Exit Strategies. Preparing for life after the deal Part five in a series FPO. Private Company Services

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1 Exit Strategies Preparing for life after the deal Part five in a series Private Company Services FPO

2 A series for privately held business owners Introduction: managing your wealth like you ve managed your business Though accustomed to making five-year and ten-year plans and to implementing the resulting informed business decisions, owners of privately held businesses often face new territory when the time comes to transfer the value and, ultimately, control of their business to others. At this time, planning begins to focus intensively on making informed decisions about one s personal financial future. This is when business gets personal. Succeeding in business is not usually an accident. The same level of careful planning that boosts many private business owners into a comfort zone can help them preserve their postexit wealth and pass it to future generations as they see fit. Doing it right requires that private business owners effectively plan for life after the deal, as explored in the pages that follow. Exiting from a business poses unique challenges for private company business owners. First, the exit requires effective transaction planning. Second, the exit converts wealth formerly held as the value in the business into liquid assets, the scale of which is often unprecedented in the owners lives. That wealth needs to be appropriately structured and managed to meet the goals and needs of the owners both for their own lifetimes and for future generations. 2 PwC Game on: Mega-event infrastructure opportunities

3 About Private Company Exit Strategies The first installment, Making the Decision to Sell, discusses why enhancing value upon the owner s exit begins with a process of identifying the owner s business and personal goals and objectives and how, to a large extent, they determine the best exit strategy and right type of buyer. The second installment, Finding the Right Buyer, focuses on seeing the business through the eyes of potential buyers and buyer types and on understanding how their various objectives and value drivers fit with the seller s personal and financial goals. The third installment, Preparing the Business for Sale, suggests some tactics to consider as well as mistakes to avoid in preparing for the sale of a private business. The fourth installment, The Deal Process, discusses the process of getting from negotiation to closing and explores ways to avoid pitfalls along the way. The fifth and final installment in our series, Preparing for Life after the Deal, discusses how to preserve and transfer the wealth generated by the exit from your business. To view all published installments in the series, visit Navigating the wealth management maze: building the right foundation 03 The tools of effective wealth preservation and transfer 07 Systematic approaches to wealth management and transfer 14 2

4 Navigating the wealth management maze: building the right foundation Although a private company owner should consider effective income tax and wealth transfer planning over the course of a lifetime, several important questions come to the forefront when exiting a business. What income tax issues will I now face? Where do my investment, retirement, and wealth transfer plans go from here? Where does insurance fit in? These and other questions need thoughtful consideration. Because some of the first decisions will have far-reaching impacts, the private company owner must begin to put an effective foundation in place for managing the wealth that will follow even before an exit strategy reaches the closing stage. Income tax planning around the sale As indicated in the fourth installment of this series, developing tax strategies early in the selling process is essential. For example, the usual strategy is to defer tax gain whenever possible so as to allow the seller the benefit of postponing the need to pay related taxes. Yet at this writing, the federal capital gains tax rate is 15 percent, and it s currently set to roll back to 20 percent after 2010; many believe this rate increase may be accelerated. Therefore, in some instances, ensuring that a late-year sale is consummated before year-end may be the best strategy for locking in a lower tax rate. Although maximizing the sale price of your business is a primary concern, a myriad of sale-related income tax issues should also be addressed early on and in tandem to maximize after-tax results. Here are a few examples: Alternative minimum tax. The seller is likely to have alternative minimum tax (AMT) issues given the potentially large amount of long-term capital gain (also currently taxed at the 15 percent rate for AMT) relative to other ordinary income in the year of the sale. Reducing the AMT impact requires coordination of other tax issues (e.g., timing of payment of state and local taxes) not only in the year of the sale but also in the pre- and postsale years. Estimated tax payments. The timing of a sale can provide a potentially long period of float for the sale proceeds before all of the related taxes are due. For example, if a year-end sale does not provide for more potential benefit, a sale a bit later, in January, might defer a large tax bill until April of the year after the sale. An important consideration, however, is the timing of the payment of state and local taxes. Matching the payment of state and local taxes to the year of sale may provide for the maximum federal tax benefit. As noted previously, an AMT analysis should be performed to determine how much of the payment of state and local taxes should be made in the year of sale versus the subsequent year in order to minimize the AMT impact. Timing of charitable gifting. Because the seller is likely to have a significantly higher adjusted gross income in the year of the sale, there are planning opportunities for correspondingly higher allowable charitable gifting, with potential for a more valuable deduction. 3 PwC Private Company Services

5 An effective strategic investment plan will incorporate tax planning and risk management alongside investment strategy and implementation. Assembling the right advisory team for effective wealth management and transfer While running a business, owners surround themselves with trusted teams of advisers. As the focus turns to managing wealth, a similar approach is wise. Wealth management is a complex endeavor that encompasses many concerns, including: Investment and retirement planning Wealth transfer planning Insurance planning Asset, cash flow, and debt management Income tax planning and compliance Educational funding The advisory team will serve as a sounding board to assist with strategy, financial considerations and operational improvement ideas designed to preserve and build value for you and your family. Developing a strategic investment plan An effective strategic investment plan will incorporate tax planning and risk management alongside investment strategy and implementation. This plan must be tailored to an individual s financial goals and risk tolerance and then monitored on an ongoing basis to make sure it is being properly implemented and goals are being met. Considerations involved in managing a strategic investment plan include: An understanding of the tax consequences associated with investment products recommended by the investor s money manager or based on the tax attributes of the particular portfolio (e.g., private foundation, charitable trust, personal portfolio, trust for the benefit of children) Selection and retention of money management firms Investment performance reporting on both fund and portfolio bases An investment policy that balances long-term needs and risk tolerance Implementation of an appropriate asset allocation strategy Selection of fund and account managers who are focused on after-tax results and, in some cases, on obtaining reduced investment minimums and management fees Ongoing portfolio performance and related adjustments in the investment policy 4

6 The importance of diversification and asset allocation Diversification is at the very root of investment planning. One might think that diversification is accomplished simply by engaging multiple investment advisers, opening multiple accounts, or investing with a variety of mutual fund companies, but it actually involves much more than that. Effective diversification deals more directly with proper asset allocation and the division of the allocation into sizes, styles, and sectors of the market. Research has proved that over 90 percent of a portfolio s return performance is credited to its asset allocation, thereby dramatically overshadowing other components, such as security selection, adviser selection and market conditions. As a result, it is extremely important that careful consideration be given to diversification of an investment portfolio appropriately at the onset of the development of an investment strategy. Likewise, review and followup are important to ensuring that investments stay on track. The goal of asset allocation is to make varied investments that move independently in the market and create a diversified investment base. This diversification can be tailored according to one s time horizon, risk tolerance, need for liquidity, marketability and capital appreciation. Asset allocation and diversification can help protect against the volatility of the marketplace because various sectors of the market will outperform or underperform at different times. However, it is important to note that diversification will not eliminate risk. Market risk, otherwise known as systemic risk, will always be present when you are investing in the market. Family issues yours, mine and ours As you exit your business, one of the most profound effects of newly liquid wealth is likely to be on family dynamics. A wide range of decisions will be required with respect to lifestyle, to how much of your wealth to give to children and others, to what form those gifts should take, and to the timing of those gifts. You will also want to consider transparency issues within the family: who should know what, and when it should be known. As a result, family goals and needs should play major roles in most, if not all, of your wealth management and transfer decisions and actions. Your planning may need to manage and balance the dynamics of marriages, children, grandchildren, stepchildren, in-laws and others. Just some of the issues you will need to consider are: Prenuptial agreements. These contracts allow prospective couples to resolve potentially divisive financial issues in writing before their marriage. They can be particularly helpful when there are children from prior marriages, an expected inheritance, closely held business It is extremely important that careful consideration be given to diversification of an investment portfolio appropriately at the onset of the development of an investment strategy. 5 PwC Private Company Services

7 interests, or substantial debt and/or wealth on either side. One type of asset protection vehicle, called a Delaware trust, can overcome some of the hurdles of prenuptial agreements but is untested in many jurisdictions. Prenuptial agreements should also be considered for children who may be receiving a substantial inheritance. Nontraditional families. If you have children and you and your partner are not married, appropriate provisions should be incorporated into all of your financial planning documents especially those involving estate planning, because intestacy laws, discussed later, can have complex and undesirable consequences. Special needs. For a special needs child, a trust can be established containing provisions to accommodate those needs while leaving the child eligible for financial assistance like (1)Supplemental Security Income from the Social Security Administration and (2) Medicaid. Life events requiring review of documents. Effective planning is not a one-time event. As your life, your goals and your family circumstances shift, you will need to revisit your documents to be sure they continue to represent your wishes and intentions. Examples of life events that should trigger a review are: Marriage/separation/living together Birth or adoption of children or grandchildren Onset of mental or physical problems in a child Tax law changes Moves to or from a community property state and to or from a separate-property state or country Plans to give or sell a business to your children or others Purchase or sale of major property Care of elderly parents or other relatives Death of spouse, child, or parent Serious long-term illness When, how, and how much to gift. This can be one of the greatest challenges of newfound liquid wealth. You will need to consider such questions as: What is fair versus what is equal? What is too much? What is too young? What is the right timing with respect to both tax and nontax factors? When should I consider trusts to deal with beneficiaries age or maturity or other factors? Those are just some of the fundamental issues that inform an effective wealth management and transfer plan, and they should be considered well before the exit strategy reaches the closing stage. 6

8 The tools of effective wealth preservation and transfer Appropriate wealth management and transfer planning blend personal, financial and tax considerations into a comprehensive plan that preserves a family s wealth for both the person planning and that person s heirs. Income tax planning Income tax planning focuses on planning to quantify and reduce current and future year federal, state and local income tax liabilities and can help you reach your personal goals by: Determining the timing and structure of charitable gifts to increase the value of the income tax deduction Evaluating investment transactions to determine a tax strategy for capital gain/loss recognition Revising debt structure to increase the portion of interest expense eligible for current income tax deductions Wealth transfer planning Proper wealth transfer planning is an integral part of successful wealth management. Done correctly, wealth transfer planning ensures that assets pass to family members, charities, and other intended beneficiaries at the lowest transfer tax cost possible while retaining as much control as desired. Overlooked, wealth transfer can tear a family apart, turn children against one another and ultimately leave inheritances lost to taxation and legal fees. While value is hopefully at a maximum at the time of the sale, transfer costs are also higher. So it is important to consider wealth transfer planning throughout the life of the business not just postsale. The primary purpose of estate planning is to ensure that you, not the state, direct how your assets get distributed. Another but secondary goal of estate planning is to eliminate or minimize federal and state income and transfer taxes. For estate tax purposes, most individuals can view their future estate as consisting of three baskets. The first is the applicable exclusion amount, or the amount that each person can pass free of gift/estate tax to others. This exclusion allows you and your spouse to minimize the tax on property that eventually passes to your heirs. The second basket is the unlimited marital deduction, which lets you pass all of your assets to your spouse (assuming he or she is a US citizen) without paying estate tax. With proper planning, the third basket life insurance proceeds can be removed from both your estate and that of your spouse. 7 PwC Private Company Services

9 Additional techniques allow for further reductions in estate taxes. Charitable giving which can create a fourth basket can be accomplished either outright or through a stylized trust. Lifetime gifts to children and grandchildren can pay for educational determine who gets your property and how much of it. In many states, these laws are based on social beliefs that were held perhaps a hundred years ago. For example, your property generally The primary purpose of estate planning is to ensure that you, not the state, direct how your assets get distributed. expenses, launch a business, or buy a home as well as reduce your prospective estate. Trusts can be used for an almost unlimited number of purposes. There are many ways to implement effective estate planning. What follow are descriptions of just some of the major estate planning tools. The will: the foundation of your estate plan The will, a legal document created by an individual to provide instructions for survivors following the individual s death, is the most basic and essential estate planning tool, yet many people either have no will or have one that is very much out-of-date. One of the most important things a will does is avoid intestacy, which is the situation that results when an individual dies without a will. There is an old but true adage: If you don t make a will, the state where you live will make one for you. Each state has intestacy laws that would be split between your spouse and children, and just how much your spouse might receive could depend on the number of children you have. Wills accomplish many goals, such as: Directing assets to persons you designate Tax planning and tax savings Naming executor(s) and trustee(s) Appointing guardian(s) if needed Establishing trusts to take effect at death, including: Bypass and marital trusts to minimize estate tax for married couples Trusts that delay receipt of an inheritance by minor children Special needs trusts that make funds available for disabled adults 8

10 A revocable living trust (RLT) can serve as a valuable supplement to a simple will. A will cannot distribute nonprobate assets (e.g., IRAs and life insurance), avoid probate, or change the statutory rights of a surviving spouse. Revocable living trust A revocable living trust (RLT) can serve as a valuable supplement to a simple will. In an RLT, a grantor contributes assets to the trust while retaining the right to revoke the trust or reclaim ownership of trust property outright during life. Trust assets are not subject to probate. An RLT: Establishes an individual s estate plan and directs assets at death, similar to a will Ensures the privacy of the decedent s estate and of the surviving family members Avoids the administrative fees associated with probate Avoids probate in each state in which property is owned (advisable if the grantor owns property out of state) Is a way to manage property for minors or incapacitated adults Facilitates funding of bypass and marital trusts Life insurance coverage Life insurance is a contract between an insurance company and the insured. In the contract, the insurance company agrees to pay a stated amount of money to a beneficiary upon the death of the insured in exchange for a sum of money, known as the premium, paid by the policyholder. The primary functions of life insurance are to pay off debts that are outstanding at the time of death, to cover expenses created by the death itself (e.g., estate taxes) and to provide financial security for the family of the deceased. A reasonable approach to determination of your life insurance needs is to examine three specific areas: Capital resources (the funds available upon your death) Capital needs (the cash needs at your death) Survivor income needs (the cash your survivors will need during their lifetimes) How you own your life insurance is important. For the proceeds to be excluded from your estate for estate tax purposes, you should not own the policy personally. For more information, see the later discussion of the irrevocable life insurance trust. Powers of attorney and living will In the preparation of a will and its contents, individuals should also consider a durable power of attorney, a living will and a healthcare proxy. Powers of attorney. A power of attorney is a legal document allowing one person (the principal) to authorize another person (the agent) to act on the principal s behalf. A power of attorney can be general or special: 9 PwC Private Company Services

11 General power of attorney grants the agent the authority to perform nearly every transaction the principal can perform. Special power of attorney authorizes the agent to act only in matters specified in the document. A power of attorney can also be either durable or nondurable: Durable power of attorney is effective when signed, continues even if the principal becomes incapacitated or incompetent and expires at the principal s death. Nondurable power of attorney is effective when signed and expires if the principal becomes incompetent. Living will. This is a written statement of a person s wishes and instructions regarding the kind of medical treatment the person wants if terminally ill. It is commonly used for instructing either that no extraordinary measures be used to extend the person s life or that the person wants all available medical treatment. Healthcare power of attorney. This document allows a person to appoint an agent who would make healthcare decisions if the person becomes unable to make or communicate such decisions. Healthcare proxy. Some states have adopted a healthcare proxy either in conjunction with or as an alternative to a living will that permits the signer to authorize named individuals to make healthcare decisions on behalf of the signer if the signer becomes unable to make such decisions. Annual exclusion gifts One of the most powerful and often underestimated tools for transferring wealth is the use of annual exclusion gifts. Each person is allowed to make individual gifts of up to $13,000 per gift (as of January 2009, increased from $12,000) to as many people as desired without incurring any gift tax. Therefore, beginning in 2009, a husband and wife together are permitted to give up to $26,000 to each of their children, grandchildren, or others without paying gift tax or reducing their applicable exclusion amount. Such gifts can be made to anyone regardless of relationship. Gifts made to spouses are not subject to gift tax. It should also be noted that gifts made for medical and educational expenses are not subject to gift tax if made directly to the provider or institution. 10

12 Trusts Trusts have long been considered the cornerstones of effective estate plans. Whether established during lifetime or at death, trusts provide significant tax and nontax benefits for the trust grantor (the trust s creator), as well as for such trusts beneficiaries. Carefully designed and managed trusts can provide for and protect your family members or others while allowing you to set initial parameters regarding the management of those assets. A trust is a legal arrangement whereby an individual (the grantor) transfers property, along with instructions (in the form of a trust document) to a trustee (a trustworthy representative) to manage and distribute to the trust beneficiaries as outlined in the trust document. Property held in trust will be distributed according to the terms of the trust. Trusts can be used for a variety of purposes, including in assisting in the management and distribution of assets and in minimizing taxes. Here are some of the more common trusts used in wealth management and transfer: Irrevocable life insurance trust (ILIT). An ILIT is a vehicle that enables surviving family members to utilize life insurance proceeds to replace current income, to provide liquidity to pay estate taxes and/or to meet special estate planning goals (e.g., equalizing value to children, benefiting children from different marriages). The irrevocable trust acquires a life insurance policy on the grantor or a second-to-die policy on the lives of a married couple. The death proceeds received by the trust will be excluded from the estate of the grantor if the grantor is free from any incidences of ownership or control over the trust. Proceeds will be excluded from a policy that is purchased by the trust, while there is a three-year inclusion period on proceeds that are received from the transfer of an existing policy. Grantor-retained annuity trust (GRAT). A GRAT is a vehicle for transferring assets with high appreciation potential to beneficiaries at a significantly reduced transfer tax cost. The grantor transfers the property into a trust while retaining an annuity stream for a stated period of years. At the expiration of the term, the property remaining in the trust is transferred to the beneficiaries. The transfer of assets to the GRAT creates a taxable gift equal to the fair market value of the assets at the date of the gift minus the actuarially determined present value of the retained annuity stream. Because the annuity is typically set such that the retained interest is essentially equal to the fair market value of the assets transferred, the gift is de minimis. At the end of the GRAT term, the remainder interest that passes to heirs is completely out of the grantor s estate. Because the present value of the remainder interest is calculated based on the interest rate at the time the trust is established, GRATs can be especially effective during periods of low interest rates. Qualified personal residence trust (QPRT). A QPRT is a vehicle for transferring a personal residence from one generation to another at a reduced transfer tax cost. The parent transfers a personal residence into a trust while retaining 11 PwC Private Company Services

13 Carefully designed and managed trusts can provide for and protect your family members or others while allowing you to set initial parameters regarding the management of those assets. the use of the residence for a stated period of years. At the expiration of the term, the property is transferred to the younger generation. The formation of the QPRT creates a taxable gift equal to the present value of the property at the expiration of the term minus the value of the retained interest. A QPRT may be created for either a principal residence or a vacation home. Charitable remainder trust (CRT). A CRT is a vehicle for accomplishing an individual s charitable intentions while retaining a current right to an annuity or unitrust amount for either the individual and/or named beneficiaries. The grantor contributes property to the trust and receives a current income tax deduction equal to the present value of the remainder interest as calculated according to the actuarial tables of the Internal Revenue Service. A specified amount is paid to the noncharitable beneficiaries at least annually for the term of the trust. At the end of the trust term, the remaining trust assets are distributed to the charity named in the trust document. Dynasty trust. A dynasty trust is an irrevocable trust designed to pass assets through multiple generations at a reduced transfer tax cost. Such a trust has a perpetual existence, and assets owned by the trust should not be includable in anyone s estate until the trust is terminated. Grantor trust rules allow the settlor to pay the income taxes on behalf of the trust during his/her life, which further benefits future generations by allowing trust assets to grow tax free. Dynasty trusts may provide creditor protection and may not be subject to marital claims. Family limited partnership A family limited partnership (FLP) is typically a limited partnership created under state law to hold and manage family assets. The family entity may also be organized as a limited liability company depending on state law. An FLP can offer both tax and nontax benefits. Some of the nontax reasons for creating a limited partnership are: To provide opportunities to consolidate management of family assets in a single entity, with potential economies of scale for administrative costs To facilitate transfer of asset management after the death of the senior generation To allow the senior generation to retain effective control over assets To provide legal liability protection against creditors through limitedpartner units 12

14 FLPs are popular vehicles for the transfer of real estate, marketable securities, and closely held businesses from parents or grandparents to children and grandchildren. Discounts for lack of marketability and control may be available to reduce the value for transfer tax purposes. FLPs are particularly useful for clients who wish to minimize transfer taxes but are reluctant to give up control over their assets. Private foundations and donoradvised funds Private foundations are tax-exempt charitable organizations, typically created by families to effectively direct charitable contributions. They can be distinguished from public charities in that they generally do not receive contributions from a wide range of supporters. Although private foundations are not without disadvantages, they do offer the following benefits: The charitable and philanthropic objectives of the donor may be carried out in perpetuity. The donor may claim a charitable deduction for the year the contribution is made and make actual distributions to charity in later years. The donor and the donor s heirs can control the administration and investment of assets of the foundation, as well as distribution of funds. The donor may address specific charitable objectives that may not be addressed by other organizations. Heirs can be trained to manage wealth and become philanthropic through distribution activities. Alternatives to private foundations include: Community foundations. A community foundation is a fund designed to attract assets for the benefit of a particular geographic area. Community foundations are treated as public charities (not as private foundations), so the donor has a large degree of flexibility both in structuring the gift and in advising the foundation on how to benefit the surrounding community. Supporting organizations. A supporting organization is similar to a private foundation in that typically it is privately organized and the donor retains some influence over the organization. To qualify for public charity status, it must support a named, publicly supported charity. Donor-advised funds. This is another way of retaining a degree of control over contributions. Generally, a public charity establishes such a fund and allows the donor to serve on an advisory board or to make suggestions as to the use of funds. Not only do 529 plans provide tax-free growth and tax-free withdrawals if used for qualified education expenses, they also have no income limitation 13 PwC Private Company Services

15 Section 529 education savings plans Internal Revenue Code Section 529 education savings plans provide an option for the funding of a child s or grandchild s education. Not only do 529 plans provide tax-free growth and tax-free withdrawals if used for qualified education expenses, they also have no income limitation, so wealthier individuals can save for their children s or grandchildren s educations and still receive tax benefits. Contributing to a 529 plan for educational funding is one option when implementing your overall wealth management plan; however, you may conclude when working with your advisers that paying for education directly with your own funds (which is free of gift tax) may prove more beneficial. Systematic approaches to wealth management and transfer Former private company owners need tax-efficient means for preserving their hard-earned wealth and transferring it to successive generations. An appropriate plan blending personal, financial, and tax considerations into a comprehensive family wealth transfer strategy or business succession plan preserves a family s wealth for the individual and the individual s heirs. An effective plan will meet your objectives, whether those objectives are to maximize the benefits of ownership and assets; distribute assets to family members or charities; appoint capable estate managers as executors and trustees; minimize taxes, probate, and administrative costs; and/or ensure the liquidity and stability of your estate. However, changes in the rules with respect to income, estate, gift, and generation-skipping taxes have made this increasingly difficult. In addition, many wealthy individuals and/or families are extremely busy, making it difficult to dedicate sufficient time to the planning and administration of their personal financial and business affairs. A total wealth management approach to financial planning, using appropriate advisers, ensures that all the elements of your wealth management plan will be coordinated and that you ll receive comprehensive advice that allows you to focus on your personal aspirations instead of worrying about your financial security. An adviser-managed systematic approach can help individuals and their families to coordinate planning among: Tax compliance Tax consulting Investment advising Wealth transfer strategies (estate, gift, and trust planning) Human resources services Family business succession planning Insurance-risk management Administrative services Charitable planning and administration Education funding Retirement planning Beneficiary designation planning 14

16 The family office For many high-net-worth families, wealth management has become multigenerational, which has created a strong demand for tax, estate, and philanthropic services, among others. A key trend has been for high-networth families to create so-called hundred-year plans whereby family members are treated as business divisions and emphasis is placed on corporate-inspired guidelines such as family mission statements, governance structures and guidelines for communication. In addition, dealing with the day-to-day affairs of the management of family wealth is time intensive. Coordinating various advisers, monitoring investments and conducting daily financial activities can be daunting tasks. Also, family stakeholders may not be able to evaluate objectively the services performed or be aware of what is available to them. Establishing a family office to manage a family s business, family entities, investments and/or personal activities may thus help ease the burden of managing wealth effectively. A family office offers a unique way for a family to manage its wealth, maintain family continuity and advance the family agenda. In the context of a family office, professional advisers can help individuals identify and evaluate their current and future wealth management objectives, increase tax efficiencies, reduce administrative costs and further advance the family agenda. Welcome to the rest of your life You ve successfully navigated the exit from your business. As you turn toward the future, what is best for you based on your own individual needs and desires? Your vision for your family s future and its financial security is uniquely your own. We trust that the thoughts in this publication will help you begin to navigate that future. 15 PwC Private Company Services

17 This document is provided by PricewaterhouseCoopers LLP for general guidance only, and does not constitute the provision of legal advice, accounting services, investment advice, written tax advice under Circular 230 or professional advice of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisors. Before making any decision or taking any action, you should consult with a professional advisor who has been provided with all pertinent facts relevant to your particular situation. The information is provided as is with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties or performance, merchantability and fitness for a particular purpose. For more information about PricewaterhouseCoopers Private Company Services practice, visit Private company exit strategies: the deal process 16

18 For more information, please contact: J. Fentress Seagroves Jr. Principal, Transaction Services NY office: (646) ATL office: (678) Mobile: (678) Fax: (813) Fax: (678) Richard Kohan Principal, Personal Financial Services Office: (617) Mobile: (617) Alfred Peguero Partner, Personal Financial Services Office: (415) Mobile: (415) Daniel L. Hall Director, Personal Financial Services Office: (415) Mobile: (415) William Zatorski Director, Personal Financial Services Office: (646) Mobile: (732) This publication has been prepared for general information on matters of interest only and does not constitute professional advice on facts and circumstances specific to any person or company. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication. The information contained in this material was not intended or written to be used and cannot be used for purposes of avoiding penalties or sanctions imposed by any government or other regulatory body. PricewaterhouseCoopers LLP, its members, employees and agents shall not be responsible for any loss sustained by any person who relies on this publication PwC. All rights reserved. PwC and PwC US refer to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. This document is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. LA

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