Financial Planning Case Study - M&A Windfall

(Note: Case studies are hypothetical, do not involve a Paceline client, and should not be construed as a guarantee.)

PROFILE

Alice, Age 35

VP, Marketing – tech startup

M&A Windfall

Objective:

After her employer was acquired by a larger competitor, she needs a plan to turn her stock option windfall into a lasting financial victory.

Current situation

Alice has swiftly climbed the ranks of tech startups where she’s worked, and having reached a senior role at a firm that was recently acquired, the windfall she’ll receive exceeds the size of all of her existing cash savings and investments combined.

With a low-interest mortgage on her condo and an emergency fund already in place, fully contributing to her 401(k) won’t even begin to make a dent in investing her excess cash on hand.

As a veteran of the tech startup scene, she has learned several lessons relevant to her current situation:

Those who fail to delegate tasks to the person best specialized to perform them may end up limiting their income
Her financial resources now greatly exceed the time and resources she has to manage them
Wealth created by employer stock is earned over multiple years, and that’s why it should be used to benefit multiple financial goals over a similar timeframe

How Paceline can help

Alice is looking to invest her new wealth in a way that will continue to grow her money, with an approach that takes close consideration of her career path, and personal situation.

Paceline can help Alice develop a financial plan to see that she achieves each of her financial goals, and implementing and investment strategy tailored to her needs. This includes being cognizant that most of her money is now in taxable investment accounts, and that from an income standpoint she’s had a “big” year.

Acutely aware of the organizational change that often tends to follow an employer being acquired, Alice is now actively looking for a new opportunity in the startup scene.

Finding the right opportunity is not just about her responsibilities and cash compensation, but also the trajectory of her next startup because that will determine what her new stock will eventually be worth.

That’s why she picked a financial advisor who specializes in working with tech professionals, and who can help answer the most fundamental question about the stock component of a new job offer: “If my company does well, will I do well (or not)?”