Study: Number One Reason for Sale of High-Worth Businesses? Potential Tax Increases

LOS ANGELES - (BUSINESS WIRE) - The third quarter Market Pulse Survey Report by the International Business Brokers Association (IBBA), M&A Source, and Pepperdine University's Graziadio School of Business and Management found that for businesses valued at $5 million and above, potential tax increases is the primary driver motivating a sale. Retirement was the number one reason for sales across all businesses valued under $5 million. The second most common reason was burnout and third was "new opportunities."

The third quarter Market Pulse Survey Report (http://bschool.pepperdine.edu/privatecapital) shows that the threat of the election, fiscal cliff and possible tax increases next year is taking a toll on the M&A market. The majority (57%) of respondents expected fewer sellers would go to market until they had better clarity on the future. A quarter (26%) of respondents said that they thought more sellers would try to close a deal before the new taxes take effect.

"Baby boomers represent more than half of the business owners in the U.S. and many are selling their businesses in order to have a comfortable retirement," said Chet Walden (Atlanta, GA), president of M&A Source. "Businesses over $5 million in value had more money to lose and were more keenly aware of the large potential tax increases coming in 2013. They decided to sell in 2012 in hopes of netting out more than they could after the new taxes take effect."