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Posted by Luke Sage on Mon, Jul 23, 2012 @ 09:12 AM

4 Factors to Help You Decide if This is the Year to Take the Leap

People have been talking about whether selling a business in 2012, instead of waiting, may make unique sense. While clients should always focus on the right business reasons to consider a transaction, there’s four reasons why 2012 may be a compelling year to sell:

(1)    There’s nearly $1 trillion of private equity funds available for investmentGet the full report

Funds are paid to invest the equity capital they have raised, and cannot raise more until they have deployed a sufficient percentage of capital and had successful liquidity events in existing funds. These factors have created an atmosphere of creative bidding for businesses available for sale.

(2)    There’s potential for a 33% increase in capital gains taxes

The jury is still out in regards to how capital gains will be treated from a tax standpoint, but the 15% federal rate expires at the end of this year, along with other so-called "Bush Tax Cuts." At the very least, the old rate of 20% will become the new capital gains tax rate if the cuts are allowed to expire at the end of 2012. The impact could be significant given the potential of a 33.3% increase in capital gains taxes.

(3)    As a result of the new Medicare Tax  and the Patient Protection and Affordable Care Act, the cost of doing business is going to increase

In 2013, an additional tax of 3.8% will apply to unearned income to help, in part, to fund Medicare. In addition, in 2014 there will be costs related to the Patient Protection and Affordable Care Act, which requires companies with more than 50 employees to provide healthcare for their employees.

(4)    Estate and gift taxes will be changing

Whether or not the current $5 million exclusion from taxation on profits from a company sale will remain in place is unknown, like a number of other tax provisions. Exactly how estate and gift taxes will change in 2013 is uncertain.

If you are considering selling all or a portion of your business, you may need assistance with succession planning, business valuation and tax guidance. Selling a business is a complex undertaking that requires different accounting and legal expertise to make sure your taxes are minimized and your retirement assets are protected to the greatest degree possible.

For a confidential discussion of your current situation and development of an exit strategy or succession plan, contact us here, or call Luke Sage at 858.795.2088.

Tags: Luke Sage, market update, year to sell

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