Presidential election years—especially the third and fourth quarters—often see an increase in M&A activity, as business owners try to get ahead of any changes to tax policy. That usual flurry was somewhat stunted in 2020, as the COVID-19 pandemic brought about uncertain market conditions. However, all indications point to 2021 as making up for the restrained demand.
Why is the 2021 M&A Setting So Conducive for Deals?
Optimism about the economy and the nation’s ability to keep a lid on the pandemic has helped fuel the current increase, but the worry about tax hikes looms large over the M&A ecosystem. Then-presidential candidate Joe Biden campaigned on an increase in the corporate tax rate from 21 to 28 percent, with a hard floor of 15 percent. The proposed long-term capital gains tax increase, from 20 percent to nearly 40 percent, also has sell-side owners anxious to unload their assets.
While it is difficult to foresee which policy changes will actually pass a closely divided House and Senate, many sell-side owners are not taking chances—and for good reason. Even the simplest merger or acquisition takes several months to complete, and the current seller’s market does not always portend a more efficient buying process. The average assets under management (AUM) per transaction with M&A deals continues to rise, underscoring the importance of due diligence.
How Can Doida Crow Legal Help?
Doida Crow Legal has several proven processes that leverage our firm’s institutional knowledge and acumen for efficient transactions. The “Change in Control” process involves a clear, logical procedure for engaging in a mutually beneficial business relationship with our clients. One of the most advantageous components of our proven processes is the flat-fee arrangement, which gives clients certainty and predictability. For more on our proven M&A process, visit this page on our website.
If you have been pondering the merits of selling your business for a while, now is arguably the best time in years to pull the trigger. The Biden administration is likely to make a push for tax policy changes before the end of the year; the last significant tax overhaul was signed at the end of President Trump’s first year in office. As a typical M&A transaction takes around three to six months, it’s worth speaking to experienced financial professionals sooner rather than later. If you’re looking to start promptly, our Change in Control proven process can provide a glide path for your future business sale.
The starting point is an initial consultation with our legal team. We will send you a questionnaire to make the most of your appointment. If you’re ready to hit the ground running, we’d love to talk soon.