You’ve done it! Your company has sold, and for the first time in years, you’re looking at a bank balance that reflects all the late nights and hard work. It’s exciting and a little surreal. But after the celebration fades, most founders face the same question: how much of this should I keep in cash?
There’s no single right answer. The ideal amount depends on your next step, whether you plan to start another business, take time off, buy a home or simply slow down and spend more time with your family.
After working with many founders across liquidity events, we’ve found that this transition usually unfolds over three years. Each year has its own focus, first tackling taxes, then planning for near-term goals, and finally creating a new financial normal.
Year 1: Getting Your Taxes Right
The first year after an exit is all about clarity. You’ve just closed a major transaction, and the most important task is understanding the tax impact before you make any big financial decisions.
We start working with post-exit founders at this point to understand the structure of your sale. We ask lots of questions about the structure of the deal and of your company. We also go way back to how it was founded, how your shares were held, and the shares that are now being transacted at your company’s sale. These details will determine the tax treatment of your shares and how to report it correctly so that you only pay for what you owe.
Once you know the numbers, you can start setting aside the right amount of cash for taxes. We’ll also look at the different rules at the federal versus state level. Some payments might be due right away in the form of estimated payments, while others can wait until next April. We will help you map that timeline so you’re not caught off guard.
While you’re waiting for those bills to come due, that tax cash doesn’t have to sit idle. It can earn a little yield in a secure account without taking on risk. The goal in Year 1 isn’t to chase returns, it’s to preserve liquidity and get through tax season with confidence.
When the taxes are behind you, you’ll have a clean slate and a clearer picture of what’s truly yours to work with.
Year 2: Funding Near-Term Goals And Big Life Decisions
By the second year, you would have paid your taxes and now you can focus on what’s next. This is when founders start turning their attention to near-term goals like major purchases, charitable giving or lifestyle upgrades that reflect their new chapter.
Making Real-Estate Decisions
Real estate comes up often, whether it’s buying your primary home or a vacation home. Many founders choose to pay cash because it simplifies the process, especially right after an exit when lending requirements can get tricky. But there’s also the option of delayed financing, where you pay cash up front and then take out a mortgage within 90 days. This lets you secure the property quickly while still freeing up capital for other investments once things have settled.
Your advisor can help you run those numbers side-by-side. Sometimes a little leverage makes sense if it allows you to keep more money working elsewhere. Other times, paying cash provides peace of mind and simplicity.
Being Strategic With Charitable Giving
Charitable giving is another common priority in Year 2. Many founders come into this phase with a dollar amount in mind, perhaps they’d like to donate $500,000 or a million dollars to causes they care about.
A good advisor will walk you through some options that will help you achieve your philanthropic goal with a lower tax impact. Instead of giving cash directly, you could explore donating appreciated stock from your investment portfolio. This can let you avoid capital gains tax on the appreciation and receive a deduction for the fair market value of the gift. In some rare cases, if the planning starts early enough before your company’s sale, founders can even explore donating company shares directly.
Year 3 And Beyond: Building Your Cash Cushion And Your New Normal
This phase is about stability, structure, and finding your new financial rhythm. Determining how much cash to set aside will depend on the path you find yourself on. Some founders continue working, either at the acquiring company or in a new venture. Others step away and shift toward managing their wealth as their full-time focus. Either path requires a different approach to cash.
If you’re earning a regular paycheck, which covers your living expenses, then you can anchor your cash holdings to your income by keeping 10–20% of your annual salary as an accessible buffer. It keeps life smooth and flexible without letting excess cash sit idle.
If your income now comes from investments or irregular distributions, the math changes. You’ll want to look 12–18 months ahead and identify what expenses or opportunities are coming and set aside enough cash to comfortably cover those. Then, you can keep another 5–10% of your overall portfolio in cash to manage flexibility.
Your advisor will then help structure the rest of your portfolio in a way that reflects your long-term financial goals and takes into account the current market conditions.
Turning A Windfall Into A Plan
A liquidity event like selling your company changes everything. It can give you financial freedom, but it also brings with it complexity. A trusted tax and financial advisor helps you navigate both.
At KB Financial Advisors, we provide tax and financial planning for founders and tech employees under one roof. We speak your language of RSU taxation, stock options, Qualified Small Business Stock, and we’ll help you see how your decisions today affect your long-term picture tomorrow.
If you’ve recently sold your company and want to make sure your wealth supports the life you’re building next, we’d love to help you start that plan.
Book a call with our team today.
Your exit was the hard part. Now let’s make it work for you.
