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How Taxes & the Fiscal Cliff Are Driving Start-Up M&A

By Nikesh Parekh

Services for Real Estate Pros with Suplari, Inc.

December 01, 2012 03:11 PM

I wrote a guest blog post on the Seattle tech blog Geekwire about how the potential increase in taxes in driving more start-up M&A. After the re-election of President Obama, there has been a rush of company and stock sales since taxes on capital gains are likely to go up in 2013. The long-term capital gains rate is likely to go up 5% and wealthy individuals will be paying an additional 3.8% as part of the affordable care act. If an entrepreneur has created value or has a significant long-term capital gain, many are looking to cash out in 2012, rather than wait until 2013.

Check it out: Why the fiscal cliff is driving start-up M&A?

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Jordon Wheeler

The Jordon Wheeler Group - Fairburn, GA

J W Group Real Estate Sales and Service

Hi Nikesh,

Thanks for writing this post and the one linked to it. Given the lack of comments, I guess that are not too many AR members making over $250,000. Anyways I enjoyed the read and the clarity you bring to the subject of the fiscal cliff. The sound bites coming across on CNN and FOX and the local news only produce a scare. You have put facts and numbers to the subject in an easy to read post. Best of success to you sir!

Dec 01, 2012 06:10 PM

John F Muscarella

RIVER FARM PROPERTIES, LLC - Venice, FL

Broker/Owner, Venice, FL, Florida's Suncoast

It's not a surprise as we're talking about real money. Notwithstanding the wealthy, it is still prudent to manage exposure. My wife works in the finance industry and is working long hours with her wealthy clients to take advantage of 2012 tax laws that change in 2013. One law in particular allows up to $5M to be excluded from an estate but drops to $1M in 2013. So most of her clients with those means are moving money and stocks now before the law changes. I agree with your premise that many new ventures are started by those with other goals in mind than avoiding taxes. I trust anything that proves to be detrimental can be changed and that wealth and business creation will survive and grow.

Dec 01, 2012 08:34 PM

Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

What M&A.

Mergers and Acquisitions??? Or. . . . . .

Dec 01, 2012 09:15 PM

Nikesh Parekh

Suplari, Inc. - Seattle, WA

Technology Entrepreneur, Executive, & Investor

Hi Jordon, The key is anyone who has a long-term capital gain is going to pay more taxes. Probably not applicable for your average agent, but if you are a broker owner and potentially considering selling your company, then it would be applicable. My asusmption is that many real estate offices or companies that could be sold would be worth more than $250k, triggering a higher tax bracket.

John - that's right. Warren Buffet put it best in that article when he said that regardless of tax rates, the wealthy and entrepreneurs continue to invest. I don't see any other choice.

Lenn - yes, mergers and acquisitions

Dec 02, 2012 12:26 PM

Happy Birthday Niki! Hope you have a great one!

Dec 03, 2012 03:15 AM

Thanks Jordon!

Dec 03, 2012 03:23 AM

Amy P

ActiveRain - Kirkland, WA

Very cool post, Niki - congrats! Those who are not from the Seattle area might not realize that Geekwire is one of the most read sites on the web for the high tech movers and shakers in this area. Of course it's not as awesome as ActiveRain, but very neat that you were asked to do a guest post!

Dec 03, 2012 09:50 AM

How Taxes & the Fiscal Cliff Are Driving Start-Up M&A

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