Logistics

Time on Market: 2 months

Client Objective: “How much will I be taxed when I sell my company?”

Discovery Meeting: The owners were a married couple that decided it was time to sell their company and spend time on land they owned out of state. The business was 35 years old with consistent revenues, a loyal customer base, and tenured employees. The business was a C Corp., and the owners had heard that they would be taxed twice if they sell the company. We explained that when a C Corp. is sold, the enterprise is taxed and then any proceeds taken by the owners are taxed so, in simple terms, they are taxed twice. We said that we never give tax advice, however, our trusted advisors are experts in that field and have helped many of our clients drastically reduce their overall effective tax rate.

Assessment: Due to the age, reputation, profitability, scalability, and quality of the company financials we knew this company would be attractive on the market.

Deal Process: We received a call from our clients stating that they had been contacted by a buyer they had met with several times prior to hiring our firm. Our clients were never able to reach an agreement with this buyer, so they asked us to give him a call. During our conversation with this buyer, we learned that he owned a large company and had made over 20 acquisitions. He stated he did not need to perform the typical due diligence and could close quickly because of his knowledge and success acquiring these types of companies. We shared what we believed the company’s synergistic value would be to the right strategic buyer. After a few discussions, we were able to come to an agreement on purchase price and structure.

Major Challenge: This buyer stated he wanted to close within one week and would have his attorney draw up the legal documents. We knew from previous experience it would take a minimum of three weeks for our trusted advisor to “spin out” our clients personal goodwill from the C Corp. We knew that would have to be completed prior to closing as unlike a typical transaction there would need to be two purchase agreements, one for the enterprise and another for the personal goodwill. Having never heard of this, the buyer stated that if our clients wanted this deal, we would need to figure out how to close within two weeks.

Solution: We explained the tax implications for our clients. We also expressed that we would have the goodwill spin out and legal documents completed in tandem and having the seller’s attorney draw up the purchase agreements would reduce buy-side legal fees. We assured the buyer we would do everything possible to expedite the process and close within three weeks. After understanding the amount of savings this meant to our clients with no impact to him, he agreed to our closing timeline.

Result: Closed transaction at the high end of market value.

Conclusion: ATK Ventures has relationships with many vetted trusted advisors that are experts in their respective fields. We leverage those relationships to help protect our clients and optimize every aspect of their exit.