Family-owned businesses urged to sell before the party ends

January 16, 2020
two men working in kitchen

If you’ve been thinking about selling your family-owned business, now may be the time to get serious about it. Uncertainty over tax changes that might occur if a Democrat takes the White House in November has some financial experts predicting that selling your business by the end of 2020 could mean a substantially smaller tax bill than by waiting to make a deal in 2021.

The Timing is Right

No matter which political party prevails in this year’s election, many advisors say the present offers excellent conditions for selling. 

  • The U.S. stock market is setting record highs.
  • Interest rates are near historic lows.
  • The broader economy is doing well.

Plus, business owners are getting higher valuations for their companies and there are plenty of potential buyers looking to make acquisitions. 

Family Matters

For family-owned businesses, especially those that span multiple generations, there are two important questions that have an impact on deciding to sell:

  1. Does the family have an heir apparent, someone who is interested in keeping the business going?
  2. Does the business provide sufficient returns for shareholders?

Many family business owners plan for their children and grandchildren to take over the company at some point, but fewer of them are choosing to do so. In fact, only 12% are viable into the third generation. 

So, is now the right time to sell your family-owned business? The answer is a nuanced one and should take into consideration current market conditions, family dynamics, and current business prospects. Thoughtfulness and open communication with shareholders and family members are required and the final decision should be one that is beneficial to the business and family. Engaging with a trusted advisor and talking with other owners of family businesses can help you make the right choice.

If you’d like to learn more about selling a family-owned business or how possible upcoming tax changes may affect your business, contact KEGA CPAs online today or call us at 772.231.6902 to schedule a consultation.