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The After-Tax Value of Your Business Could Drop 25%

By Don Woodard III

The After-Tax Value of Your Business Could Drop 25%

In 2021, President Biden proposed a near doubling of the federal capital gains tax rate from 20% to 39.6%, sending shockwaves through the business community [1]. While President Biden’s plan ultimately was blocked by the slimmest of margins in the Senate, there’s a reasonable risk that a similar or pared-down package of tax hikes will be proposed in 2025. As a result, the time for business owners to think strategically is now.

Given the potential tax changes on the horizon, a business owner contemplating a sale of all or part of their company within the next five years might seriously consider accelerating those conversations into the first half of 2024. Should the tax proposals of 2021 become law in 2025, you could find the take-home value of your company significantly reduced.

The key is urgency. Selling a company does not happen overnight. It often takes months to identify and attract the right partner who will value your company’s identity and culture.

Western’s focus is on ensuring our clients are best positioned to obtain long-term success for themselves, their families, and their companies. We believe in being proactive, not reactive. Accordingly, we are on alert for what the outcomes of this year’s federal election – and subsequent legislation, tax or otherwise – could mean for business owners.

For the business owner who is similarly concerned, there is an opportunistic window to pursue a transaction and eliminate the uncertainty of radical tax changes in the year following a federal election.

Contact us today to explore how you can take proactive steps to safeguard the long-term success of both your company and your family. Our talented Pathfinders look forward to having an informative discussion with you.

Turner Holthaus: turner@western-companies.com / 314-420-6999

Rick Groesch: rick@western-companies.com / 817-658-4653

Don Woodard III: dwoodard@western-companies.com / 817-360-8595

Western: info@western-companies.com / 817-877-9980

[1] https://www.cnbc.com/2021/06/21/biden-tax-plan-raises-top-capital-gains-dividend-tax-rate-to-among-highest-in-world.html

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