Here's an idea I've been modeling:
When buying a company using an earn out, structure it as a consulting contract to the former owner. This makes the payments an expense to you which is pretax money and reduces the cost of the earn out by up to 40% (or whatever your tax rate is). The former owner can then use a Defined Benefit Plan or Solo 401`(K) to shelter the income from taxes until they withdraw the funds.
It's a potential win-win.
Thoughts?
Reduce The Cost Of An Earn Out By Up To 40%
by an investor from Rensselaer Polytechnic Institute
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