Mergers and Acquisitions: 3 Critical Steps for Key Employees

Our phones have been ringing recently after news affecting some local Vermont companies.  Major corporate changes are almost always stressful, however they could also have potential for generous opportunities.

When a business is acquired by new owners, key employees may receive unexpected buyouts, bonuses or awards and face complex questions around taxes, timing, retirement plans, long-term incentive programs and even future employments.  While it is critical to engage competent, professional advice, there is no need to panic.

Financial windfalls (payouts, bonus’, dividends) come in many shapes and sizes but all have the potential for causing angst.  In our practice we call these issues “Sudden Wealth”, which oftentimes results in the need to address important planning steps.

Reviewing your situation with a trusted financial planner will help you determine what decisions you will need to make and when.  They will also help you evaluate the impact of your windfall on your current and future financial needs and work with you to create a holistic, life-long financial plan.

Here is a list of three important steps to take if you are faced with sudden wealth from an unanticipated business event.

1. Avoid the water cooler plan.  Too many financial disasters begin with advice from a well-meaning co-worker or untrained family member. Find professional advice. Begin with your CPA, estate planning attorney, or financial planner (if they specialize in sudden wealth issues).

2. Determine what decisions, if any, must be made immediately.  What are the tax implications of my “windfall”? How much if any should be placed in an emergency fund?  Should I pay off a specific type or all outstanding debt? Get good counsel as to how to proceed with these important questions, then take your time and don’t make any other decisions until you’ve had time to absorb your present situation and have a good understanding of what’s ahead.

3. Enjoy the feelings that come with your windfall and take the time to imagine and dream.  Your new situation may have an important impact on your current financial wellbeing, or you may suddenly be in a position to make a game-changing impact on a cause that’s close to your heart.  Take a deep breath and enjoy the confidence that professional advice can bring.

By Michael Thompson, CAP®, Financial Planner
Copper Leaf Financial

Michael Thompson, CAP®