In 1789, Benjamin Franklin wrote “in this world nothing can be said to be certain, except death and taxes.”
In Deal Note® 32 (published on September 6, 2022), we discussed the types of taxes that may be due when you sell your middle-market aerospace & defense company. Today, we will address how best to manage your corporate and personal taxes to minimize the taxes you will owe when you sell your business and the taxes you will owe when you distribute some of those proceeds to family members.
The following may seem overly simple, given the enormous complexity of federal, state, and local taxes in the United States. However, in 24+ years serving as M&A Bankers to the owners of middle market aerospace & defense companies, we have seen just one simple strategy stand the test of time. That strategy is as follows:
- Meet with highly experienced estate planning tax advisors and corporate tax advisors – long before you consider selling your business.
It is that simple. If you hire true experts in estate taxation and true experts in corporate taxation, and you instruct them to work together to minimize your taxes long before you sell your business, then you stand the best chance to truly minimize your taxes. As you may hear from your tax advisors, some of their tax planning strategies can take years to implement. For example, if it could save you taxes by converting your business from a “C” corporation to an “S” corporation, the current IRS rules require that you wait 5 years after conversion before you sell your business.
If you are considering selling your business in the future – even far in the future – now is the time to meet with highly qualified estate and corporate tax advisors and start working on your plans to minimize the taxes you will owe when you sell.
Have a great day everyone,
Bill Alderman
Founding Partner
