5 ms·

Questions like this one puzzle me, not least of which because I was recently in a very similar situation, and it never in a million years would have occurred to

Questions like this one puzzle me, not least of which because I was recently in a very similar situation, and it never in a million years would have occurred to me to ask HN for advice. I mean, I love you people here, honest I do, but when I need legal advice, I go to my lawyer. When I need medical advice, I go to my doctor. And when I need financial advice, I go to my financial advisor. You don't have a financial advisor? Well, I assume you have a lawyer, and I assume you have a banker-- ask them for recommendations. You might also ask the pros who were on your board of directors prior to the sale.

vaksel 16y ago
since it's a brand new user it's probably bullshit, especially when you remember that it's next to impossible to sell a company as a cash only deal. There is always an earn out/stock play, to make sure the buying company isn't buying a lemon
- brk 16y ago
  It all depends on the company. If he created something that works, has value, and happened to find someone with money who can do the math, this is not unlikely at all. I have first-hand knowledge of several simple cash transactions for business sales like this in the $2M-$10M range.
  - starkfist 16y ago
    > I have first-hand knowledge of several simple cash transactions for business sales like this in the $2M-$10M range. Like what?
    - brk 16y ago
      I don't want to ignore your comment, but these were generally private sales, and the private part implies a certain amount of trust and non-disclosure. I know this probably doesn't do anything to convince you I'm not full of shit, so I apologize for not offering concrete details. If you stop and think about it though, there is a lot more private money out there moving hands than you might think.
- jacquesm 16y ago
  I don't know. If I had a windfall like that I'd keep it quiet too, or at least not directly associated with my online identity, so if I would ask for advise about it online I'd do it just like the OP did.
- brown9-2 16y ago
  since it's a brand new user or a regular user who did not want to post under his/her regular username for privacy reasons.
brk 16y ago
You don't have a financial advisor? Well, I assume you have a lawyer, and I assume you have a banker-- ask them for recommendations. You might also ask the pros who were on your board of directors prior to the sale. I wouldn't assume any of these things. Did YOU have a lawyer or financial advisor when you were 20? The OP reads as if it was basically a 1-man shop sale. If he sold a company for $5M that had a board of directors and all the typical formalities, it probably would have been VC or angel backed, and the terms of the deal for a $5M sale would have probably netted him $500K at best. Let's face it, almost any investor-backed equity event of $5M is pretty much a failure and returns little if anything to the management team. So, I read this as a "guy in a basement" sort of scenario who managed to create some webapp, service, or widget pretty much solo and was wise enough to be able to flip it for a nice chunk of change. I also happen to think he was smart for reaching out here to get broader advice. I've met TONS of financial advisors that can't manage funds for shit. Not to mention in the current market a lot of funds are down, and I'm sure he would have no trouble finding a bad financial planner or lawyer that would love the opportunity to manage the portfolio of someone naive in that regard.
- michael_dorfman 16y ago
  I didn't have a lawyer or financial advisor when I was 20, but I also hadn't closed a $5M sale, either. And when I did so (at a more advanced age), I certainly did. It strains credulity to imagine that anyone, of any age, would be able to close such a deal without a lawyer or a banker being involved. (And believe me, when you show up at the bank with a $5M deposit, you get introduced to financial advisors, like, fast.) Seriously: just the practical mechanics involved in the sale of a corporation requires a small team of professionals. No one hands a check for $5M to a "guy in a basement" without some due diligence, and that involves accountants, auditors, lawyers and bankers.
- Judson 16y ago
  I did have parents, who had a lawyer and a banker ;)
  - run4yourlives 16y ago
cynicalkane 16y ago
Don't go to a financial advisor, at least not without doing some research first. Many of them are paid on commission for funneling money in certain places, and many more are just bad. Generally, someone smart enough to build a $5 million company should be smart enough to manage his own money.
- chollida1 16y ago
  > Generally, someone smart enough to build a $5 million company should be smart enough to manage his own money. They are probably also capable of fixing their own car or doing their own plumbing or landscaping. Sometimes you want to delegate tasks that you dont' want to do onto others.
  - cynicalkane 16y ago
    There's a difference in magnitude and importance between doing your own landscaping and managing your own $5 million dollars of net worth.
    - chollida1 16y ago
      Agreed, all the more reason that this statement: > > Generally, someone smart enough to build a $5 million company should be smart enough to manage his own money. is false.
      - cynicalkane 16y ago
        Your post contains no information and bears no insight. Why are you posting it? Simply for the joy of contradiction? There's nothing an half-rational person can't do that your garden variety financial advisor can. If you can build a business, then basic ETFs, mutual funds, and bonds are easy to understand, and if you want to move into individual investments or private funds... you should not be relying on a financial advisor for this. If you think otherwise, I have some stocks I'd like to recommend. And a shady commercial real estate deal that will net me a fat commission. And a bridge in Brooklyn. Legend has it there exist good financial advisors--but you have to find them. "Delegating" this because you "don't want to do" this is entirely the wrong attitude. If you don't take responsibility for your money, it will go away. It's 5 million freaking dollars, probably the entire net worth of this person, and the fruit of his business which he built.
deleted 16y ago
[deleted]
fleaflicker 16y ago
Or you can ask HN because a lot people here have faced similar situations.
ktsmith 16y ago
The flip side of this is that at 20 something he may not have those relationships established, or may not be sure about the lawyer/banker he's chosen. There also seem to be quite a few people here that have been through similar circumstances and may be able to offer advice. In my own experience in my early 20's when I suddenly came into a large sum of money I had a good financial advisor in the sense that he helped me make more money from my investments in the short term, but I had no long term strategy. When the bubble burst I lost a lot of money. I also didn't have a good tax strategy and ended up with some very large unforeseen consequences of my decisions. Then there were the people looking for handouts and investments in their "amazing ideas." I lost every penny I put into investments or loans, though I was smart enough not to expect to see any of that money again. The best advice I would give is to be quiet about how much money has been made. Find a good CPA and wealth manager. Talk about long term strategies, be sure to look at tax issues up front. People will come looking for hand outs and investments, avoid those for the most part. Make sure you trust your advisors and fully understand the decisions you are making. Don't take specific advice from somewhere like HN, try to look at patterns that may emerge from that advice however. So far it seems like everyone is advocating a conservative approach.
dalore 16y ago
Unless your financial advisor is rich from investing themself then no, DON'T talk to a financial advisor. All they will do is try and sell you stuff to get comission. Seriously just learn about it yourself. My favourite book is "The Richest Man In Babylon" and it a phrase similar to yours: Don't go to a plumber to get bricklaying advice, go to a bricklayer, so don't get advice about your money from someone who isn't rich himself. Now if your financial advisor is rich, what is he doing working for you?

vaksel 16y ago

since it's a brand new user it's probably bullshit, especially when you remember that it's next to impossible to sell a company as a cash only deal. There is always an earn out/stock play, to make sure the buying company isn't buying a lemon

brk 16y ago
It all depends on the company. If he created something that works, has value, and happened to find someone with money who can do the math, this is not unlikely at all. I have first-hand knowledge of several simple cash transactions for business sales like this in the $2M-$10M range.
- starkfist 16y ago
  > I have first-hand knowledge of several simple cash transactions for business sales like this in the $2M-$10M range. Like what?
  - brk 16y ago
    I don't want to ignore your comment, but these were generally private sales, and the private part implies a certain amount of trust and non-disclosure. I know this probably doesn't do anything to convince you I'm not full of shit, so I apologize for not offering concrete details. If you stop and think about it though, there is a lot more private money out there moving hands than you might think.
jacquesm 16y ago
I don't know. If I had a windfall like that I'd keep it quiet too, or at least not directly associated with my online identity, so if I would ask for advise about it online I'd do it just like the OP did.
brown9-2 16y ago
since it's a brand new user or a regular user who did not want to post under his/her regular username for privacy reasons.

brk 16y ago

You don't have a financial advisor? Well, I assume you have a lawyer, and I assume you have a banker-- ask them for recommendations. You might also ask the pros who were on your board of directors prior to the sale. I wouldn't assume any of these things. Did YOU have a lawyer or financial advisor when you were 20? The OP reads as if it was basically a 1-man shop sale. If he sold a company for $5M that had a board of directors and all the typical formalities, it probably would have been VC or angel backed, and the terms of the deal for a $5M sale would have probably netted him $500K at best. Let's face it, almost any investor-backed equity event of $5M is pretty much a failure and returns little if anything to the management team. So, I read this as a "guy in a basement" sort of scenario who managed to create some webapp, service, or widget pretty much solo and was wise enough to be able to flip it for a nice chunk of change. I also happen to think he was smart for reaching out here to get broader advice. I've met TONS of financial advisors that can't manage funds for shit. Not to mention in the current market a lot of funds are down, and I'm sure he would have no trouble finding a bad financial planner or lawyer that would love the opportunity to manage the portfolio of someone naive in that regard.

michael_dorfman 16y ago
I didn't have a lawyer or financial advisor when I was 20, but I also hadn't closed a $5M sale, either. And when I did so (at a more advanced age), I certainly did. It strains credulity to imagine that anyone, of any age, would be able to close such a deal without a lawyer or a banker being involved. (And believe me, when you show up at the bank with a $5M deposit, you get introduced to financial advisors, like, fast.) Seriously: just the practical mechanics involved in the sale of a corporation requires a small team of professionals. No one hands a check for $5M to a "guy in a basement" without some due diligence, and that involves accountants, auditors, lawyers and bankers.
Judson 16y ago
I did have parents, who had a lawyer and a banker ;)
- run4yourlives 16y ago

cynicalkane 16y ago

Don't go to a financial advisor, at least not without doing some research first. Many of them are paid on commission for funneling money in certain places, and many more are just bad. Generally, someone smart enough to build a $5 million company should be smart enough to manage his own money.

chollida1 16y ago
> Generally, someone smart enough to build a $5 million company should be smart enough to manage his own money. They are probably also capable of fixing their own car or doing their own plumbing or landscaping. Sometimes you want to delegate tasks that you dont' want to do onto others.
- cynicalkane 16y ago
  There's a difference in magnitude and importance between doing your own landscaping and managing your own $5 million dollars of net worth.
  - chollida1 16y ago
    Agreed, all the more reason that this statement: > > Generally, someone smart enough to build a $5 million company should be smart enough to manage his own money. is false.
    - cynicalkane 16y ago
      Your post contains no information and bears no insight. Why are you posting it? Simply for the joy of contradiction? There's nothing an half-rational person can't do that your garden variety financial advisor can. If you can build a business, then basic ETFs, mutual funds, and bonds are easy to understand, and if you want to move into individual investments or private funds... you should not be relying on a financial advisor for this. If you think otherwise, I have some stocks I'd like to recommend. And a shady commercial real estate deal that will net me a fat commission. And a bridge in Brooklyn. Legend has it there exist good financial advisors--but you have to find them. "Delegating" this because you "don't want to do" this is entirely the wrong attitude. If you don't take responsibility for your money, it will go away. It's 5 million freaking dollars, probably the entire net worth of this person, and the fruit of his business which he built.

deleted 16y ago

[deleted]

fleaflicker 16y ago

Or you can ask HN because a lot people here have faced similar situations.

ktsmith 16y ago

The flip side of this is that at 20 something he may not have those relationships established, or may not be sure about the lawyer/banker he's chosen. There also seem to be quite a few people here that have been through similar circumstances and may be able to offer advice. In my own experience in my early 20's when I suddenly came into a large sum of money I had a good financial advisor in the sense that he helped me make more money from my investments in the short term, but I had no long term strategy. When the bubble burst I lost a lot of money. I also didn't have a good tax strategy and ended up with some very large unforeseen consequences of my decisions. Then there were the people looking for handouts and investments in their "amazing ideas." I lost every penny I put into investments or loans, though I was smart enough not to expect to see any of that money again. The best advice I would give is to be quiet about how much money has been made. Find a good CPA and wealth manager. Talk about long term strategies, be sure to look at tax issues up front. People will come looking for hand outs and investments, avoid those for the most part. Make sure you trust your advisors and fully understand the decisions you are making. Don't take specific advice from somewhere like HN, try to look at patterns that may emerge from that advice however. So far it seems like everyone is advocating a conservative approach.

dalore 16y ago

Unless your financial advisor is rich from investing themself then no, DON'T talk to a financial advisor. All they will do is try and sell you stuff to get comission. Seriously just learn about it yourself. My favourite book is "The Richest Man In Babylon" and it a phrase similar to yours: Don't go to a plumber to get bricklaying advice, go to a bricklayer, so don't get advice about your money from someone who isn't rich himself. Now if your financial advisor is rich, what is he doing working for you?