• Often, sellers become fixated solely on the purchase price while
neglecting the importance of overall deal structure.

• Properly structuring a transaction is just as important as negotiating
valuation. Expertise in structuring the terms and conditions of a
transaction is critical to securing and preserving maximum value.

• Mistakes in structuring a transaction can significantly erode the hard
fought value a seller has managed to negotiate.

• 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 realize monies over time and
capitalize on favorable tax deferred treatment.

• When determining the consideration that will be received from the sale of 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 Wealth & Equity's experience structuring transactions from a financial, accounting and legal perspective. We are experts in structuring favorable transactions that maximize value for our clients