Buying and Selling continues to be a hot topic with our readers and the profession in general. We were recently asked about the selling process. Chris Cruger provides his insights on this topic.
Question: With everything going on right now, should I be thinking about selling my business?
Chris Cruger: When considering your options, you need to ask yourself if the time is right to sell? Should you continue to operate? Consider these four issues:
- Examine your motives for wanting to sell – Is the decision being driven by health reasons, divorce, death, cremation, etc.… – The reason will determine the urgency and timing.
- Tax Environment – Sellers are able to get a very attractive capital gains treatment right now. A business sold today will have an effective tax rate of approximately 20 percent. That rate could go as high as 39.6 percent under certain proposed legislation. While nobody can predict the actual tax rate, we can say without much doubt that it is not going to be favorable.
- Determine the current fair market value of your business – It would be impossible to weigh your options without having a fair idea of the actual value of your business. How have the events of the past 15 months affected your value? Is your value trending favorably or negatively?
- Preparation – Are you ready to sell? Personally, and operationally? Business owners are often emotionally ready to sell before they are operationally ready to sell. Diligently preparing your business for sale can often mean a dramatic difference in value. – It is never too early to be prepared.
If you have any questions about your current situation or need some help answering these questions, please give us a call. We would love the opportunity to work with you in charting your course forward.
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