A critical aspect of planning for the eventual sale of your business is to engage in personal estate planning with sophisticated financial, tax, and legal advisors who can help you put the right structures in place to maximize the outcome for you and your family.
Some of the most important considerations include:
- Take advantage of gifting strategies that can allow you to create substantial value for the next generation without paying estate taxes on the value you create in your business. To do so, it is essential to take advantage of these strategies well in advance of a sale when, ideally, the value of the equity in your business is materially lower than the eventual sale price. Generally speaking, the earlier the better.
- Ensure that any trust structure you set up as part of this process is governed in a manner that will be efficient in the context of a sale process. We have seen many occasions where a shareholder becomes deceased in the midst of a sale process, and a large corporate/bank trustee takes control of stock being sold. These trustees usually layer a substantial amount of additional time and process into the closing of a sale transaction relative to individual trustees. As my colleague Phil Taub wrote in our first newsletter earlier this year, “time is the enemy of all deals”—so this is crucial.
- Ask your advisors about the potential for creating and administering your trust in a state like New Hampshire, which can offer significant potential benefits if structured properly, including substantial income and capital gains tax savings in connection with an eventual sale of your company.
Our team at Nixon Peabody has significant experience guiding our clients through this process.
Our weekly newsletter is published to share updates and insights from part of our team of Private Equity and M&A legal talent. This edition is curated by Greg O'Shaughnessy.
- M&A’s path to recovery has been solidly tracking upward as private equity’s share of M&A dealmaking has rebounded.
- PE’s slice of total M&A deal value hit 41% in Q2, up from 33.5% in the previous quarter. With banks lending again for leveraged buyouts, this has helped lower borrowing costs, and large take-privates have surged.
- As supply chains shift away from China, dealmakers are positioning themselves to support the transition. Companies are reassessing their manufacturing locations and production partners, leading to the relocation of some production activities closer to home.
- This “reshoring” trend has created investment opportunities in businesses that facilitate this process. Reports indicate that 90% of North American manufacturers plan to bring at least part of their operations back to the continent within the next five years.
This newsletter is intended as an information source for clients and friends of Nixon Peabody LLP. The content should not be construed as legal advice, and readers should not act upon information in this publication without professional counsel. This material may be considered advertising under certain rules of professional conduct. Copyright © 2024 Nixon Peabody LLP. All rights reserved.
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7moThanks for sharing