Prospects of a capital gains tax increase after year end have created a surge of deals preparing for or in the market. As the timeline to close by year end shrinks, sellers should now carefully weigh the benefits of accelerating a process to beat a potential tax increase (the magnitude and timing of which is unknown) against the cost of entering a potentially saturated M&A market with less-than-ideal preparation.
Just as specialization in the automotive sector (e.g., material competency, manufacturing processes) results in expertise and competitive advantages, the same holds true in the world of M&A. Tax, legal, and investment banking advisors focused on M&A and in specific industry segments develop specific expertise and have relationships generalists don’t possess. Such expertise typically results in increased proceeds and/or better transaction terms for sellers.
Selling a business can be a deeply emotional experience with multiple competing objectives – maximizing value, cultural fit, synergies, continued employment for personnel, legacy, etc. Defining and prioritizing shareholder objectives prior to undertaking a transaction often will streamline the sale process and better align the selected buyer with the seller’s objectives.
Read Automotive M&A Pulse Q1 2021 Full Report
