Business owners have more options than ever for generating liquidity and transitioning their companies. Effectively navigating those options was a primary topic in the latest webinar in William Blair’s Business Owners Forum, “Transition to Liquidity: Tax, Risk, and Opportunity for Founders and Owners.” The webinar featured William Blair’s Andrew Hansen, part of the Founder-Owned Business Advisory team, and Chris Brathwaite, partner and director of Pre-Liquidity Planning.
Below are excerpts from their conversation focused on timing, common challenges, portfolio management, and business valuation.
- How should business owners understand the concept of pre-liquidity planning?
- Chris Brathwaite (CB): We think of pre-liquidity planning as creating some space to address how a liquidity event will affect one personally. For founders, this primarily involves maximizing after-tax proceeds. There’s an opportunity to think longer term and more strategically about how a liquidity event can disrupt or enhance an estate plan—and explore gifting and integrating philanthropy goals into the transaction.
- When should they begin the process?
- CB: Every founder and every business owner has a unique situation, but generally speaking, if we have six to 18 months to do some effective planning, we can take advantage of a host of opportunities. Depending on the situation, there may be a desire to shift state domicile, establish irrevocable trust entities for gifting, or create a philanthropic vehicle for funding future charitable work. All of those things, including assembling the right team of key advisors, take time.
- What are some common challenges for business owners when it comes to the transaction process?
- Andrew Hansen (AH): Entrepreneurs and business owners are often at a disadvantage in terms of information. They have spent their lives building a remarkable and successful company, and often aren't in the business of M&A and capital markets transactions. It's in their best interest to learn about the transaction process early to level the playing field against parties who might be on the other end of the table, such as private equity and strategic buyers who inherently have more information.
It's in their best interest to learn about the transaction process early to level the playing field against parties ... such as private equity and strategic buyers who inherently have more information.
ANDREW HANSEN, Founder-Owned Business Advisory
- How can they try to close that information disadvantage?
- AH: One of the best approaches is to find a business in their industry that has recently gone through a transaction. Reach out to the advisors who worked on that transaction to gain an understanding of the investors who participated, the valuation level, and the key diligence focus areas related to value drivers and value detractors. It's all critical benchmarking information for business owners.
- What should business owners know about portfolio management after a transaction?
- CB: Many business owners have the bulk of their wealth in the business, so that influx of cash is going to undoubtedly affect their investible assets. This presents an opportunity to take a more institutional approach, including access to different investments. Asset location also becomes more important. For example, you may benefit from investing in higher-growth, less liquid assets in a generational vehicle that has a significantly longer time horizon and is earmarked for future generations. In contrast, with a revocable trust, you may want to prioritize higher liquidity and more stability, as you're generating a sustainable income stream.
- For owners selling all or parts of their company, getting the highest business multiple is a primary goal. Should they take a broader view?
- AH: Business owners and entrepreneurs will often have an arbitrary number in their minds about the value of their business for them to live comfortably post-transaction. Maybe they heard that one of their fellow CEOs sold their business for a certain amount and think they need that amount. But when they actually sit down and consider their wants and needs—and more importantly, some effective strategies that they could deploy well in advance of a transaction to maximize after-tax proceeds—their viewpoint can change in meaningful ways.
The Business Owners Forum will continue in 2026 with a series of conversations on topics including private capital, family office solutions, private shares trading, and more. Please contact your William Blair wealth advisor for more information about the events and our capabilities.