

Ask HN: I'm about to sell my startup for a lot of $, what next? - theo91

I'm a programmer and know nothing about money management. From the sale I should get between $10m and $20m. I have seen a tax lawyer who suggested an approach centered around setting up a limited partnership. However, I have no idea how to evaluate his suggestion's merit. I would like to educate myself, so I can recognize BS, but I have no idea where to start. Suggestions?
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yourapostasy
Congrats. It is not clear from your wording if you are seeing a tax attorney
to handle your business or personal finances, or both. md1515 is correct,
there are specialized use cases for an LP for personal finance, unless you
start to get into asset protection type or capital gains treatment schemes. I
have some friends whose wealth is in the 1x-3x range of what you posted. One
is in the energy business; he lets Brown Brothers Harriman handle a large
portion of his assets. Another co-founded one of the top HFT firms in the
nation; he's diversifying into various more conventional investments. The
third was a principal programmer in that HFT firm from its early days; he
self-manages and is doing some angel investing.

As you can tell, there is no one "right" answer. A lot depends upon your life
goals and risk profile. The first friend is nurturing a generations-old
wealth. The second is trying to propagate generational wealth. The third is
trying to establish generational wealth. If none of your financial advisors
have asked you to set down on paper what you want to do in life and how much
it will take to fund that ambition, then you might want to center yourself and
put that down to draw a starting line in the sand. From there, you can talk to
them about how much volatility you can stomach, how much needs to be drawn and
when, _etc._

It cannot hurt to get second and third opinion advice this early on your tax
implications _before_ the sale closes. Bob Hope was famous for deferring a lot
of his pay into capital gains forms once he made enough to live on, and this
greatly magnified his earnings over the years. If there is a portion of your
sale that you are willing to put into that form, then now is the time to talk
with your tax advisors about it before a more adverse tax treatment is taken
upon your sale income.

If you feel at all uncomfortable with the advice you are receiving (
_including and especially mine!_ ), then one _option_ is to take the
uncomplicated tax treatment hit now and sit on the gains until you are more
comfortable with a specific set of actions. There are far worse situations to
be in than paying a large tax bill now and parking the remainder into
[CDARS](<http://www.cdars.com>), then taking whatever time you feel is
necessary to gather your data and thoughts before you pull the trigger on
structuring the gains. As my CPA tells me, some of the biggest tax payments he
oversees each year are from clients who are too busy making money to
complicate their lives further with tax efficient structuring. The interest
alone on say, $10M (after taxes and fees) in CDARS, is around $100K, which
should be sufficient for you to step back, take a deep breath for a year, and
figure out where you want to go next. Even taking into account the
"opportunity costs" of a naive tax treatment, that is really cheap insurance
against hastily making a catastrophically bad decision in the heat of the win.

You can also contact pg, he certainly can give you advice programmer-to-
programmer.

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conductr
This is where you might want to seek wealth management. Google it you will see
a few household names that you can trust, if you are in a big city they deal
with these values daily. Have them propose a couple scenarios. Try to only
evaluate them on 1) what are they saving you in taxes/fees 2) what are they
charging you for their service.

With this amount of cash, you want them to BID for your business. They will do
so by offering proposals.

1) this should be easy to evaluate. it's just math. But, they may want to
setup some entities to help you take advantage of the tax laws (eg. capital
gains vs income).

2) remember they are commission driven and make money by funneling your "cash"
into their brokerages and other services. negotiate. this will be highly
dependent on what you want to do with the cash once you have it

Hear them out, choose the best solution / provider

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ohashi
Don't be afraid to make them explain things and definitely shop around. It's
money, not magic, so you should be able to understand what you're getting into
before you sign.

Also, talking to your accountant (assuming you have one) might be a good first
step in at least getting recommendations about who to talk to.

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joshu
I can give some suggestions. Drop a line.

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revorad
Paul Buchheit's advice: [http://paulbuchheit.blogspot.com/2010/05/what-to-do-
with-you...](http://paulbuchheit.blogspot.com/2010/05/what-to-do-with-your-
millions.html)

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md1515
Not sure what you mean by "money management" and "what next?" These seem like
terms used to question what exactly do do with your money once you get it?

I'm not sure why you would need to set up a LP, or LLP unless your startup is
just your code and not a legal entity. My email address is in my profile, send
me an email if you would like some more help.

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plasma
Do you have a friend or family friend that you can ask for some guidence, like
who you need to hire to help guide you through the sale?

I'd definitely be after some professional advice (and making sure they are on
your side!).

I assume you may need a lawyer to help guide you through the sale (and they
should help catch any BS)?

~~~
theo91
Unfortunately I don't really know anyone with any expertise in the area. I
know I need professional advice, but I guess the problem is that I don't know
how to vet the person giving me the professional advice. I'm sure if I had
gone to Bernie Madoff five years ago, he'd have seemed great to me.

And, yup, regarding the sale there is a lawyer handling everything.

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glimcat
Find a lawyer who:

(a) Comes well-recommended by others in your network

(b) Has successfully handled this sort of transaction before

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kayhi
I'm sure you will get great advice here and in addition would post at
www.diehards.org

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vrikhter
Send me an email (in profile) and I'll be happy to give you some suggestions.

