This author describes a route for families and principals preparing for a liquidity event such as the IPO or trade sale of a company.

The following article comes from Alexandra Valentin (pictured below), who is a founding partner and serves as chief strategy officer, and head of Puerto Rico at Tiempo Capital. 

Alexandra Valentin

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Liquidity events change everything. A business sale, IPO, dividend recap, or secondary transaction can reset a family’s balance sheet, governance, and sense of purpose – sometimes for the better, sometimes not. The difference often comes down to preparation. Pre-transaction planning is more than tax – it is governance in action, aligning structures, people, and goals before the clock starts.

This article offers a practical roadmap for families and principals preparing for a liquidity event. The aim is simple: preserve value, reduce friction, and convert a one-time transaction into a long-term advantage.

Why pre-transaction planning matters
Families lose value when planning starts too late. Signing a term sheet without the right structures in place can limit options, push choices into a compressed timeline, and turn what should be a strategic decision into damage control. The costs show up as unnecessary tax, misaligned ownership, or conflict after the wire hits.

Research confirms how widespread this gap is:

-- 83 per cent of business owners do not have a written pre-transaction plan; 
-- 75 per cent regret selling their business within a year if planning was insufficient; and 
-- 70 to 80 per cent of privately held businesses that go to market fail to sell (i). 

For UHNW families, the consequences are magnified. Cross-border assets, multiple tax regimes, and differing legal systems increase complexity. Next-generation members may live in other countries, hold separate citizenships, or work in the family company. Philanthropic ambitions can be global. Without planning, a liquidity event can fracture the system that built the wealth in the first place.

Good planning does the opposite. It clarifies the purpose of the transaction, aligns stakeholders, and hard-wires decision rules before pressure rises. It also preserves flexibility – so the family can respond to new information during negotiations without losing control of the outcome.

The roadmap: four elements of effective pre-transaction planning
1) Tax and structural readiness
Structures need to be in place before a deal is signed. After signing, choices narrow.

-- Ownership architecture. Review holding companies, operating entities, and trusts. Confirm they match the intended outcome – who should own what, and where; 
-- Gifts and transfers. If making lifetime gifts or moving assets into trust, act early to capture valuation discounts and avoid last-minute scrutiny; 
-- Jurisdiction and treaties. Map cross-border exposure for owners and entities. Align residence, situs of assets, and treaty benefits well ahead of closing; and 
-- Philanthropy. Decide whether to use a private foundation, donor-advised fund, or hybrid structure. Pre-funding can be powerful if done on time.

One case study illustrates the value of acting early. A founder who planned well in advance allocated 50 per cent of the initial $2 million investment in a private company into a GRAT before a capital raise. After three years, 15 million dollars in stock was distributed among his children free of gift tax (ii).

Keep the design elegant. Over-engineering adds cost and risk. The best structures are durable, well-documented, and easy to operate.

2) Governance framework
A smooth transaction is a governance success. Build the framework early.

-- Decision rights. Define who can say yes to what – board, owners, family council. Set thresholds for major decisions and emergency approvals; 
-- Alignment. Agree on the “why” of the transaction: diversification, succession, growth capital, or lifestyle liquidity. Write it down; 
-- Communication. Establish a cadence for updates and a safe channel for dissent. Transparency reduces rumor and resistance; and
-- Conflict resolution. Adopt rules for breaking deadlocks – mediation triggers, independent directors, or a tie-breaker vote.

Good governance protects relationships and signals decisiveness to counterparties.

3) Succession and legacy goals
A transaction is a chance to reset the long game. Use it.

-- Family mission. Revisit purpose and values. Decide what wealth is for in the next generation: entrepreneurship, education, impact, or preservation; 
-- Roles and readiness. Define who will lead post-liquidity – operating roles, board seats, investment committees, and philanthropic leadership. Provide training where needed; 
-- Investment policy. Translate goals into an asset-allocation and risk framework. Consider cash needs, direct investing appetite, and guardrails for concentration; and 
-- Philanthropy and impact. Align giving vehicles with strategy. Clarify grantmaking focus and decision rules.

Every tactical choice should move the family closer to its mission.

4) Advisory team coordination
Complexity demands orchestration. Assemble the right team and make sure it acts as one.

-- Cast the team. Pair legal, tax, corporate finance, investment, governance, and philanthropic advisors. Assign a quarterback, often a wealth advisor or estate counsel; 
-- Timeline and workplan. Build a critical-path calendar from pre-LOI through post-close. Include document lists, approvals, and decision gates; 
-- Scenario modeling. Run models of deal structures and closing dates – numbers clarify trade-offs; and 
-- Confidentiality and readiness. Use NDAs, clean teams, and a curated data room. Prepare for diligence questions before they arrive.

The measurable impact of planning
The difference between last-minute decisions and integrated structuring is stark. Consider the following scenario of a $30 million gain:
 
Pre-transaction planning checklist

Five questions to settle before you sign a term sheet:
1. Are our ownership and trust structures aligned with the intended outcome? If not, what must change – and by when?
2. Who holds decision authority, and at what thresholds? Is the governance process written and understood by all stakeholders?
3. How does this transaction serve our long-term mission and values? What are the measures of success beyond headline price?
4. Have we addressed cross-border and multi-jurisdictional issues for entities and family members? Residency, treaties, reporting, and withholding all matter.
5. Is our advisory team coordinated under a single plan and timeline? Who is the quarterback, and how will we resolve conflicts among advisors?

Use the checklist as a gate. If you cannot answer “yes” to each question, pause and fix the gap before moving forward.

Common pitfalls to avoid:
-- Starting too late. Many families begin planning at diligence. By then, structure choices are constrained and negotiation leverage shrinks; 
-- Treating the process as tax-only. Tax matters, but pure optimization can backfire if it conflicts with governance, simplicity, or future flexibility; 
-- Leaving out the rising generation. Excluding future owners creates resentment and poor adoption of the new structure. Involve them early and keep it age-appropriate; 
-- Underestimating global complexity. Cross-border issues – CFC rules, reporting regimes, exit taxes – require time and specialized counsel; and 
-- Over-engineering. Unnecessary layers add cost and create operational risk. Favor clarity.

Each pitfall is avoidable with lead time and discipline.

A forward-looking approach
Pre-transaction planning should be ongoing, not a last-minute fix. Families that update governance regularly, keep estate plans current, and maintain an aligned advisory team are ready to act when opportunities arise. This preparation smooths the post-liquidity phase, where reinvestment and philanthropy decisions come quickly. With a clear mission and framework in place, choices are easier and better informed.

A liquidity event is a stress test for family governance. Families that prepare early protect more than financial value – they protect unity and purpose. The roadmap is clear: align structures, clarify decision rules, connect the transaction to long-term goals, and coordinate a strong advisory team. Address these before signing, and a single deal can become a generational advantage.

This material is for educational purposes only and is not legal, tax, or investment advice. Families should consult qualified professionals for guidance tailored to their circumstances.

i,  Scott A Wood, True North Advisors, Pre-Transaction Planning for Business Owners & Entrepreneurs, taken from https://truenorthadvisors.com/business-owners-and-entrepreneurs/
ii,  Chris Zander, Evercore (September, 2014), Integrating Pre-Transaction Planning, taken from https://evercorewealthandtrust.com/integrating-pre-transaction-planning/

About the author

Alexandra Valentín was, before her current role, an executive director and banker at JP Morgan Private Bank’s Miami office, where she led the Puerto Rico expansion and team covering the island. She began her career in financial services in 2003 and spent over a decade covering ultra high net worth families from Latin America at UBS International. Originally from Puerto Rico, she grew up playing tennis in her father’s academy and competed internationally representing Puerto Rico. She is a fierce advocate for financial literacy in youth and women and volunteers her time and knowledge for the cause. She is a frequent speaker at conferences and panels discussing women’s financial education.