life you want without worrying about finances. But it's much more comprehensive than a simple financial calculation.

Most business owners chose entrepreneurship because they value personal freedom above everything else—they wanted to call their own shots. Your Freedom Point addresses when you can afford to sell your business from a financial perspective, but it encompasses so much more:

• Freedom of time: Having the means to do what you want, when you want
• Freedom of relationships: Choosing who you spend your time with after your business career
• Freedom of purpose: Living a meaningful life beyond your business identity

As I explained to Jacob, "It's about securing your freedom of purpose and living a meaningful life."

The Four Critical Mistakes That Derail Business Exits

Mistake #1: Not Knowing Your Freedom Point

Too many owners use rule-of-thumb planning—multiplying their annual needs by 20 or 25. While this provides a starting point, it's insufficient for proper planning.

I recommend creating a detailed lifetime cash flow plan that considers:

• Your desired lifestyle and activities
• All income sources (rental properties, investments, etc.)
• Your accumulated wealth outside the business
• The gap that needs to be filled by your business sale

Interestingly, expenses don't always decrease after selling. Many owners find themselves spending more because they finally have time for activities they've postponed for years. Some purchase second or third homes, pursue expensive hobbies, or travel extensively.

Mistake #2: Avoiding Comprehensive Planning Due to Complexity

Business owners often see the multi-layered planning required for a successful exit as "too complicated" and push it aside. This includes:

• Business-level planning
• Personal financial planning
• Tax strategy
• Wealth transfer planning
• Asset protection

The complexity overwhelms many owners, leading to anxiety, procrastination, and indecision. They retreat to their comfort zone—running their business—rather than addressing the planning required for their exit.

Mistake #3: Not Understanding the Buyer's Perspective

How you value your business typically differs dramatically from how buyers evaluate it. Understanding this gap is crucial for maximizing your sale price.

Buyers focus on factors like:

• How dependent the business is on you personally
• Your competitive advantages
• Recurring revenue streams
• Growth potential and scalability

Many owners measure success differently than buyers, which can lead to disappointing valuations if not addressed early in the planning process.

Mistake #4: Working with Isolated Advisors Instead of a Coordinated Team

This issue comes up frequently in my practice. Business owners work with various professionals—accountants, attorneys, financial advisors, insurance agents—but these advisors operate in silos, providing isolated advice that often conflicts.

As Jacob mentioned during our conversation, he once received advice from a tax consultant, acted on it, then discovered his attorney flagged a significant issue that made the strategy unworkable. This wouldn't have happened with coordinated planning.

The Power of Early Planning

The most successful clients I work with share one common trait: they start early and remain proactive.

Here's why timing matters:

Tax Planning: You need to begin tax planning two to three years before a sale to access all available options in the tax code. Wait too long, and your options become severely limited.

Wealth Transfer Planning: Complex strategies for transferring wealth to heirs require significant lead time to implement properly.

Asset Protection: Moving money from under a corporate shield to personal ownership requires different protection strategies that must be established in advance.

The best plans create synergies—reducing taxes while accomplishing wealth transfer objectives and protecting assets in one comprehensive strategy.

The Emotional Challenge of Transition

One aspect that often surprises owners is the emotional difficulty of transitioning their wealth from their business (which they know intimately) to diversified investments (which they don't).

For most business owners, their company represents 80% of their wealth. Moving from something they've controlled for decades to financial markets they can't control creates significant anxiety. This is where having the right advisory team becomes crucial—not just for strategy, but for coaching through the emotional aspects of transition.

Building Your Advisory Team

Your core team should include, at minimum:

• An experienced wealth manager (who can serve as quarterback)
• An M&A attorney for business transactions
• A proactive, planning-focused accountant
• A qualified business intermediary

The key is ensuring these professionals communicate and coordinate their advice rather than working in isolation. You need what I call a "personal Chief Financial Officer"—someone advocating specifically for your goals and coordinating all the complex decisions involved in your transition.

Taking Action

If you’re considering an exit in the next few years, the most important step is understanding the key decisions ahead. Many owners admit, “I don’t know what I don’t know.”

That uncertainty often leads to regret—missed strategies or overlooked details realized too late. The solution? Start early, get educated, and build a team of coordinated advisors to guide the process.

Your business exit will likely be your biggest financial transaction. It deserves the same level of strategy and care you’ve devoted to building your company.

Ready to start planning your optimal business exit?

Schedule a no-obligation, exploratory call with me. We'll delve into your business specifics and long-term goals, formulating strategies to build and protect your wealth as you prepare for your ideal business endgame.

Joseph LoPresti, leads  Arlington Wealth Management, and brings over 39 years of wealth management and business expertise to the table. Joseph is passionate about guiding fellow business owners  through a smooth and satisfying transition, and coordinating all aspects of their wealth toward a secure and prosperous life.

Arlington Wealth Management is a Registered Investment Adviser ("RIA"). Registration as an investment adviser does not imply a certain level of skill or training, and the content of this communication has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Arlington Wealth Management provides individualized responses to individuals in a particular state only after complying with the state's regulatory requirements, or pursuant to an applicable state exemption or exclusion. All investments carry risk, and no investment strategy can guarantee a profit or protect against loss of capital. Advanced Tax Reduction Group (ATRG), an affiliate of AWM, may receive a portion of the fees from the services mentioned in this communication. ATRG offers tax planning, consulting, and preparation, as well as estate and business consulting for separate compensation. AWM clients are not obligated to use ATRG for these services.