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Selling Your Company Soon? Don’t Go Crazy with Year-End Tax Planning

Business For Sale

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If you are considering selling your business in 2016 or 2017, now is not the time to aggressively manage your year-end taxes – particularly if you are simply accelerating expenses and deferring revenue recognition.  This is more detrimental to your overall financial gain than Giving Up $2 to Save 30 Cents.  In this situation you are really only saving the net present value of a year’s delay in paying the inevitable tax, but could be decreasing your company’s valuation and your gross proceeds.  At this point of your exit strategy, your financials should reflect the fundamental earnings capacity of the business so that potential buyers can clearly see the cash flow and profitability opportunity in front of them.  With the exception of contributing to retirement accounts (which is easily documented and added back) and perhaps a few other items, have an in-depth discussion with you accountant and M&A Advisor and  leave the tax and accounting gymnastics out of the equation.