Founder Aaron Galperin moved from high-tax California to no-tax Texas specifically to avoid state income tax on his company's sale. This pre-exit relocation is a crucial, often overlooked financial strategy that significantly increases a founder's net take-home pay from a liquidity event.
Related Insights
Before selling two-thirds of his company Gym Launch for $31M, Alex Hormozi had already taken $42M in distributions. This proves that for highly profitable businesses, the wealth generated from ongoing operations can be far more significant than the headline exit price, flipping the script on the importance of the final sale.
The most powerful incentive for increasing employee ownership is to make founder exits to their employees tax-free. This aligns financial self-interest with a social good, making it more profitable for a founder to sell to their team than to private equity.
After their main exit, two founders received a secondary payout structured as a promissory note. This 'bonus' was taxed as earned income at a ~50% rate, not as capital gains (~25-30%). This structuring detail cut their net proceeds in half, highlighting a critical and non-obvious tax trap in complex M&A deals.
For high earners, strategic tax mitigation is a primary wealth-building tool, not just a way to save money. The capital saved from taxes represents a guaranteed, passive investment return. This reframes tax planning from a compliance chore to a core financial growth strategy.
A $33M exit sounds huge, but Scott Galloway only took home $2-3M. This was because he owned just 20-30% of the company and had to split proceeds with his ex-wife. It's a powerful reminder that founder equity and personal circumstances, not the sale price, determine the actual take-home amount.
Instead of taking profit and paying taxes, a business can reinvest that capital into a growth driver, like hiring. This investment reduces taxable income while dramatically increasing the company's profit potential, leading to a much larger, tax-efficient gain in enterprise value.
Moving to a location with a lower cost of living (geo-arbitrage) is more than a cost-saving tactic; it's a strategic lever to accelerate financial and lifestyle goals by a decade. This allows founders to extend their runway, free up capital for investments, and achieve their desired lifestyle much faster.
Billionaire CEOs face a no-win situation where publicly opposing a wealth tax invites attacks from employees, shareholders, and media. The rational response is to remain silent while privately planning a move to a more favorable tax jurisdiction like Austin or Miami.
Post-exit financial planning is too late. Jacqueline Johnson learned from her banker that founders should be interviewing and establishing relationships with firms like Goldman Sachs or UBS *during* the sale process to create a full strategy for taxes and investments beforehand.
Marshall Haas sold a controlling stake in his company but retained significant equity. His goal was not just a cash payout, but to create a structure that provided ongoing cash flow, a continued advisory role, and a way to avoid the boredom and financial anxiety that often follows a complete, all-or-nothing exit.