How to Sell Your Business and Keep More of What You Built

You've spent years — maybe decades — building this thing. The late nights, the payroll stress, the moments where you weren't sure it was going to work. And now someone wants to buy it. Or you're starting to think about what comes next.

Here's the problem: most business owners spend 90% of their energy on the deal itself — the valuation, the LOI, the due diligence, the lawyers — and about 10% thinking about what happens to the money afterward.

That ratio should be reversed.

Without advance planning, 30–50% of the sale proceeds can go to taxes. On a $5M sale, that's $1.5–2.5M that didn't need to leave. With the right playbook, that number can shrink dramatically.

This guide covers the full arc — what your attorney and CPA should be doing before the sale closes, what you can start doing right now to bank tax losses before a single dollar changes hands, and how we deploy the proceeds after the wire hits so they're actually working for you.

Know Your Numbers

Before we talk strategies, you need to know your starting position. Every decision in this playbook flows from these numbers.

Entity structure. C-corp, S-corp, LLC, or partnership? This single factor determines which strategies are available — both before and after the sale.

Cost basis. What's your tax basis in the business? For founders, this is often near zero. That means almost the entire sale price is taxable gain.

Sale structure. Asset sale vs. stock sale vs. merger. Each has different tax consequences. The 338(h)(10) election can bridge the gap between what buyers want and what sellers want.

Timeline. How far out is the sale? Three or more years gives you maximum flexibility. One to two years is workable. Even if you're mid-negotiation, there are still moves to make.

Post-exit needs. What does life look like after the sale? Do you need income? Starting another business? Retiring? The answer shapes how we deploy the proceeds.

Before the Sale: Work With Your Attorney

There are several powerful strategies that need to be in place before the sale closes. These are legal and structural decisions — your attorney and CPA should be quarterbacking this part of the playbook. Here's what you should be talking to them about:

Don't Wait: Start Building Your Tax Offset Now

Most business owners assume the tax planning starts when the deal closes. That's leaving money on the table.

If you know the sale is coming in 1–3 years, you can start harvesting tax losses today — before a single dollar from the business sale changes hands.

Here's how it works: take existing after-tax dollars — savings, brokerage accounts, whatever you have available — and deploy them into a tax-aware long/short SMA. The SMA begins generating losses immediately. Those losses carry forward indefinitely and are ready to offset the capital gains the moment the sale closes.

Say you put $500K into an SMA two years before the sale. At a 33% annual loss realization rate, that's roughly $330K in banked losses before you've sold a single share of the business. At a 28.75% combined tax rate, that's roughly $95K in future tax savings — already in the bag on closing day.

This is one of the highest-ROI moves in the entire playbook, and it's the one most owners don't know about. You don't need to wait for the deal to start protecting the proceeds.

After the Sale: Deploying the Proceeds

The wire hits your account. You're liquid. The hard part is over, right?

Not exactly.

You've traded one concentration problem for another. Instead of all your net worth in a private business, now it's all in cash. Cash sitting in a money market account loses purchasing power. The sooner you deploy it into a diversified, tax-efficient portfolio, the sooner it starts compounding — and the sooner you start generating losses to offset the gains from the sale.

This is where the real playbook starts. The pre-sale strategies set the table. What happens next is the meal.

The Post-Sale Playbook at a Glance

There are four core tools for deploying your exit proceeds. Each one has a specific job. The most effective approach is usually layering a few of them together.

Now let's walk through each one.

Give Smart
Donor-Advised Fund (DAF)

If giving is part of your plan, a Donor-Advised Fund is one of the most efficient moves available after a business sale.

Front-loading a large DAF contribution in the year of the sale creates a deduction against the spike in income — offsetting ordinary income from depreciation recapture, non-compete allocations, and consulting agreements taxed at your highest marginal rate. You can recommend grants to the charities you care about over time, on your schedule.

For a business owner who just sold for $5M with a near-zero basis, contributing $250K to a DAF can save $75K+ in capital gains taxes and generate an additional $90K+ income tax deduction. Start with your lowest-basis assets for maximum impact.

Give + Earn
Charitable Remainder Trust (CRT)

A CRT combines charitable giving with an income stream — and the math can be compelling.

You contribute appreciated assets to the trust. The trust sells them tax-free and invests the full pre-tax amount. You receive 5–8% annually for a term of years or for life. The remaining assets go to charity at the end. You also get a partial income tax deduction at contribution based on the present value of the charitable remainder.

Here's why this matters after a business sale: the trust invests the full pre-tax amount, not the after-tax amount you'd have if you sold first. On a $1M contribution with a near-zero basis, you'd have roughly $1M working for you inside the CRT vs. approximately $700K if you sold and invested what was left. That difference in starting capital compounds for decades.

CRTs are particularly powerful when you need ongoing income after the exit — basically building yourself a pension funded by appreciated business assets.

Offset
Tax-Aware Long/Short SMA

Whether you sold for cash or are receiving installment payments — the capital needs a home. The long/short SMA is the engine that ties the whole playbook together.

A tax-aware long/short separately managed account builds a diversified portfolio while aggressively generating tax losses. Running at 130/30 leverage or higher, it creates losses that offset capital gains — whether from a direct sale or installment payments received over time.

Here's the translation: the account value goes up (because it tracks something like the S&P 500), but we've created paper losses we can use to offset gains. At a 33% annual loss realization rate, a $1M deployment generates roughly $330K in usable losses per year. Those losses offset capital gains from the sale, bringing down the effective tax bill year after year.

The Full Playbook: Stacking Strategies

The most powerful exit outcomes aren't the result of one clever move. They're the result of layering strategies in the right sequence. Here's how a complete playbook might look:

Step 01 · 2–5 Years Out
Work With Your Attorney on Structure

Check QSBS eligibility. Evaluate entity and deal structure. Consider installment terms. If your estate exceeds the exemption, explore grantor trust strategies. These decisions need to be locked in before the sale closes — your attorney and CPA lead this phase.

Step 02 · 1–3 Years Out
Start Harvesting Losses Now

Deploy existing after-tax dollars into a tax-aware long/short SMA. The SMA starts generating losses immediately, and those losses carry forward to offset the capital gains when the sale closes. The earlier you start, the bigger the war chest on closing day.

Step 03 · At or Near Closing
Give Smart

If philanthropy is part of your plan, front-load a DAF contribution or fund a CRT. The deduction offsets the income spike from the sale year — depreciation recapture, non-compete payments, and consulting agreements taxed at your highest rate.

Step 04 · Immediately Post-Sale
Deploy Cash Proceeds

Cash proceeds go directly into the SMA — adding to the pre-sale capital already at work. The SMA continues harvesting losses on every dollar deployed, building the offset for future tax obligations including installment payments, state tax estimates, and deferred gains.

Step 05 · Years 1–5
Manage Ongoing Tax Obligations

Coordinate SMA loss harvesting with installment income and any remaining capital gains events. The SMA is the central tool for managing all of these tax events over time.

Some clients use two of these strategies. Some go through the entire sequence. The playbook meets you where you are.

Questions to Ask Yourself Before You Sell

Every business exit is different. Before you make a move, think through these:

1. What is my entity structure (C-corp, S-corp, LLC, partnership)?
2. Does my stock qualify for QSBS exclusion under Section 1202?
3. What is my cost basis in the business?
4. How far out is the potential sale — and have I started harvesting losses yet?
5. Is the buyer proposing an asset sale or stock sale?
6. Will I receive acquirer stock as part of the purchase price?
7. Am I planning any charitable giving?
8. Does my estate exceed the federal exemption?
9. What are my post-exit income needs?
10. Do I have existing after-tax dollars I can deploy into a loss-harvesting strategy today?
11. What is my state tax rate on capital gains?
12. Am I working with a CPA who specializes in business exit planning?
13. What does "enough" look like — and does this sale get me there?

The right playbook depends on your answers. That's why we start every conversation with these questions before recommending anything.

Frequently Asked Questions