For your situation
The bank advising on my sale also wants to manage the proceeds. Is that a problem?
The letter of intent is close, or signed, and the banker who has run the process for months has just introduced a colleague from the bank’s wealth management group. The pitch is reasonable on its face: they already know the deal, they can have the accounts open before the wire lands, and the lending desk down the hall can advance against the proceeds if you want liquidity before close. You are being asked to decide who manages the largest sum most founders ever receive, during the busiest month of your working life, by people who are paid when the deal closes. The question is not whether they are competent. It is whether the structure they sit inside can put your after-tax outcome ahead of the closing, and what to do about it if it cannot.
One company, three desks
At a bank-owned firm the investment banking group, the lending desk and the wealth management arm are typically divisions of a single parent. They may carry different names, sit in different buildings and answer to different regulators, and they often share a revenue relationship: the banker who introduces a client to the wealth arm may receive a referral credit, and the wealth arm may be measured in part on the assets it gathers from the bank’s own deal flow. None of this is hidden. It is disclosed, usually in the conflicts section of the wealth arm’s relationship summary, called Form CRS, and in more detail in its Form ADV brochure, in language along the lines of affiliates compensating one another for referrals. The introduction you just received is a referral inside one company, and the documents say so.
That is the structural fact the rest of this page follows from. It is not an accusation against the people involved, who are often very good at what they do. It is a description of who is paid when, and by whom, and it matters because a liquidity event is a sequence of decisions in which those two things pull in different directions at different moments.
Where the conflict shows up, stage by stage
A sale, a recapitalisation and a secondary have the same shape: a period before the price is fixed, a period of diligence, a closing, and everything after. The pull of the structure is different at each one. The rail fills as you read.
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When the banker is engaged
The introduction
The wealth arm is often introduced early, sometimes in the pitch itself, as part of what the bank brings. At this stage it costs nothing to listen and nothing to decline. What is worth noticing is the order: the person introducing the wealth arm is the person whose fee depends on the deal, and the wealth arm’s first interest in you is the size of the number the deal produces.
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Before the letter of intent
Two fees, one headline number
The bank’s advisory fee is typically a percentage of deal value, sometimes at a higher rate above a threshold. The wealth arm’s fee is a percentage of the assets that land in its accounts. Both are largest when the deal closes at the highest headline price with the most cash at close. The founder’s interest is different: it is the after-tax, after-risk value of the whole package, which can favour a lower headline with a stock component, a seller note that spreads the gain across years, or a structure that keeps a Section 1202 exclusion intact. Nobody at the bank is paid more for a smaller number that leaves you with more.
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During diligence
The planning that shrinks the managed account
The months between the letter of intent and close are when the planning that most changes your outcome still works: gifting shares to trusts for children before the value is fixed, checking whether the stock qualifies under Section 1202 and whether trusts can multiply that exclusion across the family, funding a charitable remainder trust or a donor-advised fund with shares rather than cash, and negotiating an installment structure. Each of those routes money away from the account the wealth arm would manage: into trusts, into a charitable vehicle, into a note. A firm paid on the managed balance is not paid to raise them, and founders often hear about them from the CPA afterward, when the window has closed. The planning window is the subject of its own piece.
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At close
The product shelf and the lending desk
The wire lands and the proposal arrives, often in the same week: a portfolio that may include the parent’s own funds, structured notes issued by the bank, and a securities-based line of credit against the proceeds. Each is a legitimate tool. Each also pays the parent something a plain index fund and an unpledged account do not, and a founder who has just sold is the customer most likely to say yes to all three in one signing, because the adrenaline of the closing has not yet worn off.
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After
A book, or a plan
Once the accounts are open the relationship is measured by the balance. The house, the gift to the children, the seed money for the next venture, the estimated tax payment in April: all of these reduce it. A plan built around what the money is for treats those as the point. A book treats them as attrition. The difference shows up in how the first year’s conversations go, and in what the adviser calls to talk about.
Who is in the room, and who pays them
Here is the deal table drawn as a ring of seats, with your own seat at the top. Tap a seat to see who pays it and what it wants from the closing; the notes below follow along. Two of the seats are yours to fill, and the one at your left is the one this page argues for.
- Investment bankerPaid by you, as a percentage of deal value at close, often with a retainer along the way. Wants the deal to close, at the highest headline number, on the current timetable. Very good at exactly that, which is why you hired one.
- Bank lenderPaid by the bank’s interest margin. Wants collateral: a line against the proceeds, a refinanced house, a facility for the next company. At the table because the parent brought it, and useful if you want to borrow.
- Bank wealth armPaid a percentage of the assets that land in its accounts, and often a share of revenue from the parent’s own products and lending. Wants the largest possible balance, as early as possible, with the referral credited to the right colleague.
- BuyerPaid by the return on what it is buying. Wants the lowest price it can get and as much of it as possible deferred, contingent or paid in its own stock. The only seat whose interest is openly opposite yours, which makes it the easiest to plan for.
- Deal attorneyPaid by you, by the hour. Wants a clean purchase agreement, representations you can stand behind, and an escrow you can live with. Not paid on the price and not paid on where the proceeds go afterward.
- CPAPaid by you, by the hour or by the engagement. Wants the structure that leaves the most after tax and the fewest surprises in April. Often the first to see that the planning window is closing, and often not asked until it has.
- Fee-only adviserPaid by you and by nobody else in the ring. Has no stake in the deal price, the product shelf or the lending desk, so the only thing left to want is the plan: the attorney and the CPA coordinated before the letter of intent, and a purpose for the proceeds before they arrive.
A book to be grown, or a plan to be built
The same proceeds can be handled two ways, and the way is usually set in the first meeting after close. Switch between them to see how the early conversations differ. Neither description is a caricature; both are what the fee structure rewards.
The first meeting
An allocation proposal for the full amount, a lending line pre-approved against it, and a conversation about how soon the remaining cash can be invested. The estate documents and the CPA come up later, if at all.
What gets measured
The balance, against a benchmark, each quarter. A withdrawal for the house or a gift to the children shows up as money leaving, and the review is about replacing it.
The first meeting
What the money is for, in what order: the tax payment, the year of cash you want untouched, the house, the children, the next venture, the giving. The portfolio is sized to what is left after those are named, not the other way round.
What gets measured
Whether each purpose is funded and on schedule, whether the tax estimate held, and whether the family understands the arrangement. A withdrawal that was in the plan is the plan working.
What the bank’s wealth arm does well, and when to take it
An honest page says this plainly. The wealth arm of the bank running your deal has advantages an independent firm does not have in-house. It knows the transaction, because the people down the hall ran it. It can open the accounts and put the wire instructions in the purchase agreement before close. Its lending desk can advance against the proceeds, refinance the house and fund the next company under one relationship and one login. It moves quickly, and speed matters in the week of a closing.
For some founders that integration is exactly what they want, and it is worth saying when. If the sale is straightforward and most of the proceeds are cash at close; if the pre-sale planning has already been done with your own CPA and estate attorney, so there is little left for the managed balance to compete with; and if what you want afterward is a single banking relationship for the next stage, then the bank’s wealth arm may be the right choice, and the conflicts on this page are a price you pay with your eyes open. The case for someone else in the room is strongest when the structure is still open, the planning has not been done, the deal has an earnout or a rollover that needs modelling, or the sum is large enough that a percentage of it is worth a great deal to whoever manages it.
Nobody at the bank is paid more when you keep more.
That is not a flaw in the people. It is the fee structure, and it is written down in the disclosures. The question the founder has to answer is who at the table is paid the other way.
What to ask the bank’s wealth arm
These are fair questions, and a good advisor at a bank-owned firm has clear answers to all of them. The answers, not the discomfort of asking, are what you are after.
What a fee-only fiduciary does across the same timeline
A fee-only adviser is paid by the founder and no one else, owes a fiduciary duty under the Investment Advisers Act for the whole of the relationship rather than at the moment of a recommendation, and sells nothing. That changes what the adviser does at each stage, and it changes the order in which things happen.
Before the letter of intent, the work is the after-tax model of the offer: what a stock component, an earnout, a seller note or a rollover is worth against cash at close, and what the deal attorney should be asking for as a result. During diligence, it is coordinating the estate attorney and the CPA on the trusts, the Section 1202 question and any charitable vehicle, on a timetable that beats the signing, because a trust funded after the price is fixed does very little. At close, it is wire instructions to accounts at Charles Schwab or Fidelity in your own name, a plan for the cash that already expects the tax payment and the first year’s withdrawals, and a read of any lending proposal against what borrowing would actually cost you. Afterward, it is the plan itself: what the money is for, in what order, and how the family, the next venture and the giving each get their share. At Aspirean the coordination with your CPA, attorney and insurance agent is inside the fee, and the fee is the same whether the proceeds end up in one account or spread across several trusts. Our broader thinking on exits and liquidity events sits alongside this page.
None of this is exotic. It is the same list the CPA and the estate attorney would write if someone asked them early enough. The difference a fee-only adviser makes is that somebody with no stake in the closing is asking them early enough, and holding the calendar.
The principle to carry
Follow the fee. Every seat at the table is paid by someone for something, and the disclosures say who and for what. Your interest is the after-tax value of the whole package and what it does afterward, and the person you want beside you is the one whose pay rises and falls with nothing except that.
Aspirean is an independent, fee-only, fiduciary wealth management firm with offices in Marin County, St. Joseph and Chesterton. If a letter of intent is on the table, we would rather read it with you now than read the proposal with you after close.
Frequently asked questions
Is it a conflict of interest for the bank running my sale to manage the proceeds?
It is a disclosed one. At a bank-owned firm the investment banking group and the wealth management arm typically share a parent and often a revenue relationship, so an introduction from your banker is a referral inside one company. The conflicts section of the wealth arm relationship summary, Form CRS, usually says so. Disclosed is not the same as disqualifying, but it is worth reading before the first meeting.
Why would a wealth manager not raise pre-sale planning before my business sells?
Because much of it lowers the balance the firm would manage. Gifting shares to trusts, a charitable remainder trust or donor-advised fund funded with stock, and an installment structure all route money somewhere other than a managed account. A firm paid on that account is not paid to suggest them. A good advisor may raise them anyway; the fee structure simply does not reward it.
What questions should I ask a wealth manager referred by my investment banker?
Four cover most of it: how are you paid on this relationship in full, does anyone at the bank receive a referral credit for introducing me, what happens to the pre-sale planning that would lower the managed balance, and may I see the conflicts section of your Form CRS. Add two more if lending or proprietary products are proposed: what the line costs all in, and which holdings can be moved elsewhere.
When does it make sense to use the deal bank for wealth management after a sale?
When the sale is straightforward, most of the proceeds are cash at close, the pre-sale planning has already been done with your own CPA and estate attorney, and you want one integrated banking and lending relationship afterward. The bank knows the deal, can open accounts before the wire lands, and moves quickly. The case for an independent adviser is strongest when the structure is still open or the planning has not been done.
This piece is general education, not individual advice.
Meet with us
Bring the letter of intent. We’ll read it with you.
A second opinion before close is a read of the deal structure, the pre-sale planning still open, and who at the table is paid what by whom. You leave with the list, whatever you decide.
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