Sell in 2021 before Biden’s Infrastructure Plan?

If you are a business owner of the baby boomer generation, you may have already reevaluated your succession plan in light of Biden’s Tax Plan. As a reminder, under Biden’s proposal, owners who make more than $1 million would face nearly double the taxes after selling their businesses. Because we expect the new taxes to be implemented in 2022, many business owners are adjusting their exit strategy timelines accordingly.

Happily, it makes sense to feel optimistic about how much you’ll be able to sell your business for in today’s market – particularly now that we’ve had a look at Biden’s $2 Trillion Infrastructure Plan. Interest rates remain low. Buyers have cash and may have been sitting on it for some time, due to pandemic considerations. Between now and the end of the year, we expect a lot of deals to happen, particularly in industries affected by the Infrastructure Plan.

Biden’s plan is designed to have a wide economic impact across the middle market and many different industries. Here are just a few of the key industries we’re watching:

Transportation and logistics
COVID-19 has driven a lot of innovation in the transportation and logistics spaces, drawing the attention of investors. Analysts expect deal activity, particularly related to ecommerce, may outpace the broader economic recovery. Transportation also plays a critical role in Biden’s infrastructure plan, with $621 billion allocated for improving roads, bridges, railways, public transit, waterways, airports, and more.

Today’s healthcare sector is focused on operational flexibility and resilience. We expect that to continue, along with continued emphasis on Long Term Care (a consistent trend since 2014). $400 billion is allocated to In-Home Care programs in the current version of Biden’s plan. The plan extends access to long-term care services under Medicaid, providing the opportunity for hundreds of thousands of Americans to receive care at home through community-based services or from family members.

Industrial manufacturing
Digital capabilities and technological efficiencies are top of mind in this space, as the global pandemic has shown us the pain operation and supply chain disruptions can cause. Biden’s plan invests $300 billion to boost manufacturing. Two specific highlights include:

1. $50 billion for semiconductor manufacturing to address the global semiconductor shortage

2. $30 billion for medical manufacturing so the US will be more prepared for a future medical crisis

Construction and engineering
Construction is one industry that unexpectedly surged in late 2020, particularly residential and industrial construction. This is expected to continue through the end of 2021, despite supply shortages driving up costs. In addition to all of the larger scale infrastructure projects proposed, Biden’s plan also calls for investing $213 billion toward building, renovating, and retrofitting more than two million homes and housing units.

Experts expect investment activity will focus on consolidation, technology, and strategic acquisitions in the specialty chemical space. Specialty chemicals, particularly related to pharma, hygiene, agriculture, and nutrition have grown in the last year. In his plan, Biden asks Congress to invest $180 billion to advance US leadership in critical technologies, upgrade the US’s research infrastructure, and establish the US as a leader in climate science, innovation, and R&D.

While it will take months of negotiation for Congress and the White House to agree on a final plan, we expect the current version of the infrastructure plan to drive the demand for mergers and acquisitions in key industries. With the added tax “deadline,” we expect the market to heat up significantly in 2021.

If you are considering selling your business, please contact us for a confidential discussion of possibilities appropriate to your specific situation. We have direct experience helping business owners across all industries sell their businesses, as well as relationships with buyers who are interested in new opportunities. We can help you position your sale for maximum benefit.

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