TAX DAY - NOW IS THE TIME TO PLAN FOR OWNERSHIP TRANSITION
By John Palatiello, MAPPS Executive Director
Today is the deadline for filing Federal taxes. With that in mind, I recently talked taxes with Charlie Pecchio. Charlie has been affiliated with a handful of MAPPS member firms, consults on ownership transition, and has been a presenter at a MAPPS conference and several state surveying societies on that topic.
“President Trump’s infrastructure program and proposed tax law changes mean that owners of surveying, mapping and geospatial companies should be working hard on ownership transition plans NOW for a sale of their business in the next few years, Pecchio said.
“The Trump Administration is developing a program to increase infrastructure spending and reduce federal regulations and which could easily boost GDP by about a trillion dollars. Although Trump will face some opposition, the next four years could see infrastructure spending at triple the rate of the last four years.”
What does this mean for owners of geospatial firms? “Proposed tax reform could lower the corporate tax rate for a company from 40% (combined federal and state) to an effective combined rate of 21.5%. That would equate to an increase in the value of the company by over 30% based on a multiple of 5 times earnings. Also, the taxes resulting from the sale of the business should be at the lowest rate they will ever be. That’s a double positive for the seller,” Pecchio told me.
“Timing is everything,” he said. “Over the next four years, the increased revenue from Trump’s infrastructure program and the reduced tax burden should help to maximize the value of successful surveying, mapping and geospatial companies.”