Re: 1202 QSBS, C-Corp discount for trucking/logistics
January 28, 2021
by a searcher from University of Colorado at Boulder in Los Angeles, CA, USA
Told by biz broker that ‘all transactions in trucking are structured as asset sales’.. which makes sense, buyer can step up asset basis and depreciate.
Incorporate w/ sec 1202 QSBS is preferred structure. Is this a nonstarter, or is it not a huge issue - just subject to some discount to account for lack of basis step up value?
Also, if there are any brokers on here that are active in the trucking/logistics world - told 5-7x EBITDA multiple is range for flatbed/heavy-haul biz doing $3mm EBITDA, 12% EBITDA margins. Roughly 20% revs from brokerage. Would be interested to know if this multiple is realistic, and hear about recent transactions.
from Walsh College of Accountancy and Business Administration in Detroit, MI, USA
In regards to section 1202, it is imperative to think through your holding period and exit plan when deciding on entity choice. Modeling out the cash flow and tax implications under a partnership and a C-Corporation is imperative. I have clients that will buy stock and they do not care about the tax benefit (some for valid business and/or tax reasons) while others take the lack of step up into account when valuing the business when they submit the LOI. The question that is hard to answer is who will you sell to when it comes time to exit and will they value the step up or not.
Glad to connect on a call if helpful. email me at redacted and we can set up a date and time that works for both of us..
from Wayne State University in Farmington Hills, MI, USA
The value is often in the contracts and these are all tied into the EIN/DOT/MC numbers. If the vendor is large (i.e. Amazon), you are basically working with a dashboard and will want to keep those in place so as to not upset the applecart.
If you do an equity purchase, make sure to review the inspection records as you could be one bad report away from losing your operating authority.