I did it!!

v5200

v5200

Dryer sheet wannabe
Joined
Sep 11, 2008
Messages
21
Well it's hard for me to believe, but it's finally happened... last month I sold a majority stake of my business to a Private Equity firm. This has been months and months in the making, and anyone who has gone through this can probably relate to the sky high anxiety levels towards the end of the process.

I am so fortunate, it's hard for me to get my arms around it at this point. When I look back at my first post here, it's taken a little longer than I originally planned, but the delay resulted in a more lucrative liquidity event, so it's all good. I'm not a religious man, but the word "blessed" comes to mind. I will still be participating in the company on a limited basis (board level, and 4-6 days/mo), and I still own a significant minority stake, but for the most part the end game is finally here.

It's mind numbing to think about all of the things that are now available to me, and how I will construct the next phase of my life. I have good advisors, and money will not be an issue. Over the years, while I have not posted much, but I have consistently checked back with this forum for advice and inspiration. I hope this does not come across as bragging... these are all topics that are difficult to discuss with existing friends and co-workers- the people who I have been surrounded with for the last several years. I am hoping to learn from this group and others about how to adjust to the next phase of your life, how to manage sudden wealth and a change in lifestyle, and how to find your path after the big event.

Thanks all!
 
Sounds like winning the lottery but with a lot of front end work :) Now you can start learning how to handle that small fortune on your own. You may discover that those "good advisors" were useful getting you were you are but are sucking wealth now that you have sold the business.
 
Sounds great - congratulations! Be careful how you invest that fortune, so you can live long and prosper... (I just couldn't resist)... :D

Time to do the happy dance: :dance:
 
v52, congratulations and welcome to your new life. :)

Donheff mentioned you might find that your good advisors become a drain on your hard-won wealth. That may or may not be the case, but it might be worthwhile to post how your advisor wants you to invest and manage your funds. You might get some interesting feedback and suggestions from this group.

I say this because my ex boss pulled the ripcord on his golden parachute a few years back and his brother, a broker, manages his portfolio for him. I had lunch with him last month and was very interested to hear some of the investments his brother had chosen for him - some made sense to me, others I wouldn't dream of putting any money into.
 
v5200 said:
...I have consistently checked back with this forum for advice and inspiration. ... these are all topics that are difficult to discuss with existing friends and co-workers - the people who I have been surrounded with for the last several years. I am hoping to learn from this group and others about how to adjust to the next phase of your life...and how to find your path after the big event.
Click to expand...
First off, sincere congrats.

The above part of your post struck a chord with me too. Even though planning for FIRE has been a significant part of my life over the past several years, I have never been able to discuss retirement or the plans leading up to it with anyone at work at all ever. Nor with friends or even family except for DW of course. But DW has no interest in anything financial, nor does she have any post career plans, so this place has been an incredible resource for me too. Thanks everyone...
 
Congratulations. I'd second the advice about cross checking the investments your advisers recommend. My next door neighbor runs an investment firm for high value clients and I'm amazed at his spend rate. Dunno, maybe he delivers.....but, wow.
 
Congrats V5200. Please post what you experience as I hope to live thru your experiences.... at least until I can join the group in 8 - 10 years.
 
Congratulations! I too hope you'll post more often now that you have the time.

This is one helluva supportive community. Its support definitely made ER an easier decision.
 
Thanks so much for updating us on the sale of your business. Congratulations!!!!!
 
Hi V5200, welcome to ER. As a few others posted, hopefully you will or have already done your due diligence on the advisors. Don't want any Bernie Madoff repeats.
 
Wow, thanks everyone! Midpack- it sounds like you've felt the same way... even though it's all good news, money and finances are just something that are difficult to discuss with even close friends- and there is no DW, so I can see the value in this forum already!

The advisors I'm using have come highly recommended from trusted associates, and I called several other references just to get some further perspective before we started working together. I know there are fees associated with using advisors that could be avoided if you truly manage all of your own investments, but I just don't think I have the expertise currently, and I'm not sure that's the best bet for me... what I like about these guys are they deal with people in my situation (a lot of entrepreneurs who have sold companies, or executives in public companies with stock options, etc), AND they don't at all recommend swinging for the fences- their approach seems balanced and sensible. That being said, I know you need to watch everything carefully!

The portfolio that they are recommending consists of roughly the following:

30% index and mutual funds
25% Munis
5% MLPs
20% Alternative (PE funds/Hedge)
20% Cash/Fixed "alternative"

The last bucket is a work in progress... they normally would have recommended a larger bond piece, but the current market conditions seem a little tenuous, so that will morph over time. I'll be looking on the board to try and figure out other relatively safe investments for that cash/foundation part of the portfolio...

In addition, I'm continuing to manage any existing investments that I held prior to this event, as a benchmark and to keep my mind active in this arena!

Any comments and thoughts are appreciated, and thanks again for the warm re-welcome!

(actually, I just realized this is probably the completely wrong place to post this portfolio info!!)
 
v5200 said:
20% Alternative (PE funds/Hedge)
In addition, I'm continuing to manage any existing investments that I held prior to this event, as a benchmark and to keep my mind active in this arena!
Click to expand...
If you're in the realm of "accredited investor", then you can save yourself at least 2% in fees and 20% of your unrealized cap gains per year in this part of your portfolio by joining an angel investor's club. But the real reason you'd be interested in joining the club would be to (1) be a better investor, (2) be a business mentor to other entrepreneurs, and (3) apply what you've already learned from the private equity guys... but this time for your benefit.

Oh, and it's hugely intellectually stimulating.
 
Nords, yes, I'm very interested in learning more about angel investing... it actually is on the top of my list!
 
Congratulations, V5200! Can anyone tell me if a fixed index annuity is a good thing? I want it for hopefully 10 to 12 or more years from now, when I figure I will take out some $ every month to help with whatever I need some extra $ for.

The one my financial guy recommends is a guaranteed 8%, with a 10% bonus for getting into it. The amount in this cannot go down no matter what the market does, only up....but it may not go up as quickly or as much as the stock market. But, that is fine with me....as long as I don't lose any $. Actually, he said, if the market was to drop, there is no downside for me....my account would only go up, when the market rises, without having to make up for the money I lost, because I would not have lost any money.

I did do a little reading on these fixed index annuities, and the only people that did not like them seem to be people that cannot sell them to you.
 
Skye said:
I did do a little reading on these fixed index annuities, and the only people that did not like them seem to be people that cannot sell them to you.
Click to expand...
Which is exactly the same as saying,
"The only people who like them are people that can sell them to you."
Click to expand...

And congrats to v5200. I'm sure you won't be buying an indexed annuity.

Hedge funds did extremely poorly recently and caused their investors lots of taxes even with poor returns. Your list of other investments looks like a great way to lose money. I wonder if you have just thought about used tried and true methods? You have the ability to take on risk, but you have no need to take on any risk, so what's the point of going outside the normal stocks:bonds index fund route? Think about it.
 
LOL,.....That is true,....but the people that can sell them, can also sell many other products, and they say, a FIA is what to get when you don't want much risk, and are willing to keep this money in it for a while.
 
Thanks LOL... you bring up an interesting point. I felt the balance was fairly diversified, but as instruments such as MLPs and Hedge/PE funds are concerned, as it was explained to me they do offer a level of diversification, and the opportunity for higher returns. MLPs in particular have a low correlation to other parts of the portfolio (which seemed to make sense to me at the time). You bring up an interesting point though, which is how much risk should I take, given that I could probably do OK with modest gains. Food for thought...!
 
Skye said:
Can anyone tell me if a fixed index annuity is a good thing? I want it for hopefully 10 to 12 or more years from now, when I figure I will take out some $ every month to help with whatever I need some extra $ for.
The one my financial guy recommends is a guaranteed 8%, with a 10% bonus for getting into it. The amount in this cannot go down no matter what the market does, only up....but it may not go up as quickly or as much as the stock market. But, that is fine with me....as long as I don't lose any $. Actually, he said, if the market was to drop, there is no downside for me....my account would only go up, when the market rises, without having to make up for the money I lost, because I would not have lost any money.
I did do a little reading on these fixed index annuities, and the only people that did not like them seem to be people that cannot sell them to you.
Click to expand...
We need a new perpetual thread for the FAQ archives: "Should I learn how to manage a diversified investment portfolio of passively-managed index funds, or should I just pay someone to sell me a fixed index annuity?"

v5200 said:
Thanks LOL... you bring up an interesting point. I felt the balance was fairly diversified, but as instruments such as MLPs and Hedge/PE funds are concerned, as it was explained to me they do offer a level of diversification, and the opportunity for higher returns. MLPs in particular have a low correlation to other parts of the portfolio (which seemed to make sense to me at the time).
Click to expand...
Yes but.

Instead of relying on some other guy's explanation, including ours, you might want to page through Larry Swedroe's "The Only Guide to Alternative Investments You'll Ever Need". It's subdivided into "The Good, the Flawed, the Bad, and the Ugly".

MLPs aren't mentioned, perhaps because they can invest in a number of different assets, but the book gives one a good framework to evaluate investments for more than just their lack of correlation between assets.

v5200 said:
You bring up an interesting point though, which is how much risk should I take, given that I could probably do OK with modest gains. Food for thought...!
Click to expand...
"I have more than I need, so I don't need to take any risk."
"I have more than I need, so I might as well try for a moonshot with the excess."

I don't have a good answer to this conundrum either. But I believe that investment returns are generally correlated to an investor's level of effort to educate themselves and to do their own due diligence. So if you have more than you need, you may find that you're not necessarily willing to work that hard to pile up even more...
 
v5200, if I were in your shoes, I would set aside the bulk of my portfolio for someone like Evanson Asset Management - Main Page or the like. For money I wanted to lose, I would go with hedge funds, angel investing, MLPs, etc. But money I wanted to keep in the family and not have to mess with would go to a very low-cost DFA funds advisor (but not a high cost advisor). There are a few of them out there. You don't need "magic investing" just because you are a whale.

Some more links for you:
ETF Investing Guide: My Broker's an Honest Fox - Seeking Alpha
Blaine Lourd Profile - Executives - Portfolio.com

And you might as well read the entertaining "Liar's Poker" by Michael Lewis although there are many books about ripping off rich people by Wall Street.
 
Nords said:
If you're in the realm of "accredited investor", then you can save yourself at least 2% in fees and 20% of your unrealized cap gains per year in this part of your portfolio by joining an angel investor's club. But the real reason you'd be interested in joining the club would be to (1) be a better investor, (2) be a business mentor to other entrepreneurs, and (3) apply what you've already learned from the private equity guys... but this time for your benefit.

Oh, and it's hugely intellectually stimulating.
Click to expand...

What's an angel investor's club?
 
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