{"id":1215,"date":"2024-08-12T08:24:00","date_gmt":"2024-08-12T13:24:00","guid":{"rendered":"https:\/\/www.mgocpa.com\/?post_type=perspective&#038;p=1215"},"modified":"2025-07-14T13:47:07","modified_gmt":"2025-07-14T18:47:07","slug":"considering-a-liquidity-event-prioritize-sell-side-tax-diligence-for-a-smooth-transaction","status":"publish","type":"perspective","link":"https:\/\/www.mgocpa.com\/perspective\/considering-a-liquidity-event-prioritize-sell-side-tax-diligence-for-a-smooth-transaction\/","title":{"rendered":"Considering a Liquidity Event? Prioritize Sell Side Tax Diligence for a Smooth Transaction"},"content":{"rendered":"\n<p><strong>Key Takeaways:&nbsp;<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If your business is contemplating a liquidity event, it is critical to prioritize sell-side tax due diligence well before entering the market.&nbsp;&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It is especially important to focus on state and local tax (SALT) issues, as evidenced by South <em>Dakota v. Wayfair<\/em>, which widened the ability of states to tax out-of-state sales.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Seek guidance from a sell-side advisor \u2014 doing so can significantly impact the success of your transaction.&nbsp;&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>If your business is contemplating a liquidity event, prioritizing sell-side tax due diligence \u2014 with a special focus on state and local tax (<a href=\"https:\/\/www.mgocpa.com\/solution-and-industry\/state-and-local-tax\/\" target=\"_blank\" rel=\"noreferrer noopener\">SALT<\/a>) issues \u2014 is crucial. Engaging in sell-side tax diligence well before hitting the market, under the guidance of a sell-side tax advisor, is a strategic move that can significantly affect the success of the transaction.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Why Focus on SALT?<\/h2>\n\n\n\n<p>The complexity of SALT liabilities can pose major hurdles during buy-side diligence. This is especially true in the wake of South Dakota v. Wayfair, which broadened states&#8217; ability to tax out-of-state sales. Addressing these issues proactively allows sellers to navigate potential deal delays and negotiate more favorable terms, and helps ensure a smoother transaction process. This focused approach not only showcases the business as well-managed and compliant with intricate SALT complexities, but it also enhances the company\u2019s appeal as an acquisition target.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The Benefits of a Wellness Check<\/h2>\n\n\n\n<p>Conducting a thorough wellness check on your company\u2019s state tax posture can minimize the risk of surprises that could lead to renegotiations or even deal termination. This also can position the seller to potentially secure a higher sale price by demonstrating a comprehensive approach to SALT compliance and risk management. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Mitigating SALT Exposures<\/h2>\n\n\n\n<p>Using voluntary disclosure agreements (VDAs) and diligently collecting sales tax exemption certificates are effective strategies for mitigating SALT exposures. VDAs allow sellers to address historical sales tax liabilities under favorable terms, including the elimination of penalties. The VDA process not only remediates historical tax liabilities, but it also signals a commitment to compliance that can be reassuring to buyers. Further, maintaining sales tax exemption certificates helps ensure that exempt sales are properly classified, which can reduce the risk of future exposure.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The Risk of Noncompliance<\/h2>\n\n\n\n<p>Attempting to address past noncompliance through prospective filings, rather than by remediating historical exposures, leaves businesses vulnerable to exposure identified by state tax authorities and buy-side diligence teams. A VDA can limit this exposure by reducing the lookback period and eliminating penalties. Without a VDA, businesses risk historical liabilities that can significantly exceed those that could have been negotiated under a VDA.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Being Proactive<\/h2>\n\n\n\n<p>Ultimately, sell-side due diligence empowers sellers to be in a better position with all issues related to tax compliance. This proactive approach is far more efficient than reacting to a conservative exposure identified by buy-side advisors, which can take significant time and resources to address or refute.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Prioritization Is Key<\/h2>\n\n\n\n<p>Prioritizing sell-side tax diligence, especially for SALT issues, is a strategic move that can enhance a company\u2019s attractiveness to potential buyers, minimize transaction delays, and potentially lead to amore favorable sale outcome.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How MGO Can Help<\/h2>\n\n\n\n<p>Preparing for a liquidity event can feel like a battlefield \u2014 dodging land mines and watching where you step. Strategic planning and meticulous attention to your tax compliance are crucial, and MGO is well-equipped to support your business in navigating the challenge of sell-side tax due diligence. With our thorough understanding of the intricate dynamics of SALT issues and the impact they can have on your organization, we provide tailored guidance to help position your business for the best sale possible.<\/p>\n\n\n\n<p>Our team excels in a proactive approach: conducting thorough wellness checks, identifying potential SALT liabilities, and implementing effective strategies to mitigate historical tax exposures and minimize transaction delays \u2014 and enhance your company\u2019s appeal to those looking to buy. For inquiries or support in prioritizing your sell-side tax due diligence, <a href=\"https:\/\/www.mgocpa.com\/solution-and-industry\/state-and-local-tax\/\" target=\"_blank\" rel=\"noreferrer noopener\">reach out to our team today<\/a>.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><em>Written by Matthew Dyment and Thomas Leonardo. Copyright \u00a9 2024 BDO USA, P.C. All rights reserved.www.bdo.com<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways:&nbsp; &#8212; If your business is contemplating a liquidity event, prioritizing sell-side tax due diligence \u2014 with a special focus on state and local tax (SALT) issues \u2014 is crucial. Engaging in sell-side tax diligence well before hitting the market, under the guidance of a sell-side tax advisor, is a strategic move that can [&hellip;]<\/p>\n","protected":false},"featured_media":1216,"template":"","meta":{"_acf_changed":false,"content-type":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"perspective_topic":[119,25],"perspective-type":[42],"class_list":["post-1215","perspective","type-perspective","status-publish","has-post-thumbnail","hentry","perspective_topic-due-diligence","perspective_topic-state-and-local-tax","perspective-type-articles"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Prioritize Sell-Side Tax for Smooth Liquidity Events - MGO CPA | Tax, Audit, and Consulting Services<\/title>\n<meta name=\"description\" content=\"Prioritizing sell-side tax diligence, especially for SALT issues, is a strategic move that can enhance your company\u2019s value.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.mgocpa.com\/perspective\/considering-a-liquidity-event-prioritize-sell-side-tax-diligence-for-a-smooth-transaction\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Prioritize Sell-Side Tax for Smooth Liquidity Events - 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