The First 12 Months After a Liquidity Event
by Malik M. Amine
You just had an exit. Congratulations — and be careful. The first year after a liquidity event is when most wealth is accidentally destroyed. Not by markets, not by taxes, not by bad luck. By the founder themselves, making big decisions on a high-emotion timeline.
Step one: do nothing for 90 days
Park the cash in a treasury money market or a short-duration treasury ladder. Resist every urge to buy things, invest in your friend's startup, or make dramatic life changes. The emotional high of a liquidity event is not the time to make financial decisions. You earned the patience.
Step two: nail down the tax bill before you spend a dollar of it
Your liquidity proceeds aren't all yours. Depending on structure — QSBS, founders' stock, RSUs that vested at acquisition, escrow, earn-outs — you may owe federal capital gains, state capital gains, AMT clawback, NIIT, and in some cases ordinary income on a portion. Get a CPA who has seen exits before to model the bill. Wire the estimated taxes to the IRS and your state on the next safe-harbor deadline. What's left after that is what you actually have.
Step three: a new investment policy statement
Your old portfolio thesis assumed you had high human capital and could absorb risk. Post-exit, you may have a decade of optionality already sitting in a brokerage account. Most founders are now overcapitalized for their actual lifestyle and undercapitalized in tax-advantaged structures. Before you put a dollar to work, write down: what return you actually need, what risk you can tolerate, and what you want this money to do for the next 30 years.
Step four: the small list of decisions worth making in year one
- Establish a donor-advised fund if charitable intent is real. The deduction year matters.
- Maximize this year's retirement contributions (Solo 401(k), backdoor Roth, mega backdoor if available).
- Update estate documents — will, revocable trust, beneficiary designations on every account.
- Get an umbrella liability policy. Concentrated wealth attracts lawsuits.
- Consider a 529 if family-formation plans involve kids.
That's it. Everything else can wait. The expensive moves — buying a house in cash, starting a hedge fund, angel investing across 30 deals — are far better made in year two or three when the dopamine has cleared.
If you're inside the first 12 months and want a second opinion before you commit any of it, book a call.