They just sold their business. What’s next?

Tessa and Norm’s Background

Tessa and Norm worked their fingers to the bone building their manufacturing business and they were ultimately rewarded when they got an offer to buy it that they simply couldn’t refuse.

Tessa’s parents started a clothing and textiles company 50 years ago and carved out a significant niche in the market before they retired 25 years ago. Tessa started out doing odd jobs there in high school and took on more responsibility in university before joining full-time after she graduated.

Norm joined the company just before he and Tessa were married and together, they grew it into one of the premiere players in the industry. After years of battling for marketshare with their fiercest Canadian competitor, they received an unexpected offer to buy them out and merge the two companies together.

They felt their customers would be even better served by the newer, larger company and agreed to sell. They also accepted the offer to stay on as consultants for the next two years to make sure the transition was as smooth as possible for everyone involved.

They’re a little apprehensive about their new roles but are looking forward to having less responsibility, doing a little travelling for the first time in years and spending time with their two kids, Gavin and Alicia, who are both in university.

How did VPIC help coordinate a solution?

Along with Tessa and Norm's advisor, we started out by listening. We listened to their vision for retirement, we listened to their views on money, spending and investing and we listened to their dreams of leaving a legacy.

Once we had a good grasp of their situation, we went to work.

  • A one-page summary of their financial life was quickly prepared, including all of their assets and liabilities, a net worth statement and a five-year projection of their cash flows and taxes.
  • Their data was plugged into our sophisticated retirement planning software to get a better idea of their long-term future and the potential risks they might face. These included stock markets going into a prolonged slump, inflation spiking and being hit unexpectedly with a major expense. Their accountant and lawyer were also brought into the discussion to make sure the nature of their sale agreement was fully understood.

A Solution to Meet Their Needs

After evaluating all of the relevant documents and accounts, our team, along with Tessa and Norm's advisor, came up with a solution tailored specifically for them.

They wanted to step away from full-time work once their consulting contracts were up so we needed to structure their portfolio to ensure they had enough cashflow in retirement to live on.

As long-time business owners, they were very interested in investing in companies that would grow their investment capital well into the future. They understood that buying excellent, durable businesses that paid a growing dividend was the best way to build their wealth and that growing their capital opened up a number of doors for leaving a legacy with their children, grandchildren (fingers crossed!) and other causes they were passionate about.

The majority of their money was invested in a focused portfolio featuring stocks with dominant market positions and a long history of profitability and paying growing dividends.

These companies generate significant dividend income and cashflow which Tessa and Norm can use to fund their lifestyle.

A portion of their capital was allocated to a fixed income portfolio which pays an attractive, yet predictable, income stream to provide a buffer against any short-term volatility that may occur in the equity markets.

We invested the majority of their money in a focused portfolio featuring stocks with dominant market positions and a long history of profitability and paying growing dividends.