The only deal point that matters is valuation.

When selling a business, structuring a transaction properly to achieve the specific needs and address the particular situation of a business owner can yield significant benefits

• Often, sellers become fixated solely on the purchase price while neglecting the importance of overall deal structure.
• Sellers must consider personal and financial goals when evaluating competing offers.
• For an owner that is interested in remaining actively involved in the business after the sale, structuring a proper earn-out or employment agreement can add significant value.
• For a seller that desires only partial liquidity, structuring a stock transaction allows the business owner to capitalize on favorable tax deferred treatment.

Tax implications of deal consideration

• When determining the consideration that will be received when selling a business, it is important to understand the tax implications of the various options.
  • Asset Deal: The seller is paid for the assets of the business and retains specified liabilities. From a tax perspective, an asset deal may translate into a large upfront tax liability for the seller.
  • Stock Deal: The seller is paid for the company’s shares and does not retain any liabilities. If paid in stock, the seller has the ability to take advantage of long-term capital gains tax rates by retaining buyer’s stock over a period of time. To mitigate risk, the value of stock received from the buyer can be "locked-in" with the use of collars, puts and options, allowing the seller to preserve value.
• Long-term capital gains tax rates are at an all time low, allowing sellers to retain more value for their company than ever before. Currently, a seller will pay only a 15% long-term capital gains tax rate (the lowest in history). However, the rate will be phased up to 20% over the next five years.

Generational Equity has decades of collective experience structuring the most complex of transactions when selling a business

• The representatives of Generational Equity have decades of collective experience structuring transactions from a financial accounting, and legal perspective. We are experts in structuring favorable transactions that maximize value for our clients.