Investing assets after selling a company
How entrepreneurs structure their assets
With the sale of a company, business assets are transferred to private assets. This raises the question of how the assets should be structured and invested. This article provides information on how to proceed in three steps.
The key points in brief:
The key points in brief:
- The role of an entrepreneur changes with the sale of a company. Liquid assets from the sale are often invested prematurely.
- Anyone seeking to invest their assets in a long-term and diversified manner should take sufficient time for planning. The UBS Wealth Way approach assists with the preparation. We recommend that entrepreneurs (1) gain a clear picture of their own assets, (2) conduct financial and estate planning as well as build up an asset structure and (3) develop an asset strategy.
After selling a company, entrepreneurs often have considerable liquidity and newfound freedom. A large proportion of their assets are no longer tied up in the company, but can be invested freely.
Investing wisely in a new situation
Investing wisely in a new situation
We recommend taking enough time to plan the new phase in life and preparing for the new role as an investor. Only then can the ideal asset structure be determined and the appropriate investment strategy be carefully implemented. In practice, we often see former seasoned entrepreneurs making hasty investment decisions in this new situation.
Important: Experience has shown that those who continue to approach their new role as an investor with an entrepreneurial mindset are likely to make mistakes. This often means that the newly available liquid assets are invested directly in well-known companies that the entrepreneurs have become familiar with during their entrepreneurial activities. This approach can lead to a familiarity bias, a tendency to focus on investments or markets that they are already familiar with, resulting in increased risks due to a poorly diversified portfolio. The UBS Wealth Way recommends a systematic approach to reducing these risks.
Wealth planning with UBS Wealth Way
Wealth planning with UBS Wealth Way
UBS Wealth Way is a global advisory approach from UBS that assists investors in managing their investments in three steps: (1) discussion of values, (2) financial planning, estate planning and asset structure as well as (3) Liquidity. Longevity. Legacy. asset strategies.
Planning to sell your company? Or do you have other sources of liquid assets that you would like to invest? The three steps of UBS Wealth Way will help you to select the ideal investments and investment properties for your personal situation.
Step 1: Discussion of values
It is crucial for investors to define their values, as they are an important guideline for future investment decisions. It is therefore important to first clarify the family's priorities and define personal values and goals. In doing so, the following five questions should be asked:
- What do I want to accomplish in life?
- Who are the people that matter most to me?
- What do I want my legacy to be?
- What are my main concerns?
- How do I plan to achieve my life’s vision?
Investors who see their own values reflected in their investment portfolios are more likely to prioritize consistency and are less inclined to sell their positions at unfavorable times or conditions during times of crisis.
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Step 2: Financial planning, estate planning and asset structure
Once the first step of discussing values has been completed, the next step is to analyze the current and future financial situation in order to understand it in detail.
This involves preparing a private financial plan showing income and expenditure as well as the development of assets over the next few years. The aim is to gain an overview of the current asset situation and to define how assets should develop in the future in order to achieve personal financial goals. The financial plan serves as the basis for creating the investment concept.
With estate planning, legal arrangements to protect loved ones and philanthropic considerations become apparent. As entrepreneurs often also hold company shares, additional coordination is required to clarify dependencies between the private and business sides and to take legal, tax and estate-related aspects into account.
UBS defines the asset structure as the composition of total assets. This step clarifies the question of whether real estate, shareholdings, investments or art should be held privately or through a company. To this end, UBS provides an overview of the client's entire asset structure (see illustration below for an example). On the basis of this overview, it is possible to identify and discuss alternatives that reflect the values and objectives and ideally also offer legal, tax and estate-related advantages.
Asset structure of the Doe family
Schematic representation of an overview of the asset structures
Asset structure shown schematically, taking into account family circumstances, private assets and the owner structure in the company.
It is never too early for succession planning
It is never too early for succession planning
Whether for the worst-case scenario or for a well-deserved retirement: Find out the key points to consider when transferring your company.
Step 3: Liquidity. Longevity. Legacy. asset strategies
This step involves creating the actual investment concept after the values, goals and financial situation have been assessed. It is based on the findings from the two previous steps. We recommend that entrepreneurs align their total assets with the following three strategies:
UBS Wealth Way – your personal investment concept
Maintain standard of living in the short term
Secure standard of living in the long term
Improve life across generations
- The liquidity strategy serves to maintain your own lifestyle and covers expenditure over the next three years. Defining a liquidity strategy helps entrepreneurs to generate cash flow with resources that are not exposed to market risks. Although liquidity is important, investors should not hold too much.
- The longevity strategy is aimed at satisfying long-term needs and covers expenditure after four years until the end of life. A longevity strategy is designed to finance all expenses for the rest of a person's life, helping the entrepreneur to retire securely and comfortably.
- The legacy strategy is intended to benefit the lives of third parties. In practice, this involves donations to children or philanthropic activities. The legacy strategy represents the portion of assets that exceeds personal needs.
As large investment sums often have to be invested when companies are sold, we recommend building up the three asset strategies at different intervals. It often takes more than twelve months to implement a comprehensive investment concept in practice. Once the UBS Wealth Way has been fully implemented and the investment assets have been built up, the decisions must be regularly reviewed and adjusted if necessary.
UBS Wealth Way enables you to invest your assets strategically with a focus on value
UBS Wealth Way enables you to invest your assets strategically with a focus on value
Selling your own company offers a unique opportunity to align and invest your new liquid assets with your own values and life goals. This means letting go of old habits as an entrepreneur, becoming accustomed to the role of investor and making a fresh start. This requires planning enough time.
As a trusted partner, UBS assists entrepreneurs in tailoring their investments to their values, goals and personal risk profile with the UBS Wealth Way. This provides entrepreneurs with peace of mind even in turbulent times.
Your goals in focus
Your goals in focus
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Pascal Zumbühl
Pascal Zumbühl
Economist with the Chief Investment Office at UBS
Pascal Zumbühl joined UBS in October 2023, having previously worked in research at Credit Suisse for four years and conducted various analyses of the Swiss corporate landscape. He has extensive experience in research on start-ups, SMEs, sustainability in the corporate world and succession planning.
John Moser
John Moser
Client Advisor with Executives & Entrepreneurs Zurich at UBS
Over the past 15 years, John Moser has advised 60 entrepreneurial families in the greater Zurich area. The private and business needs of his clients are the focus of his advice.
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