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Your Business May Sell in 2023? Personal Considerations

Anyone ever involved with the sale of a company knows that the buyer and its professional advisors ask many questions and perform extensive due diligence. However, rarely does this process involve any effort to understand the best outcome for the owners, officers, and employees of the seller.

If your company may sell in 2023, EVALUATE NOW, before a deal is in place, the consequence that a sale may have on you personally. Salary, bonus, benefits, equity and options are all tied to our jobs. Any sale will therefore impact your wealth, making it important to understand and plan for the effect, both directly (i.e., sale of stock, change in job, etc.) and indirectly (i.e., taxes, access to benefits, acceleration of options, etc.). To achieve the best outcome personally from a sale, it is critical that you: (1) ask the right questions, (2) develop a plan of action that addresses your needs, and (3) act on your plan.

Regarding equity and options, an article in the Atlanta Business Chronicle suggested several questions to ask and provided some cautionary information about the tax consequences from certain decisions. The comments of that author are just a part of the evaluation you should do. Whether alone, or with the assistance of an attorney, accountant, and/or financial professional, you can make a difference if you understand your situation in advance and take control. The effects of a sale can differ, so take steps now to influence the preservation and maximization of your wealth.

What are your options or other forms of equity award shares as a percent of the company's total outstanding shares? . . .If you exercise non-statutory options (NSO) before the sale or IPO, you will owe earned income tax on the spread without being able to sell the stock to pay the tax. . . . While taxes are not due at exercise for ISOs, selling shares before a year and a day from exercise can trigger the alternative minimum tax or ordinary income tax.

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m&a, corporate and business, insights, mergers and acquisitions, duma_scott
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