

Ask HN: My company is about to get acquired, how do I best manage this money? - crcme

Hello.<p>I work for an Australian company based in Sydney. I&#x27;m not a founder, I&#x27;m just an early employee (engineer #2). I&#x27;ve been here since the start and we&#x27;ve been running for about 8 years. We are in data analysis area, providing analytics service. I&#x27;ve been given some shares when I joined over a vesting period, which is now well over.<p>Now, it looks like our company is going to be bought by a larger company in the near future. I don&#x27;t really know the details. But if everything goes well, I might be able to cash in my shares.<p>Let&#x27;s say, I will be in possession of $2M (a complete arbitrary number).<p>My main question is, what is the best way for me to manage this money? Where do I put it? What should I invest in? How will the tax (the Aussie tax system that is) affect me?<p>I heard that I should create a trust fund, but how does that work? Is there anyone I should talk to?<p>What should I prepare for? Are there any unexpected things that I should know about when you&#x27;re all of a sudden given a large chunk of money?<p>(And how do the answers to my question change if the money becomes larger than $2M)?<p>Thanks for all your comments.
======
MalcolmDiggs
My honest advice is to do absolutely nothing with it for a few months. Don't
move it, don't spend it, don't invest it, don't loan it to friends...and most
importantly don't tell anybody about it.

Just give yourself some time to cool off and get over the adrenaline-pumping
feeling of "holy shit, look at all that money". This will likely take a while
to wear off. Only once you're calm about it should you trust yourself making
decisions.

------
seainvest
I was in a similar position a couple years ago, and I can pass on the advice
that I was given from financial planners/etc.

Much of the advice that can be given is dependent on what you want to do with
your windfall. If you do bring in $1 MM or more, you theoretically will have
enough to live out the rest of your life in a 4/5-star hotel on a beach
somewhere. You could travel for a while, or just hang out, or you could try to
turn that cash into something much larger. Personally, I've done all three,
with different levels of personal satisfaction from each.

Depending on your age (are you closer to your 20s than to your 60s?), most
financial planners will advise putting roughly 50% into higher risk
investments (startups, riskier stocks, Forex baskets), and 50% into more
conventional assets (real estate, investment funds, etc), with higher
allocations to lower risk as you grow older.

I would definitely try to invest a large part of your wealth into assets that
pay regular, well defined returns. The most conventional of these are real
estate and dividend producing stocks. In real estate, there's small apartment
complexes, rental houses, small office buildings, and other commercial
properties. Generally, you can purchase these types of assets with a 10% down
payment and will see a return of 7-9% over the long term. Generally, you
should be able to secure a 30 year mortgage on a property with interest of
roughly 3-4%. There are other types of conventional investments that also
perform regularly, such as purchasing under-performing small businesses like
small tool-and-die shops, or other small manufacturing concerns.

Much of it depends on your taste for risk. For instance, energy and commodity
stocks, which can usually pay out good dividends are in freefall at the moment
(due to the low price of oil). However that freefall won't last -- a well-
timed purchase or sale could mean a 20% gain in a relatively short span.
Additionally, Forex baskets are showing extremely great growth at the moment,
with the right split between currencies. If you start monitoring these
markets, you'll start to get a feel for when the peaks/valleys occur, and can
invest accordingly. Generally, it is wise to spread out your higher risk
investments into smaller baskets that can be easily changed/converted into
other assets. Also, be wary of any investment managers who claim they can beat
the market. They likely can't, and if they did before, it was due to a
combination of luck, timing, and being in the right place at the right time. I
have yet to meet someone who can reliably outwit the market.

If you have a taste for riskier investments, and since you have an engineering
background (and are a short plane flight away from most of South East Asia),
you might consider joining a small investment fund (or VC firm) that focuses
on technology in SEA. There continues to be huge growth all over SEA
(Indonesia, Philippines, Malaysia, Singapore, Thailand, etc). Many startups
require very small investments ($50,000-$100,000), and you could theoretically
invest in 5 or 10 at the same time, with the intention of later selling one at
15-20x and the others either returning less than the investment or roughly
breaking even. Attend one of the regional tech conferences as an investor, and
find some teams/products that you have confidence in and invest!

If you have an idea for a product or service in any business sector, I would
highly suggest starting your own company and "giving it a go." In my
experience, these types of ventures tend to have far better returns than any
other, so long as you are judicious with your spending, and keep your company
small and lean enough until it is able to narrow down on the right
product/market segment fit. Once you have found the right product, then you
scale like mad.

Remember: there's no reward without risk.

~~~
lingua_franca
after taxes he will take home just $1+mm, far from enough to live out the rest
of hist life in a 4/5-star hotel on a beach somewhere. u need at least $10mm
for that

~~~
notahacker
If you scratch 4/5 star hotel and replace it with "fairly nice property"
there's plenty of parts of Asia where he could live well off the interest on
$1m for the foreseeable future.

------
cegascon
Honestly if you are talking about considerable amount of money you should seek
out to first and accountant (He will save you more money that he will charge)
he will figure those things out cause even if you research on that a lot, my
personal feeling is that you might do mistake that will catch up to you in the
future.

For the were to invest it, well no one can answer that for you it depends on
your attitude towards risk and where you are in your life. If you 25 no family
and looking to risk more to (hopefully) earn more then invest back in yourself
and start your own but if you have a family and looking to work in o a more
steady environment, wait a bit because with over 100K in your bank account,
you will get calls from portfolio managers! : ) Those guys will know who to
invest your $$ better and at a risk level your will be comfortable with.

An personal opinion, fix everything with an accountant an then relaxe a take
the time to answer those questions they will affect a lot how you will live
your futur!

~~~
a5seo
I'd hire a therapist first because the greatest threat to your money is you.

A lot of issues will crop up about your values, relationships, and life goals.
Think of the therapist as someone who can help you know yourself, design your
life, and above all, use your fortune as a tool to get what you really want. I
say this having sold my first co at 32 and banked $10M.

------
chatmasta
You don't want an accountant for this amount of money; you want a financial
planner. Find someone who's an expert at managing wealth to grow it safely and
conservatively. He/she will work with you to devise a plan, based on your life
goals, to make the best use of that money.

Also, don't spend any of it for at least a month.

------
jenkstom
Reduce expenses first, cover cash flow requirements then increase revenues
without more risk than you can accept.

Begin by paying off highest interest debt and continue until you run out of
money or have paid off all your debt. You always get rid of debt because debt
costs you money on an ongoing basis. Better is to make money - which is not
just a little better, it's double better. You get to keep cash you would have
lost due to interest PLUS you get to make more money by investing.

Next you need to try and make sure you have enough cash flow to continue
meeting recurring expenses, or make purchases that eliminate or reduce
recurring debt. Buy a house instead of renting, that sort of thing.

After that the general rule of thumb is to invest in the highest-return
investments you can find that provide an acceptable level of risk. If you are
40 years from retirement and can accept a very large amount of risk, then you
might want to invest part of it in another startup that you think has a good
chance of a very high rate of return. You might put part of it in stocks (high
to medium risk), bonds (medium to low risk) or money market items like
certificates of deposit (low risk, but some of these tie up your money for
longer periods of time than others).

------
cylinder
First issue is, do you have to cash out your shares? Or can you exchange them
for shares in the parent company? If shares, you may want to defer cashing
everything, you can slowly sell shares as you need them, keeping yourself in a
lower tax bracket (capital gains taxed as normal income in Aus). Or you can
borrow against them.

You need a professional financial and tax advisor. Always go independent (not
affiliated with a large bank/institution) and fee-based (not commission).

------
alain94040
It really depends on which stage in life you are at. Do you currently have a
comfortable life (make good income, no major debt)? Then don't change
anything, just place your money safely.

Piece of trivia: the first thing people in your situation buy is a new bed.

------
jbrad7354
You're going to pay 50% in tax. No way around that.

$2M in Sydney doesn't go that far these days, but if you want hassle free
investment, put it into Vanguard.

Otherwise just throw it into a high interest savings account for zero risk.

------
thret
IANA expert but: [http://australiangovernmentbonds.gov.au/etbs/list-of-
etbs/](http://australiangovernmentbonds.gov.au/etbs/list-of-etbs/)

