Throughout the country, hundreds of thousands of business owners are struggling to cope with the massive impact of the coronavirus shutdown.
Most will soldier on, helped by the government's relief measures, but a minority will likely decide that it's time to cash out and sell all or part of the business.
For some, securing outside funding through an equity sale may be the only way to survive. For others, the pandemic and looming recession may have accelerated their timelines for moving on to something else.
Whatever the reason, owners shouldn't underestimate the importance of having a smart tax strategy in the run-up to a sale. While tax problems rarely sink deals entirely, in my experience they often cause unnecessary headaches and can result in substantially less money in owners' pockets than would otherwise have been the case.
Here are two steps to get the right price:Step 1: To get a better price, get your taxes in order
Broadly, there are two key elements of tax planning for a sale. The first is getting your own tax house in order. The second is ensuring that the sale results in the most advantageous tax treatment possible for you.
Step 2: Find the right type of sale to put more money in your pocket
Early preparation is equally important when it comes to optimizing the tax outcome of a sale. If you don't think about this until you're in the thick of negotiations, it can be hard and potentially costly to backtrack.
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Steve Niehaus, MBA, CBI
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239.565.3171
