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Thought leadership series
How much cash do you actually keep when you sell your business? There are 2 big numbers to know.
How much cash do you actually keep when you sell your business? Most sellers focus on the sale price. The number that actually matters is what's left over after the transaction settles. And 2 big items that can surprise you are debt payoffs and taxes. And the deal structure matters too. Had a new client close a deal that looked great on paper. $1.5M upfront and $6.5M total paid over 5 years. But his business carried $1.2M in debt that had to be paid off at closing.... before taxes. Which left him only $300K in hand in year 1. Then the tax bill came. Given his cost basis in the business, the IRS wanted $452K. He had to scramble to find the difference. Before you finalize a sale, make sure you are clear on 3 things: 1. Model the tax and timing on each payment separately, not just on the total deal value. 2. Know your tax basis before you negotiate the deal structure. It determines your actual gain, and most sellers find out too late. 3. Map debt payoff against closing proceeds before you agree to terms. Day 1 cash can look nothing like the headline number. If you're working through a possible sale, click the link in the bio. We'll model it with you. #BusinessExit #ExitPlanning #TaxPlanning #BusinessOwners #FinancialPlanning #SellYourBusiness #CapitalGains #WealthManagement
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