Business ownership is how most FatFIRE wealth actually gets built, and the exit is where decades of work convert to a number. Section 1202 Qualified Small Business Stock can exclude up to $10 million of gain per shareholder from federal tax, and proceeds beyond that face the 23.8 percent top capital gains rate. Entity and structure decisions made years before a sale determine which of those applies.
This hub covers the full arc: how private businesses are valued, deal structures from asset sales to earnouts to rollover equity, succession planning, financing growth, the operating disciplines that make a company sellable, and what founders actually face after the wire hits. It is written for owners and operators who want the years of work to convert at the best multiple and the lowest tax cost, and who are already thinking about what comes next.
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Entrepreneurship: common questions
How is a small business valued for sale?
Most private businesses sell on a multiple of earnings, typically seller's discretionary earnings for smaller companies and EBITDA for larger ones, with the multiple driven by growth, margin durability, customer concentration, and how well the business runs without the owner. Recurring revenue and clean financials expand the multiple; owner dependence compresses it more than most founders expect.
Should I sell my business through an asset sale or a stock sale?
Buyers prefer asset sales for the depreciation step-up and protection from hidden liabilities; sellers prefer stock sales for capital gains treatment on the whole price and a cleaner break. The gap gets priced in negotiation, and the answer depends on entity type, since C corporation asset sales can trigger two layers of tax while stock sales avoid them.
How long before selling should I start exit planning?
Two to five years. Clean financials need trailing history, QSBS and trust strategies carry multi-year holding requirements, key-person risk takes time to engineer out, and estate moves like gifting equity work best before a sale price exists to anchor the valuation. Owners who start when a buyer appears leave both price and tax savings on the table.