Selling a business in 2021 is a major topic of conversation these days, and the reason may surprise you. The reality is that 2021 could be a great year to sell your business. Read on for three reasons why.
1. Anticipated Tax Increase
There is the possibility of a significant increase in the long-term capital gains tax rate, possibly beginning next year in 2022. The proposed tax plan aims to nearly double the current capital gains tax rate.
Simply put, the current tax structure is as advantageous for a seller as it will likely ever be. If you are considering selling a business within the next three to seven years, it would be wise to consider selling now in order to close the sale before year end and avoid the greater tax implications.
We can better explain how much the tax increase may impact you specifically in a no-obligation, complimentary consultation.
2. Buyer Activity
There has been a tremendous amount of buyer activity in the past six months. As a professional M&A firm, that means we are able to choose from a larger pool of buyers and bring you some extremely strong and well-qualified prospects. But, why has there been an uptick in buyer activity?
Attractive Resilience
All types of buyers, whether individual, strategic, or private equity, are actively seeking opportunities with resilient businesses that were able to withstand the impact of COVID-19.
Growth Through Acquisition
With capital costs low, M&A is proving to be one of the more accessible paths for companies to achieve growth. Now is a particularly good time for strategic buyers to acquire complementary businesses that can expand their customer base, grow their market share, or diversify their offerings.
Buyer activity has also accelerated due to new lending incentives, especially from the Small Business Administration.
3. SBA Incentives
The Small Business Administration (SBA) has implemented a number of incentives to make acquiring a business more obtainable. This has created a sense of urgency for buyers to act before the incentives expire. Some current initiatives include:
Temporary Fee Reductions
Reduces the cost of capital by waiving fees associated with the SBA 7(a) and 504 loan programs for borrowers and lenders.
Express Loans
Increases the Express Loan amount from $350,000 to $1 million through Sep. 30, 2021. On Oct. 1, 2021, it will be reduced to $500,000.
Guarantee Amounts
Incentivizes lenders to make loans by temporarily increasing the guarantee up to 90% on 7(a) loans, including for Community Advantage Loans, until Oct. 1, 2021. The guarantee on Express Loans of $350,000 or less is temporarily increased from 50% to 75% until Oct. 1, 2021.
Conclusion
Acting swiftly to take advantage of good timing does not mean acting without intention. Make the most of the opportunity, and take the necessary steps to sell your business for top dollar. Begin with securing professional representation; we are here to help you get the best result possible. Contact us today for a confidential valuation and consultation.