Total Wealth Planning

Total Wealth Planning looks at all facets of your financial picture:

  • Family or closely-held business
  • Commercial/agricultural real estate
  • Intellectual property
  • Investable assets (non-qualified)
  • Retirement assets
  • Personal real estate/land holdings
  • Personal property
  • Trusts and estates

At TransitioNext we look at a business owner’s wealth a little bit differently. We find that many asset allocations typically consider only traditional asset classes such as stocks, bonds, and cash – potentially rendering this analysis misleading and incomplete as a result.We see pre-liquid wealth as tremendously important to the total picture at every stage of the game, so crucial that much of what we do in our planning process is helping clients manage it before the exit event.*

What is pre-liquid wealth?

Pre-liquid wealth is defined as the value of the client’s business as a growing asset.

It is the value held inside a private or family owned business. Eventually, every business will be sold or transitioned to an internal or third party. At that point, liquid wealth will be realized and must be integrated with the overall existing wealth plan.

In other words, we think the best course of action lies with treating your ownership interest as an investment—not just a source of income or cash flow. Under this approach, business interests are included as assets in your investment portfolio rather than just a line item on your financial cash flow plan.

How do you manage pre-liquid wealth?

Many business owners assume that managing pre-liquid wealth is just as simple as running their company. While there is no substitute for income generation, focusing on it alone neglects the problem many business owners eventually face.

“How and when do I convert my pre-liquid wealth to liquid wealth in a way that is well-timed,
cash flow positive, tax efficient, and makes sense for all the personalities involved?”

Doing this correctly doesn’t happen by accident. It must be managed through a process that addresses performance enhancement, distributions, partial sales, strategic intergenerational planning and ultimately the sale or transfer of a business. We have designed the TransitioNext Process to specifically address these issues.

At TransitioNext Advisors, every transition can mark the start of something greater. What happens before the transition is just as important as what happens during it. Pre-liquidity planning is a subject of little attention to most, but we wouldn’t see our planning as complete without it.

*The pre-liquid wealth concept was discussed in Z. Christopher Mercer’s book “Unlocking Private Company Wealth,” Peabody Publishing LP, 2014. Chris Mercer is a well-known valuation expert and uses concept in his business.

Chris Mercer is not a representative of or with MML Investors Services. His views and opinions are his own and are not sponsored or endorsed by MML Investors Services, or its affiliated companies.