As we prepare for 2025, many business owners are considering how proposed policy changes could impact their exit strategy. If you’re planning to sell your business in 2025 or over the next few years, it is imperative you understand how potential economic shifts may affect the valuation, tax ramifications, and sale conditions for your business.
- Maintain a Clear Understanding of Potential Policy Reforms
- Tax on Capital Gains: The Trump administration may propose changes to capital gains taxes, potentially lowering rates to incentivize investment. Selling your business under a favorable tax climate can yield significant savings.
- Estate Planning: Lowering estate tax rates is another possible policy focus. If your business succession involves family members, consider how these changes could benefit your estate.
- Interest Rates: The Fed continues to drop interest rates and economists are predicting this trend to continue in 2025. The lower rates will likely drive buyer activity, increasing demand and potentially increasing business valuations, all favorable conditions for business owners looking to sell their businesses.
- Understand What You Can Do: No matter the political administration and market environment, there are actions business owners can take to maximize their exit.
- Solid Management Team: Buyers seek assurance a business will continue to operate successfully once the business owner steps away. As a business owner, start preparing for your exit by ensuring you have a strong, experienced management team in place that can run the business with or without you.
- Financial Statements with Integrity: Having audited financial statements provides potential buyers a level of confidence in the sustainability of the financial performance reflected on business’ statements. Although most buyers will conduct a third-party quality of earnings analysis, having audited financial statements should save time (and money) during the diligence process, should reduce the likelihood of a retrade due to erroneous financial reporting, and ultimately, should increase the likelihood of consummating the transaction.
- Realistic Expectation of the Value of the Business: Understanding how potential buyers will value the business is critical to the sales process. Educated, rational expectations of the business’ value provide helpful negotiation tactics, increase the probability of a successful outcome, and help guide financial planning conversations and strategies.
Overall, the market is predicting optimistic change 2025 which could be beneficial to business owners. If you are thinking about selling, now is the time to start preparing. At Aberdeen Advisors, our team is comprised of former business owners who have built and sold companies. We are uniquely equipped to help you successfully sell your business for maximum value. Contact us today to learn more about preparing to go to market in 2025.