The Integral Role of a Sell-Side Tax Advisor

by | Sep 21, 2023 | PKF Texas - The Entrepreneur's Playbook®, Insight-Post

Say you’re a business owner ready to sell their business. You enlist a tax advisor to help with the transaction process. What benefits do tax advisors bring to the table? Find out in this episode of PKF Texas – The Entrepreneur’s Playbook®, featuring Tax Director Chris Dodd, CPA, and Tax Senior Manager, Thang Ngo, CPA.

Jen: This is the PKF Texas – Entrepreneur’s Playbook®. I’m Jen Lemanski, and I’m back once again with Chris Dodd and Thang Ngo, two of the Approachable Advisors™ on our tax team. Guys, welcome back to the Playbook.

Chris and Thang: Great to be back.

Jen: So, last time y’all were here, we talked about buy-side. So, now I’m a business owner. I want to sell my business. I’ve got you guys involved. What are you helping me to do?

Chris: Big thing, Jen, as your advisor, I want to get you comfortable with the transaction or with the different options in the transaction. We spoke before about all the options that you have with the transaction. Now we start going to the LOI (letter of intent), and then we start actually going to deal terms.

So, our goal is to have no surprises. We want to get you very transparent with the process. We want you to know everything that could possibly go on. We want to start modeling the transaction for you. We want to model different asset allocations or potential sales so that you understand, “Hey, this is what the buyer wants to do. How does this affect me?” We don’t want you going into a situation where you don’t understand that there could be depreciation or amortization recapture at ordinary rates. So, instead of paying 20% on something, now you’re paying 37% on something.

We’re also here to help walk the buyer through their due diligence process. We want to be your advisor and by your advisor, we are showing the strategy – or your tax strategy – to the buyer so that they understand what’s going on, they’re getting comfortable, and they don’t perceive that there’s any material deficiencies in your tax planning.

Thang: To Chris’s point… at PKF, we try to help you to avoid surprises. We’ve seen in our practice when a seller did not have a tax advisor, they received the surprises with the high tax bill. So, as a PKF tax advisor, we help you to model after the transition, making sure that you understand any potential gain, whether that would be ordinary or capital gain due to help you about the surprises come Tax Day.

Jen: Yeah, because that could be a big issue, right?

Chris: Yes. When you’re expecting to pay 20% on a transaction and all of a sudden, you’re paying 37%? That’s a surprise. As your advisor, I appreciate you not wanting a surprise. So, we work to do everything possible and give you all the information, model the transactions so that there are no surprises coming your way.

Jen: That sounds great, guys. We’ll get you back to talk some more tax-related transaction things. Sound good?

Chris and Thang: Great.

Jen: This has been another Thought Leader production, brought to you by PKF Texas – the Entrepreneur’s Playbook®. For more information about this and other topics, visit Tune in next week for another chapter.

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