Catherine Synan No Comments

How to minimize Capital Gains in the sale of your privately held company

This is the fifth article in a five part series that reviews the Section 1042 Capital Gains Tax Deferral. In this last installment we will briefly discuss how to potentially eliminate capital gains taxes on proceeds from the sale of a business and we will discuss the summary points on a C-Corp vs. S-Corp sale. One of the more powerful uses of the Section 1042 capital gains tax deferral is the elimination of capital gains taxes in their entirety. This requires planning, but in certain circumstances, the seller may be able to entirely eliminate capital gains taxes on the sale of their business.

Elimination of Capital Gains Taxes under Section 1042
We mentioned earlier that the deferral of capital gains taxes using Section 1042 could be turned into the elimination of capital gains taxes in their entirety. This occurs when the seller holds the investment in QRP until death. At that time, the QRP passes on to the seller’s heirs with a step up in basis. As the basis in the assets is now equal to the value of the investments, there is no capital gain to tax and, therefore, no capital gains taxes due. Please note that the overall estate, including the QRP, may be subject to Federal or state estate taxes, unless some other exemption exists. Still, avoiding a 30% or more in capital gains tax remains attractive and offers significant savings.

Catherine Synan No Comments

New Year means New Deals

 

I am not sure for the reason why, maybe its a good marketing strategy, maybe we know the transport market better, perhaps the economy helps. For whatever the case, we have become very busy with a number of small and large projects most in transport but some outside of it.

This includes: A $40 million Debt Recap of a $115 million dollar revenue Midwest Based Carrier, Sale of a Texas based General Frieght carrier, A Buy-Side assignment with a Family Office / Private Equity group, A debt/equity placement for a Boston based Medical Services company, A equity /debt placement for a small automotive parts manufacturer and a LOI being finalized for the sale of a Midwest based Bulk Carrier,

We are handling 7 client assigments at this time with another 8 to 10 in the pipeline. Extremely high acitvity on the LOI negotiations and the debt recap.

Keep it going in 2013!

Norm Clarke

Catherine Synan No Comments

DONE DEAL

We closed on our Idaho based Refrigerated Carrier on September 24th, asset purchase $5.6 million, valuable experience in working through an ESOP close

Catherine Synan No Comments

How to avoid closing issues after the LOI

As we move towards the close on the sale of a Refrigerated Motor Carrier it comes to mind the various issues that can occur during the contract / due diligence period and how to avoid them in the future:

a. Negotiate your LOI closely and with detail, as much detail as can reasonably be put into the document. This closes the gap between LOI terms and contract / due diligence.
b. If at all possible get a schedule in place for the due diligence period. Keeping everyone on track and targeting a hard date.
c. Extended closes rarely close. A long closing period, one that is greater that 90 days is often a sign of a reluctant buyer. Tight fast closes with everyone on task are the best unless there are legal and regulatory filings to be completed.
d. Stay in the “Loop”, intermediaries are sometimes cut out of the contract process, This often leads to un wanted surprises such as a “blown deal” or a fee cut at close to the banker.
e. KNOW YOUR CLIENT! Spend extra time in the due diligence so you understand each line item of the financial statements and the schedules behind thme. Beware of unspoken non-finance issues as transitioning off of a family run company.

That’s It!

Catherine Synan No Comments

Closings

Three deals in close. Despite the outward perception that transactions are difficult in this uncertain economy closely held business continue to change hands. It takes a while depending on the company, valuation, market, profitability etc and the time to close can take anywhere from 5 months (very short) to a year. We are now in the process of taking two signed LOI’s to close and attempting to finalize a third LOI, from that point the process is from 45 days (very short) to 90 days to close.

If an owner is the least bit concerned about the potential reelection of the “Marxist Obama Regime” it might be time to move on.