If you’re familiar with Greycourt & Co. Founder Greg Curtis, you know that his blog is always a good read. His recent series on common mistakes families make investing after a liquidity event is especially compelling. Curtis notes that businesses tend to sell when the market is at its most overpriced. This means families who sell their business often find themselves investing just as the market is about trend downward. He sums the problem up nicely below:

“Fourth generation family companies don’t get sold when markets are low and the economy is struggling. No one has any money then. No, if your family company has just received an impossibly high offer, it almost has to mean that the stock market is high: the hedgies are all risk-on, the corporations’ stock prices are high enough to enable them to buy almost anything, and the PE boys can leverage out the wazoo. So while people can always argue about whether or not the markets are “too high,” if you’ve just sold your family company for a lot more than you thought it was worth, guess what? The markets are too high.”

This is definitely a must read and you can find the rest at the links below:

How to Not Invest a Fortune, Part 1: The Set Up

How to Not Invest a Fortune, Part 2: Other People’s Money

How to Not Invest a Fortune, Part 3: What the Smiths Should Have Done