Surviving – and Thriving – After a Liquidity Event

April 12, 2023
BBH Senior Advisor Ellen Perry discusses the complexities surrounding a liquidity event and covers ways to make the transition more successful.

Coming into a large sum of money suddenly may sound like a dream. However, for those who actually experience it, the excitement of sudden wealth can be complex. Perhaps they signed a lucrative contract, took their startup company public, sold the business they have poured their energy into for years, or simply inherited a significant fortune. Those who are faced with a large amount of money often experience:

  • Damaged personal relationships
  • Poor financial decisions
  • Psychological strain
  • Dangerous behaviors

Even those who retain their friendships and financial assets describe the enormous emotional and intellectual burden that comes with a life-changing financial event. It seems that the reality of the dream is significantly more complex than the dream itself.

As advisors to individuals and families who have accumulated or inherited significant wealth, we have witnessed these complications firsthand and have helped many clients navigate this transition successfully. Although each person’s path is unique, there are several elements that can frequently lead to happier endings.

The Great Disconnect

Many who have experienced a liquidity event are surprised to find a great disconnect between how they imagined they would feel and how they actually feel. For one thing, there is often a bewildering array of new economic and legal concepts to master, along with unfamiliar acronyms and technical jargon. This can lead to a sense of constant anxiety or even inadequacy.

One entrepreneur who built a company and sold it for a sum beyond his wildest expectations remarked, “I knew my business, and I knew my industry. But now, I don’t even know what I don’t know.” 

Some respond to this new tension by trying to avoid discomfort. Others embrace the learning opportunity. They read books, attend seminars, and try to achieve mastery as quickly as possible. 

Regardless of the approach, many report having obsessive thoughts about spending, investing, or running out of money. In addition, the attempt to address an item on the newly expanded to-do list can frequently lead to analysis paralysis and an inability to make a final decision. Or conversely, it may also lead to a sense of defeat, followed by compulsive behavior and loss of self-regulation.

This kind of internal disorientation can affect external relationships as well. Sometimes jealousy, and uncertainty over how to deal with jealous behavior, can damage even the closest relationships. Feelings of vulnerability can lead to suspicion, loss of trust, and social isolation. And many individuals who acquire significant liquid wealth following an event report having major bouts of guilt – over how their wealth was acquired or over systemic or societal issues that are well beyond any one person’s control.  

The result of this complex stew of emotions is often fatigue, both mental and physical. Ironically, this fatigue can make it more challenging to address the cause of these emotions. But simply taking the time to understand and recognize these very human responses can provide better preparation for resolving them when they occur. 

Where Is This Coming From?

The complexity of human emotions around wealth derives from several different sources. For many of us, the money messages transmitted by parents and grandparents are a primary influence on our spending decisions and financial habits for the rest of our lives. This is true whether those messages were explicitly conveyed through dinner table negotiations over allowances or discussions about college savings, or whether they were silently learned by watching hard-earned dollars go into the church collection basket every Sunday.

One private equity investor who has bought and sold several companies admits to driving his car further than he needs to so he can refuel at a gas station that charges a few pennies less – a hardwired habit that he inherited from his mother. Attitudes about money are frequently shaped by our families of origin and are thus often connected to deep-seated emotions and memories that are just waiting to spill over to the surface. The result? The willingness to make trade-offs between money and time, risk aversion vs. the appetite for entrepreneurship, feelings of neediness, the feeling between sufficiency and abundance. 

Cultural norms and narratives can be a major influence as well. Many Americans report an aversion to talking about money at a personal level, such as how much you have, how much you earn, and how much you donate. At the same time, there seems to be a deep societal fascination with stories about other people’s money, particularly when things go wrong. CEO severance packages, celebrity prenups and divorces, and disgraced heirs and their brushes with the law get attention. Affluent families that are happy, close-knit, and well-adjusted do not often make the news. 

As a result of this information imbalance, few people would have any reference points that would prepare them for a sudden shift in finances. For some, the experience may feel like being dropped in a foreign land where you do not speak the language, know who to trust, know the norms, or know how to navigate your way around. It is no surprise that new arrivals in this foreign country might feel burdened by uncertainty. 

At the same time, with more wealth comes more options. Surprisingly, this is not always a good thing. Barry Schwartz, the author of “The Paradox of Choice,” has observed that the more options one has, the more perfection becomes the expectation. Anything less than perfection comes with a sense of dissatisfaction or uneasiness about whether a different choice would have been even better. The travel review company TripAdvisor reports that there are 100 five-star hotels in Paris. How can anyone be sure that they have chosen the best one? Perhaps the vacation might have been more fun, more relaxing, or more romantic at a different five-star hotel. For some, the constant second-guessing associated with having too many options can turn the blessing of ample resources into a curse.

Fortunately, there are effective ways to manage these circumstances.

One exercise that a therapist might recommend is to take the time to reflect on your past and how it has shaped who you are today. Articulate your core values and think about how to operationalize those values in your new life.

The New Normal

Even with these emotional responses so deeply ingrained, there are several considerations that can help you successfully navigate the new normal after a substantial change in financial circumstances, such as the sale of a business. First and foremost, know that emotional reactions are natural and that there are phases to any transition. Acknowledge how you are feeling, and be kind to yourself and to your loved ones. 

On a related note, it is often wise to slow down and acclimate gradually. Try to avoid being pressured into significant decisions, at least for the first several months. This means resisting the urge to buy a new house, make extravagant gifts, walk into your boss’s office and quit – at least not until you have prepared for the financial, emotional, and practical considerations of your new circumstances. Oftentimes, objective, trusted third parties are well-positioned to help. 

When selecting those advisors, it is important to follow a formal process. Interview potential candidates carefully, check references, and ensure that they have worked with others in a similar situation. Your advisors should be able to help not just with your technical, logistical, and quantitative needs, but also be sensitive to more qualitative issues, such as your family’s need for education, patience, and frequent communication. 

In addition to the traditional team of advisors, you might consider engaging a therapist, even if only for a temporary period. Many consider this to be an effective investment of time and money. The emotional issues that trail behind liquid affluence are complex and multidimensional, and the wealth may affect many of your closest personal relationships. Having someone to sort out these thoughts and feelings with you can be helpful.  

One exercise that a therapist might recommend is to take the time to reflect on your past and how it has shaped who you are today. Articulate your core values and think about how to operationalize those values in your new life. As you begin to make important life decisions in a post-liquidity world, use your core values as a filter to drive that decision-making.

For example, if your core values include financial security and independence, you may want to pay off all of your debts and obligations before making a large new purchase. If generosity or compassion are among your highest values, then philanthropy and making gifts may play a big role in your life moving forward.

It may also be good practice to keep your rituals in place. If you always have family pizza night on Fridays or coffee with friends on Sundays, continue to do these things. These patterns are grounding during a time when you will have a lot on your mind. It is important to maintain familiar routines in the midst of the new and unfamiliar. 

Finally, consider communicating early and often with family and loved ones. Try to avoid making a rash, public announcement over an extravagant dinner for all your friends and family. Rather, make a list of all your closest relationships and create a plan for whom to tell, when, and how. After all, once you have started to process your own reactions and needs, your next obligation is to prepare your loved ones so that their inheritance, if any, will bring not regrets, but blessings.


Although there is no checklist that will guarantee success, the practices mentioned can be distilled into three common themes. 

  • First, take the time to articulate your values and remain in touch with them as you move further into the new financial territory.
  • Second, find seasoned guides to help you identify opportunities and pitfalls and to guide you through this experience, particularly through the early months and years.
  • Third, be patient. Like with any new experience, it takes time to acclimate and integrate fully. Keeping a focus on these principles and practices will help position your financial success as the life-enriching opportunity that it is. 

Please reach out to a Brown Brothers Harriman relationship manager or wealth planner if you would like to continue the conversation.

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