Part of Running a Family Office Under $100M
Most founders start thinking about wealth management after exit. That's too late for some of the most valuable planning.
The 12–18 months before a liquidity event is a window. Certain moves are possible with equity that become impossible—or extremely expensive—once that equity converts to cash. Once the wire hits, you're managing consequences. Before it hits, you're creating options.
This post is for founders who see an exit on the horizon. Maybe it's certain, maybe it's probable, maybe it's just increasingly plausible. If any version of "we might sell in the next year or two" applies to you, this is worth reading now.
The Window That Closes
Here's the core problem. Your equity has value, but that value isn't yet "crystallised" for tax purposes. The shares sit on a cap table. They're worth something—maybe a lot—but until they're sold, exchanged, or converted, that value exists in a kind of limbo.
This limbo creates opportunity.
You can move shares between structures more easily than cash. A share worth £1 today that might be worth £10 million at exit can be transferred into a trust, a holding company, or a family member's ownership—with tax consequences based on today's value, not tomorrow's.
You can reorganise ownership. The capital structure that made sense when you founded the company might not be optimal for the people who'll receive the proceeds. Changes are cleaner now.
You can establish structures that need time. Some arrangements work better when they've existed for years before the liquidity event. Setting them up the week before closing looks like what it is—last-minute tax avoidance. Setting them up 18 months before looks like legitimate planning.
Once the exit happens, these options largely disappear. Moving £10 million in cash into a trust has very different implications than moving shares that later become £10 million. Reorganising ownership of cash triggers immediate tax. Structures established after liquidity don't have the history that makes them defensible.
The window closes at signing. Sometimes, even earlier, certain anti-avoidance rules look at what you did in anticipation of a transaction. But generally, actions taken 12–18 months before exit have more flexibility than actions taken 12–18 days before.
A founder sold his company for £24 million. His accountant had suggested some restructuring two years earlier. He'd been too busy running the company, figured he'd sort it out later. "Later" never came. He paid roughly £4 million more in tax than he would have with proper planning. Not because he did anything wrong—he just didn't do the things that would have been right.
That's £4 million for a few meetings and some paperwork he didn't prioritise.
12–18 Months Out: Structure
If the exit is 12–18 months away, structure is the first conversation.
The fundamental question: how should you hold the proceeds? In a personal name? Through a holding company? A trust? Some combination?
This isn't a question with a universal answer. It depends on your residency, your family situation, your goals, your existing structure. But it's a question you need to engage with now, not later.
Family Investment Companies have become the dominant vehicle for UK founders in recent years. HMRC's own review found that FICs have overtaken trusts in popularity, mainly because trusts trigger a 20% inheritance tax charge on lifetime transfers exceeding the £325,000 nil-rate band, while FICs don't face that immediate hit. The average FIC holds around £5 million in assets, according to HMRC data, though they're increasingly common at lower thresholds too.
An FIC creates separation between you personally and your investments. Parents typically hold voting shares (retaining control) while children hold growth shares (capturing future appreciation). Corporation tax at 25% beats the 45% top rate of personal income tax for accumulating wealth, and UK dividends received by the FIC are exempt from corporation tax entirely, enabling tax-free reinvestment.
The setup isn't trivial—you'll need bespoke articles of association, careful share class design, and proper documentation. But the structure is familiar to anyone who's run a company, which is part of the appeal. HMRC wound up its specialised FIC investigation unit in 2021, suggesting they're comfortable these are legitimate planning vehicles rather than aggressive avoidance.
Trusts remain relevant for specific situations but have become more complex. A lifetime discretionary trust typically costs £4,000–5,000 plus VAT to establish properly, with ongoing administration on top. The 20% IHT entry charge on transfers above £325,000 makes them expensive for large amounts. However, they still work well for specific purposes—protecting assets for vulnerable beneficiaries, providing flexibility in distribution, or situations where control separation matters more than tax efficiency.
The threshold at which trusts justify their complexity is typically higher than FICs—£20–30 million plus, with specific circumstances warranting the administrative burden.
If trusts might be relevant, the time to explore them is now. Trusts established well before a liquidity event are treated differently from trusts established right before. The "settlor interested trust" rules and various anti-avoidance provisions make timing a key factor.
The point isn't to implement everything immediately. It's to understand your options, make decisions, and give structures time to exist before the exit. Implementation that feels rushed raises red flags. The implementation that happened 18 months ago looks like ordinary planning.
Tax Planning Before Value Crystallises
This is where the real money is.
When shares have low current value but high potential future value, you can do things with them that would be prohibitively expensive later.
Gift shares to family members. If you give shares worth £100,000 today to your children, and those shares are worth £5 million at exit, they've received £5 million at exit but the gift was valued at £100,000 for tax purposes. Each spouse or civil partner has their own annual CGT exemption (£3,000 for 2025/26) and, critically, their own £1 million lifetime limit for Business Asset Disposal Relief. A married couple can potentially shelter £2 million of gains at the preferential BADR rate.
Transfer shares to trusts. Same principle. The trust receives shares at today's valuation. Growth happens inside the trust. The eventual proceeds may be sheltered or taxed more favourably.
Move shares into holding structures. Reorganising so that a company holds your shares rather than you personally, with different tax treatment on eventual sale.
The key phrase is "before value crystallises." Once the company is sold, the value is fixed. The £5 million is £5 million and any movement of it gets taxed on that basis. Before the sale, the value is arguable, defensible, and often much lower.
The BADR landscape has shifted. Business Asset Disposal Relief (formerly Entrepreneurs' Relief) still matters, but it's less generous than it was. The lifetime limit dropped from £10 million to £1 million in March 2020—a significant reduction that many founders still aren't aware of. The rate itself is changing too: 10% through April 2025, rising to 14% from April 2025, then 18% from April 2026.
On a £1 million qualifying gain, that's the difference between £100,000, £140,000, and £180,000 in tax. Still substantially better than the 24% standard rate (which would be £240,000), but the advantage is shrinking. If you're planning an exit, the timing relative to these rate changes matters.
To qualify for BADR, you need 5% of shares, voting rights, profits, and assets on winding up—and you must have been a director or employee for the entire two-year period before sale. Simply holding 5% of shares isn't enough if there are different share classes or preference shares that dilute your economic interest. HMRC enforces these conditions strictly.
This isn't aggressive avoidance. It's legitimate planning that tax authorities expect sophisticated taxpayers to do. But it has to happen before the event, with proper documentation, with genuine commercial rationale beyond tax savings.
The founders who pay the least tax—legally, properly—are the ones who planned 18 months ahead. The ones who pay the most are the ones who called their accountant after signing.
Just to be careful here. I'm describing concepts, not giving advice. The specific strategies depend entirely on your situation, your jurisdiction, current legislation, and dozens of factors I don't know. The point is that these conversations should happen now, with qualified advisors who understand your specifics. Not later. Now.
The Residency Question
For some founders, relocation is part of the picture.
Different jurisdictions tax capital gains differently. The UK now charges 18% (basic rate) or 24% (higher rate) on most gains—rates that increased significantly in October 2024. Portugal's original NHR regime, which offered potential exemption on foreign capital gains, closed to new applicants in January 2024 (with final transitional applications accepted until March 2025). The replacement IFICI regime is far more restrictive, targeting specific professional categories rather than general investors. UAE charges nothing on capital gains. Singapore has favourable treatment for certain structures.
If you're considering a move anyway—for lifestyle, family, opportunity—the tax treatment of your exit can be a factor in timing. If you'd be happy living in Dubai and you're expecting £20 million from an exit, the tax savings from establishing UAE residency before the exit could be £4–5 million.
That's real money. It's worth thinking about.
But—and this is crucial—residency for tax purposes requires genuine relocation. Not a mailbox and an occasional visit. Not keeping your London flat "just in case." Real, substantive, primary-residence-is-now-here relocation.
The UK's Statutory Residence Test is specific. If you've been a UK resident in any of the previous three tax years (a "leaver"), the rules are strict. With four UK ties (family, accommodation, work, 90-day presence in prior years, country where you spend most time), you can only spend 15 days in the UK without becoming resident again. With three ties, the limit rises to 45 days. With two ties, 90 days. With one tie, 120 days.
These ties matter: if your spouse remains a UK resident, if your children are in UK schools, if you maintain a UK home available for use—each one counts against you. The founder who "moved" to Dubai but whose kids are still in school in Surrey, whose spouse is still living in the family home, who flies back every other weekend—that founder is going to have problems. The tax savings will be challenged, potentially with penalties and interest.
If relocation is genuine—you actually want to live somewhere else, your family is moving, you're building a real life there—then timing that move before exit can be valuable. If it's purely a tax play with no real intention to relocate, don't do it. The risk isn't worth the potential savings.
This isn't relevant for everyone. Most founders will exit as residents of wherever they already live and pay tax accordingly. But if relocation is genuinely on your radar, the planning needs to start well before exit. You can't move after the deal is signed and claim the proceeds should be taxed elsewhere.
6 Months Out: Practical Preparation
As the exit gets closer—say six months out—the focus shifts from strategic planning to practical preparation.
Banking relationships should be established before you need them. Research from Avaloq found that 29% of ultra-high-net-worth onboardings take three months or longer, with only 13% completing in a week. Wealthier clients face more protracted processes—more documentation, more compliance, more verification. The private bank that takes three months to onboard you isn't helpful when proceeds are arriving next week. Start the conversations now. Open accounts. Build relationships. Even if the balances are small initially, the infrastructure is in place when you need it.
An advisory team should be in place. Tax advisor already engaged and familiar with your situation. Estate solicitor working on documents. Investment platform or wealth manager identified, if you're using one. You don't want to be interviewing wealth managers while simultaneously closing a transaction.
Documents should be current. Will updated. Powers of attorney in place. Shareholder agreements reviewed. Any personal legal loose ends tied up. Exit transactions are distracting and exhausting. Administrative tasks that seem simple get neglected. Handle them now.
Insurance should be reviewed. Your coverage needs will change significantly post-exit. Understanding what you have, what you'll need, and what the gaps are—easier to do before than during.
Family conversations should happen. Does your spouse understand what's coming? Are you aligned on what happens with the proceeds? Any prenuptial or postnuptial considerations? These conversations are harder under time pressure. Have them while there's still time to think clearly.
The goal is to arrive at a close with the infrastructure ready. The wire hits, the cash has somewhere to go, the team is in place, and the documents exist. You're not scrambling to set up basics while simultaneously processing a life-changing event.
The Conversations Before Exit
Beyond the practical, some conversations should happen before liquidity changes everything.
With co-founders and partners: How are proceeds being split? Any disputes about cap table or ownership? Better to surface these now than during closing. Are there shared investment plans post-exit? Any ongoing obligations to each other?
With spouse: What does this money mean for your life? What changes? What stays the same? What are the priorities—security, lifestyle, giving, legacy? These conversations are easier when the money is theoretical. Once it's real, emotions run higher.
With advisors: Not just "what should I do" but "what are my options." Understand the range of possibilities before committing to any path. What would you do differently if the exit were £10M versus £30M versus £50M? Having thought through scenarios makes the actual decision easier.
With yourself: What do you actually want? Not what you're supposed to want. Not what other founders do. What would make this money meaningful for your specific life? The answer isn't apparent, and you won't figure it out overnight. But starting to think about it now means you won't be making it up under pressure later.
What If You're Already Close?
Maybe you're reading this, and the exit is three months away. Or three weeks. Is it too late?
Not entirely. But options narrow as time compresses.
At 6 months out, most strategic planning is still possible. Structure can be implemented. Trusts can potentially be established. Major moves are on the table.
At 3 months out, some things are still possible but everything is rushed. Structures established this close to exit get more scrutiny. The "has this been done for tax reasons in anticipation of the transaction" question becomes harder to answer favourably. Simple things—holding company setup, basic documents—can still happen. Complex trust structures are probably too late.
At 1 month out, you're mostly doing practical prep. Banking, documents, team coordination. The strategic planning window has essentially closed. Whatever structure you have is the structure you're working with.
At 1 week out, focus on not making mistakes. Make sure cash has somewhere safe to land. Make sure you understand immediate tax obligations. Make sure nothing falls through the cracks during close.
If you're reading this and an exit is imminent, don't panic about missed planning opportunities. Yes, you might have saved money with more lead time. But the exit is still life-changing. Post-exit planning still matters. The goal now is to manage what's in front of you well, not to regret what you didn't do earlier.
And take this as a lesson: if there's ever a next time, start the planning 18 months out.
The Planning Mindset
Here's what I want you to take from this.
Pre-exit planning isn't about aggressive tax avoidance. It's not about gaming the system or hiding money. It's about understanding the options, making informed decisions, and implementing them at the right time.
The tax code offers legitimate planning opportunities. Structures exist that are designed for precisely this purpose. Using them isn't cheating—it's doing what the rules allow and what sophisticated taxpayers are expected to do.
The founders who benefit most aren't the cleverest or the most aggressive. They're the ones who started early. Who had the conversations 18 months out instead of 18 days. Those who gave themselves time to understand, decide, and implement properly.
You're building a company. That's consuming most of your attention, as it should. But if exit is plausibly on the horizon—even just as a possibility—carve out time for these conversations now.
The planning you do in the next few months might be worth more, per hour invested, than anything else you spend time on.
Find a good tax advisor. Have the structure conversation. Understand your options.
The window is open. It won't be forever.
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