BMO Family Office
After a difficult year for some companies and a banner year for others, many business owners are evaluating whether now is the right time to sell their business. The uniqueness of the last year coupled with President Joe Biden’s proposed changes to the capital gains tax rate (from 20% today to a proposed 39.6%) has pushed some business owners from being undecided on when or if they are going to sell their business to being ready now.
Time may be quickly running out to get a deal closed before January 1, 2022, the date many expect new capital gains rates to take effect. These potential tax changes, along with an already strong market for mergers and acquisitions, could make getting a deal done this year more difficult if you don’t move quickly.
This is expected to be an active year for M&A, due to:
These industry tailwinds have created a strong market for sellers. Given the volume of deals expected, however, there is concern about just how many deals can get done in the second half of the year as deal execution capacity is anticipated to be extremely limited. As the volume of deals increases, transaction service providers, such as accounting firms and investment banks, are expected to be at or above full capacity. Since it typically takes approximately six months to close a standard sale transaction, the timing for hiring an adviser and lining up a high quality transaction team is quickly coming to a close.
To help increase your chances of your deal’s success, some steps you can take immediately include:
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