While 2020 has been the year of COVID-19, 2021 may be the year of business sales. And those business sales may produce unprecedented levels of charitable giving.
A CNN Business article last month noted that companies in 2020 have focused on securing cash and stabilizing balance sheets. As a result, we could see “a wave of deals announced in the first half of 2021.”
With cash on the balance sheets, companies will likely look to acquisitions to secure future growth. Some of the acquisition will be driven by the desire to secure supply chains—one of the painful lessons of the COVID-19 era. Additionally, some of the companies facing difficult futures will become acquisition targets.
With business sales, however, come the largest and best charitable giving opportunity. As companies are at the point of sale, many sellers miss the opportunity to reduce their tax liability by donating shares before the sale.
Wise sellers will seek the right tax counsel that will include charitable giving before the purchase agreement is signed.
Giving at the point of sale produces a triple benefit: income tax reduction, capital gains tax reduction, estate tax reduction and ultimately more charitable giving. The key is to look for the opportunity early before the deal is too far down the track.
Do you know of owners who are selling who would benefit from this discussion?
Photo by Roland Samuel on Unsplash
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Published July 24, 2020