This post focuses on a significant tax advantage that any entrepreneur, fundless sponsor and lower-middle-market private equity practitioner should be aware of known as Qualifed Small Business Stock (QSBS). QSBS is an overlooked section of the U.S. tax code that can result in incredible tax savings on capital gains. If a transaction is structured properly, it has the potential to save shareholders millions of dollars in the event of a successful exit (sale of the company).
The attached PDF file provides an explanation of how QSBS works, and details a hypothetical equity structure. The document introduces legal documents relevant in forming a corporation and defining the equity structure of the corporation. The following additional topics are touched on as well:
Download Paper: Fundless Sponsors & Qualified Small Business Stock: An Incredible IRR Boost
Related: Fundless Sponsor Economics
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Original Recording (recorded in 2013): Integrating Financial Statements
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A) really boring
B) pretty sweet
C) super important
D) somewhat easy
E) kind of hard
G) all of the above
*Answers a, b, c, d, e, f and g are all correct.
should be simple.*