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As Merger and Acquisition advisors, our goal is to maximize our seller clients' after tax proceeds. The first step is to get the best price from the marketplace by presenting the acquisition opportunity in a competitive bid situation. Having several interested buyers is the most important factor in achieving the best sales price.
However, the nature of the balance sheet of companies with a heavy investments in equipment makes the form of transaction especially important. First rule of thumb in the sale of your privately held business is to have the corporation set up as an S Corp, LLC, or Partnership rather than a C Corp. The reason for this is that buyers prefer an asset purchase versus a stock purchase. If you are structured as a C Corp there is no such thing as long-term capital gains for tax purposes.
So if you have an asset sale of a C Corp, then your gains are taxed first at the applicable corporate tax rate and then taxed again as long term capital gains when the proceeds are distributed to shareholders.
Steve Pierson is a Partner in the Oak Brook, IL office of Seldon Fox, a national accounting and consulting firm. He has over 25 years of experience as a tax professional in public accounting. Steve has a wide range of experience in estate and succession planning, employee benefits and international tax planning for medium-sized businesses and has worked extensively in merger and acquisition transactions.
Steve is a member of the American Institute of Certified Public Accountants and its Tax Legislation Committee and Employee Benefits Committees. He is also a member of the Illinois CPA Society, the Iowa Society of Certified Public Accountants, and serves in many capacities with the Industrial Council of Northwest Chicago and the Profit Sharing Council of America . He has appeared on local cable network telecasts and has written tax related articles for several nationally published magazines.
David Kauppi is a Merger and Acquisition Advisor with Mid Market Capital, Inc. MMC is a private investment banking and business broker firm specializing in providing corporate finance and business intermediary services to entrepreneurs and middle market corporate clients in a variety of industries. The firm counsels clients in the areas of M&A and divestiture, family business succession planning, valuations, business sales and business acquisition. Dave is a Certified Business Intermediary (CBI), a licensed business broker, and a member of IBBA (International Business Brokers Association) and the MBBI ( Midwest Business Brokers and Intermediaries). Contact Dave Kauppi at (630) 325-0123, email davekauppi@midmarkcap.com or visit our Web page www.midmarkcap.com.
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