The cost of waiting
Most owners call once an offer is on the table. By then, half the good moves are gone. The plans that save the most start two or three years before you shake hands, in how the entity is set up and how the books read. Early is cheap. Late is expensive. Slide the timeline and see what is still open.
How far out is your sale?
Drag to your timeline. Each move shows whether it is still fully open, narrowing, or effectively closed for an owner at that stage.
- OpenChoose or change the entity for the salePre-sale reorganizations, S versus C questions, and the five-year clock on qualified small business stock all need years, not weeks.
- OpenMake the books read like a company worth buyingBuyers want three clean years. Reclassifying owner expenses, fixing intercompany accounts and tightening revenue recognition takes time to show up in the record.
- OpenSeparate personal goodwill and owner-created IPValue that belongs to you personally can be sold or licensed on its own terms, but the separation has to be real and documented well before a buyer appears.
- OpenMove ownership interests to family or trusts before the value jumpsGifting or selling interests to the next generation is far cheaper at today's appraised value than at the buyer's price.
- OpenFix the buy-sell and operating agreementsConsent rights, drag-along and tag-along terms and partner buyout formulas decide whether a sale can even happen cleanly.
- OpenCharitable pre-sale planningA charitable remainder trust or gift of an interest must be complete before there is a binding agreement to sell, or the gain is yours anyway.
- OpenDesign the consideration: cash, installments, earnout, rolloverNegotiable until the agreement is signed. Each form of payment is taxed differently and at a different time.
- OpenNegotiate the purchase-price allocationGoodwill, equipment, non-compete and consulting each carry a different tax rate. This is a deal term, not an accounting entry after closing.
- OpenRead the agreement for the tax trapIndemnities, escrows, working-capital adjustments and how they are worded change what you are taxed on and when.
- OpenNew Jersey bulk-sale notice, estimated taxes and the post-sale planAlways available, and always urgent once there is a contract. Miss the state's notice window and closing waits on Trenton.
The tax on a sale is set by moves you make, or do not make
Sell a New Jersey company with no planning and the proceeds face federal capital-gains tax, the 3.8% net investment income tax on top of it, and then New Jersey's income tax, which gives capital gains no discount and reaches into double digits at the top. Anything the buyer allocates to a non-compete, to consulting, to inventory or to depreciation recapture is taxed as ordinary income, at higher rates still. An earnout is taxed as it arrives, whether or not the buyer's projections hold.
None of those numbers is fixed. Each one moves with how the entity is structured, how the price is allocated, how the payments are timed, and what was separated from the company before the buyer priced it. On a $10M sale, a swing of a few percentage points in how the price is characterized is measured in hundreds of thousands of dollars. That is the money owners remember years later, and it is the money this practice exists to keep on your side of the table.
If you think you might sell someday, someday is the reason to talk now.
A first talk is free, and it is short.
Bring what you have, even if it is a rough number and a rough timeline. Martin will tell you plainly what can be done now and what has to wait. No pressure to sign anything.