StartupTalky

Tag: Entrust Family Office

  • Life After IPO: What Founders Need to Focus On

    This article has been contributed by Rajmohan Krishnan, Principal Founder and Managing Director, Entrust Family Office

    The ringing of the bell on listing day is one of the most significant moments in the life of a founder. All the sweat, toil and tears over the years have finally paid off, and the vision they started their entrepreneurial journey with is vindicated to a great extent. But here’s the big question: What comes next after the Initial Public Offering (IPO)?

    For many Indian founders today, going public isn’t just about making money, but about establishing a legacy that will endure beyond them. Hence at this time, founders need to shift their focus from building and scaling the business to ensuring that their hard-earned success translates into lasting wealth and impact. This article explores what founders should prioritize around an IPO, in order to achieve this end.

    Before the IPO vs After the IPO
    Before the IPO vs After the IPO

    Before the IPO: Set the Stage for What’s to Come

    Wealth & Liquidity Planning

    After a significant liquidity event like an IPO, the founder’s personal financial landscape changes overnight. However, the risk lies in viewing this liquidity as a final destination. Meticulous planning is needed at this stage, in order to ensure that the wealth is protected and grown.

    Founders need to thoughtfully structure their holdings: how much equity to keep, when and how to exit, and how to diversify across different asset classes. A solid tax strategy is also important, to avoid unexpected tax liabilities. 

    Building the Family Governance Framework

    An IPO is also a significant moment for the founder’s family – each family member has expectations from the newly gained wealth. With increased expectations and potential for conflicts, family governance becomes important.

    Founders need to consider setting up a family constitution, along with structures to ensure that their wealth is protected in alignment with their values. Governance frameworks can help in preparing family members for their responsibilities and avoid misunderstandings in the future.

    Setting the house in order

    Before the company goes public, founders need to take the time out to assess their financial landscape. The focus areas at this time need to be capital structuring, strategy for using the IPO proceeds and identifying risks to be addressed early on. 

    After the IPO: Liquidity to Legacy

    Crafting a Smart Portfolio

    Liquidity can result in unnecessary risk taking and opportunistic investments. But founders need to exercise discipline and build a professionally managed, well diversified portfolio that is aligned to their values and risk tolerance. This will enable their wealth to grow across generations, in accordance with their belief systems.

    Giving with Intention

    Philanthropy is often seen as something to think about later in life. But this is a good time to plan for meaningful giving. Founders can look at charitable trusts, foundations or impact funds that are aligned to their values.

    This will also set an example for future generations, making philanthropy a part of the family’s legacy.

    Preparing the Next Generation

    Preparing the Next Generation for Wealth
    Preparing the Next Generation for Wealth

    A significant challenge after an IPO involves getting the next generation ready to inherit. Sudden wealth can lead to a sense of being weighed down or of feeling entitled, both of which are avoidable. What is required is to instil a sense of stewardship, with the help of mentorship and structured guidance.

    Children need to be involved early on in conversations that make them understand the responsibilities related to wealth, so that they slowly grow into their roles rather than feeling overwhelmed. 

    Planning for the Future

    At this stage, estate and succession planning become very important. These are difficult topics to deal with in harmonious times, but avoiding them can lead to significant confusion and conflict in the future.

    Founders need to establish clear plans for inheritance and business succession and ensure that tax efficient structures are in place. This will help ensure a peaceful transition of wealth across generations, ensuring continuity and family harmony.

    Setting Up a Private Office

    Streamlining Wealth Management Post - IPO
    Streamlining Wealth Management Post – IPO

    Many founders come to realize that after going public, managing their wealth, philanthropy, family governance, and compliance can quickly turn into a full-time job. At this stage, establishing a private office or family office might make sense. This would ensure that the day to day management of wealth and legacy is taken care of, leaving the founder to focus on the bigger picture. 

    The Real Legacy Starts After the IPO

    An IPO is a very important milestone, but it is the beginning of a crucial journey. By planning carefully and setting structures in place in order to protect and nurture their wealth and legacy, founders can ensure that this moment of success creates something lasting and meaningful.

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  • Developing Effective Wealth Management Strategies for Long-Term Financial Success

    This article has been contributed by Sreepriya NS, Co-founder and Director, Entrust Family Office.

    It requires more than just making money to thrive in life. It’s essential to ensure that there is a decent level of growth, stability, and longevity. Erratic investment decisions, volatility in the market, and economic recession may all drain even large assets if not bolstered by a designed financial strategy.

    Asset protection as well as long-term financial security can be ensured with a carefully planned asset management plan. To fund and nurture generations, there must be a systematic and disciplined approach. A well-planned financial strategy will maintain investments aligned with individual endeavors, ensuring current and future fiscal security.

    The key steps below will help you create a winning asset management plan –

    1. Clearly Defining Investing and Financial Objectives

    Establishing well-defined goals is the foundation of a successful financial plan. These goals facilitate a more concentrated investment approach, no matter what their greatest aspirations are, which might be to build a lasting family legacy, endow educational institutions, or ensure a secure retirement. A critical part of this process is budgeting.

    Individuals are better equipped to make financial decisions once they have a clear understanding of their income, expenses, and savings. Resources are allocated well by managing a range of expenses and eliminating inefficiencies while maintaining a balance between lifestyle selections and financial obligations.

    2. Follow a Disciplined Investment Approach

    Investment decisions should be based on logic and strategy rather than feelings. Sticking to a well-planned, long-term approach to wealth management reduces risk and maximizes returns over time. Distribution of assets across different financial categories increases stability and growth potential.

    3. Asset Allocation

    It’s always preferred to diversify your investment portfolio across various asset classes. Each asset class plays a distinct role; fixed income is for stability, equity is for growth, and gold is a hedge against inflation and a haven during uncertain times. Additionally, there is real estate investment and insurance.

    Year after year, different asset classes take turns to outperform each other. Hence, having an appropriate asset allocation helps you manage your wealth better with risk-adjusted returns.

    4. Optimizing Your Tax Planning

    Effective tax planning is significant for preserving asset storage. Structured tax–efficient investment strategies assist in minimizing financial liabilities while complying with regulatory changes. This leads to ensuring long-term financial growth and capital preservation.

    5. Enhanced Insurance and Real Estate Planning

    Insurance serves as a protective barrier against financial uncertainty, but real estate planning ensures that assets are transferred seamlessly to future generations. Establishing a will, trust, and succession plan will help minimize legal complications and ensure that prosperity is used as desired.

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    6. Regularly Review and Adapt Your Financial Plan

    Asset management plans are not static. Regular checks are required to focus on changing economic situations, tax laws, and personal situations. Regular portfolio reviews help you stay in sync with your long-term goals. Many families lose their financial stability due to poor planning, uninformed decisions, or internal conflicts.

    Research shows that many families avoid discussions about investment and financial capabilities, leading to a lack of motivation for future financial responsibility. Money discussions are becoming more and more common, but strategic investments still have obstacles.

    7. Sustainable Investing

    Sustainable investing not only syncs your values with your investment portfolio, but also potentially enhances long-term returns. The first step is researching and selecting investment products that concentrate on environmental, social, and governance (ESG) factors.

    For example, focusing on ESG-focused exchange-traded funds (ETFs) or mutual funds to diversify your sustainable investments. Implementing this approach can assist in capitalizing on companies that are well-positioned for future growth, especially in areas like social innovation or renewable energy, potentially making way for stronger long-term performance.

    8. Philanthropy

    With immense wealth comes an opportunity to incorporate philanthropy into your wealth management plan. Multiple options like setting up charitable trusts or donor-advised funds allow you to make tax-deductible contributions while maintaining control over how the funds are distributed over time.

    For instance, a charitable remainder trust can benefit you with income during your lifetime, with the remainder going to your preferred charity. This strategy assists in causes you genuinely care about and can deduct your tax burden, freeing up more resources for wealth growth.

    9. Preparing The Next Generation

    It is important to promote the next generation and have financial discussions. In the end, early financial education can prevent common pitfalls and promote responsible asset management. The elder generation plays an important role in the design of financial value within a family. Bringing children to prioritize long-term financial stability before short-term profits promotes responsible money management.

    Family offices can assist here by supporting key inheritance assets throughout the investment cycle, notifying them in financial markets, and supporting portfolio management, succession planning, and governance structures. With the right approach, prosperity is preserved, expanded, and transformed into a legacy of stability and growth.

    Maintaining a corpus is a journey, not the destination. It’s a process of consistency; in investing, saving and making informed financial decisions. Beginning early, focusing on protecting your assets, diversification, reducing taxes and managing debt, you’ll be looking at long-term financial success.

    The answer is discipline, patience and a clear plan. Stay focused on your goals, adjust your strategy as needed and celebrate your success along the way. With time, your efforts will compound, paving the way to financial independence and lasting wealth.

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