BUY LOW, SELL HIGH, KEEP MORE

Most business owners come to me with one goal in mind: sell their business and move on. That's exactly where this specialty retail owner was when we first connected. He was ready. The timing felt right. We were moving toward a listing.

Then we got some interesting news.

A regional competitor — a business operating in the same space — was preparing to sell. Most owners would have seen that as a threat. More competition on the buyer market. Potential downward pressure on price. A reason to move faster.

We saw something different. We saw an opportunity.

TURNING A THREAT INTO AN OPPORTUNITY

Instead of rushing to list, we paused. I worked with the owner to evaluate what it would mean to acquire that competitor before going to market himself. The numbers told a compelling story: the competing business was available at a significant discount — essentially pennies on the dollar relative to its true strategic value.

By acquiring it, my client could do something powerful. He could consolidate market share, strengthen his customer base, eliminate a competitor, and — most importantly — present a substantially larger, more profitable combined operation to future buyers. A bigger business with stronger revenue and a broader footprint commands a higher multiple. A higher multiple means a dramatically higher selling price.

We moved on it. The acquisition went through. And then we got to work integrating the two operations and positioning the combined business for a premium exit.

The result? When the time came to sell, my client achieved a significantly higher price than he ever would have received for his original business alone. The investment in the acquisition paid for itself many times over.

THE STRATEGY MOST SELLERS NEVER HEAR ABOUT

Here's where things got even more interesting — and where a lot of money was saved.

When it came time to structure the sale, we had a choice to make: asset sale or stock sale. For most small business transactions, asset sales are the default. Buyers typically prefer them because they get a step-up in the asset tax basis and avoid inheriting any liabilities. Sellers often don't push back because they don't know there's a better option.

In this case, there was.

By structuring the transaction as a stock sale, my client was able to recognize the majority of his gain as long-term capital gain rather than ordinary income. That difference in tax treatment — capital gains rates versus ordinary income rates — translated into thousands and thousands of dollars in tax savings. Real money that stayed in his pocket instead of going to the IRS.

Stock sales aren't right for every transaction, and they require a buyer who's willing to accept the structure. But when the deal profile supports it and you have the right advisors at the table, the tax savings can be substantial enough to materially change the outcome of an exit.

Most sellers never even know to ask the question.