Planning For Your Company's Sale
With mergers and acquisitions in the news, Falcon Wealth Advisors Founder and CEO Jake Falcon, CRPC, joined me on In The Money Insight to discuss how employees can put themselves in a strong position if their company is sold. A summary of our conversation is below. You can find the full video and podcast here.
Jake: In regards to mergers and acquisitions, this is not our first rodeo at Falcon Wealth Advisors. We have helped hundreds of clients who have seen their employer be acquired by another company. Our guidance often involves helping manage both finances and emotions.
Cory: Yes, that’s a good point about this being an emotional moment in life. The first piece of advice I tell people when rumors are swirling is not to panic.
Jake: Yes, it’s easy for us to say, of course. But working somewhere for decades and being a few years away from retirement and then finding out the company is being sold understandably provokes a lot of emotions. I advise clients to embrace their emotions, even while things are uncertain – but at the same time, it’s important not to act on them and make emotional decisions. And I encourage people to block out as much noise as possible, whether it’s from the media or colleagues. Until a sale is final, no one knows exactly what will happen.
Cory: And it’s ideal if you can avoid jumping to conclusions. I know clients who were at companies that were sold, and they’re pleasantly surprised how happy they are at the new company. Or how their overall situation turned out.
It’s also important to understand how the sale of your company could impact your financial plan. This is something we take pride in helping clients with at Falcon Wealth Advisors.
Jake: And if you are experiencing anxiety, one step you can take to feel more in control is to call your wealth advisor. At Falcon Wealth Advisors, we can review your financial plan and use software to run different “what if” scenarios based around the company sale.
Cory: And if you don’t have a financial plan, now is a great time to work with a team like ours at Falcon Wealth Advisors to develop one. A financial plan is not a set-in-stone blueprint, but rather a resource to help guide you on your financial journey. And we build plans to accommodate unpredictable life changes – like the company you work for being sold.
I also recommend clients to be mindful of timing. For example, if you decide you don’t want to be part of the new company and leave voluntarily, you could miss out on a potential severance package, stock options, and more. And again, it’s important not to assume the sale will negatively impact you and that you should leave as soon as you can.
Jake: I agree with that, although if you’ve been entertaining other career opportunities, now might be just the right time to pursue those. I wouldn’t recommend waiting around to see if you will receive a nice severance package if you have an exciting new opportunity available.
And if you own a lot of company stock and your company is about to be sold, it’s quite possible the sale could be good for your financial plan. Because stock sells at premium prices in these situations, you may even be able to retire earlier than you expected, or transition to a lower stress job. This is the exciting part of a company sale that sometimes people overlook because they’re focused on their emotions.
Cory: To share a real client story, I know a 53-year-old who was laid off from his longtime job. He didn’t have a financial plan, so we created one for him. When we met, he was pleasantly surprised to learn his financial plan indicated he didn’t need to take a similar high-level, stressful job. And a few years later his previous employer was sold, which he benefited from because he still owned company stock.
I share this to reiterate that life is unpredictable and sometimes big changes don’t necessarily lead to the negative consequences we envision.
Jake: That’s a great story that shows the importance of a financial plan. I’m pleased to share that we now have four financial planners on our team.
Cory: Jake, I know you recently posted an episode of Upticks that focused on mergers and acquisitions. Is there anything you would like to share today that you discussed in that episode?
Jake: I talked about potentially selling company stock and diversifying your portfolio if the stock price quickly rises upon rumors or an announcement of a sale. If you have a financial plan in place, it can help you make the right decision for you.
Cory: Yes and selling company stock is a big decision. That’s why it’s so important to get organized and work with fiduciary-minded advisors like our team here at Falcon Wealth Advisors. As we mentioned, we’ve helped hundreds of clients through this process.
Jake: Exactly. I tell people all the time, if you’re having knee surgery, would you want to choose a surgeon who hasn’t performed a knee surgery? Of course not. It’s important to work with experienced, objective wealth advisors during this uncertain time.
Cory: Objectivity is so important. It may be an emotional time for you but working with an unbiased fiduciary wealth advisor – fiduciaries are legally required to act in your best interests – can be such an asset for you.
One thing we haven’t discussed is taxes. Selling your stock after a company sale can have major tax implications, and while we are not accountants at Falcon Wealth Advisors, we take tax planning seriously and take pride in helping our clients execute tax-smart strategies.
No matter where you are in life, and what’s going on with your employer, it’s prudent to work with objective fiduciary wealth advisors who can develop a customized financial plan for you. If you would like to learn more, contact me directly at [email protected]