As business owners, we’re all bracing for the Biden tax hikes. For those considering the sale of their business, this is of grave concern. Here’s what the proposed changes look like:
Capital gains rates will double under the proposed plan. Many business owners who would like to rush to sell to beat the tax hikes are coming off a bad year because of the COVID-19 pandemic. At Accelerated Manufacturing Brokers, Inc. we’re fielding calls every day from owners asking “Can I Sell My Manufacturing Company Before the Tax Hikes?”
To answer this question, I’d like to provide you with a current case study. In late March of this year, we launched a marketing campaign to sell a new listing. This was a CNC component manufacturer in the Midwest. By the third week of April, we had professionally and financially vetted 70 potential acquirers. Only 6 were granted visits. Of the six, five submitted offers. The deal will close on August 31st.
This will be a five-month time frame from beginning to end. It’s important to note that our client’s sales declined in 2020. The deal will still close above the contracted list price of the business.
The bottom line is that you CAN sell before these tax hikes take effect if you start now. To achieve this timeline, Sellers also need to respond with speed to data requests during the sale process. The manufacturing M&A market is incredibly strong and there’s plenty of acquisition capital. The above-referenced transaction is an all-cash deal.
If you’ve been afraid to start the process because you had a bad COVID year or you simply don’t think you can sell before the tax hikes, think again. Reach out today to schedule a confidential, no-obligation call. You’ll be glad you did!