If you have been “doing the dance” with a prospective investor who’s “almost there” with respect to investing in your company, we just received a tip worth sharing from Portland, Oregon law firm Roberts Kaplan that might be a positive tipping point for your negotiations.
Apparently, the US legislature recently adopted new Act that effects small business investments. Within certain limitations (see some below), investments between September 27, 2010 and December 31, 2010 may qualify for a 100% exclusion of gain from the sale of small business stock.
From an investor’s standpoint, this could be HUGE and from an entrepreneur’s standpoint, anything that is this beneficial to an investor certainly has to factor positively in a decision to complete the deal.
The limitations on a qualifying deal may include:
- Must be made before year-end
- Company must be a C Corporation
- Investment must be held for 5 years
- Available only to non-corporate taxpayers
- Direct /original issue by the C corporation (can be through underwriter)
- The business must have assets of less than $50 million
- The business must also use 80% of its assets in a qualifying active business (no financial institutions, hotels, restaurants, farms, professional service firms) for substantially all of the holding period
Again, this may be helpful in raising capital by year end if you have potential investor “on the fence”, but here’s where ActSeed provides its disclaimer: While this interesting tip may be useful for you to explore, you should do it with an attorney and possibly even an accountant.
If you don’t already have an attorney, the folks who shared this information with us may be able to guide you and one of their specialties is working with small businesses and startups around the USA. For more information, contact Cliff Spencer at Roberts Kaplan: 503.221.0607. ActSeed is not compensated for referrals, but as always, we want to continue our mission to bridge capital from where it resides to where it is needed.