United States

Selling your business in a post-election world

Do proposed tax reforms mean it’s time to accelerate a business sale?

INSIGHT ARTICLE  | 

In a climate of uncertainty due to the early days of an evolving Trump administration and burgeoning policy direction, some privately held business owners thinking of selling their companies may be feeling some anxiety.

Should you accelerate your sale now to take advantage of known tax considerations before the end of the year, or is a more deliberate approach the better play, pushing a sale to 2017 or beyond? While the urge may be for some to hurry up planning efforts for fear of the unknown, it’s likely better for many to take more deliberate sales strategy steps, and here’s why.

When you hurry, you lose control

Essential to an optimal business sale is the ability to control the readiness process. This starts with the business owner answering basic succession planning questions around business value, retirement and wealth planning needs, leadership requirements, family dynamics and more.

Addressing these questions and planning takes time, however, and if an owner is in an accelerated mode to sell the company, key business considerations may be missed and sale outcomes may fall short. So, despite the worries of unknowns about tax reform now, smart business owners shouldn’t be sprinting to the finish line. Rather, take a breath. A slow and steady pace will win this race. But, a restrained pace doesn’t mean efforts shouldn’t be underway now to plan for your business sale later. There’s much to do to achieve what you want out of your successful sale.

Addressing these questions and planning takes time, however, and if an owner is in an accelerated mode to sell the company, key business considerations may be missed and sale outcomes may fall short. So, despite the worries of unknowns about tax reform now, smart business owners shouldn’t be sprinting to the finish line. Rather, take a breath. A slow and steady pace will win this race. But, a restrained pace doesn’t mean efforts shouldn’t be underway now to plan for your business sale later. There’s much to do to achieve what you want out of your successful sale.

Getting your business sales ready

What can be done to get the business ready for an optimal sale, even in these somewhat speculative times? Believe it or not, basic succession planning tenets still apply. Business owners should still focus on getting financials and data in order, shore up leadership succession efforts, spruce up facilities and work with business advisors early on to uncover areas to fix and enhance. Advisors can also help illuminate what the Trump presidency could mean in terms of the economy, tax reform, trade and interest rates, as well as the impact on your sale. Work with your tax accountant, wealth management adviser and others to get this helpful guidance to address tax issues and other challenges upfront.

In addition, consider leveraging sell-side due diligence in your preparation efforts. An investment in professional pre-sale due diligence can produce accurate financial information for your buyer and also address operational, technology and human resources issues that could be the difference between a successful sale and a long, potentially contentious transaction process. Advantages include early collaboration with investment bankers to address risks, improved accuracy of historical and projected financial information, minimized surprises and maximized transaction value by adding credibility and objectivity to the process and identification of adjustments that positively impact earnings before interest, taxes, depreciation and amortization (EBITDA). The tax ramifications of any prospective sale are a significant issue for buyers and sellers. By using sell-side due diligence, a business owner can identify significant tax issues early in the process and either mitigate the issue(s) or frame those concerns in the best possible light.


FOR ASSISTANCE WTH TAX PLANNING IN THE FACE OF UNCERTAIN REFORM, CONTACT OUR TAX PROFESSIONALS.  

 

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