How to Buy a $5m Business & Hire an Operator to Run It
Acquiring Minds
00:00
The Tax Advantages of Phantom Equity
So let's say you buy the business for four million dollars and sell it for 10 million. That's a six million dollar profit or a, of, of, you know, capital gain. And so he's fully vested. Let's say let's call his, his phantom equity 20%. So that would entitle him to 20% of six million. Um, and then going back to the, the enterprise value. So should you exit the business? Let's assume he's full vested. Yep. Okay. Now what is the point of phantom equity versus true equity? Yeah. There's some tax disadvantages to, to the employee for phantom equity Versus true equity but makes things overall simpler.
Transcript
Play full episode
