Verit Advisors’ view is 2012 will bring enhanced interest from privately held middle market business owners as they look to evaluate partial and full liquidity alternatives. Increased optimism that the U.S. economy is stabilized and moving towards continued recovery coupled with looming tax changes will incite more aging private business owners to start looking at liquidity strategies to lock in historical capital gain rates and monetize/diversify their holdings. The stock market volatility may provide challenges with respect to consistent valuations but should be mitigated by stabilized performance from recession lows along with recovering credit markets.


The direction of the overall economy will continue to drive financial markets and remain “top of mind” for many middle market business owners.

  • U.S. economy is expected to grow at a modest pace for 2012 with 2.5% GDP1 growth.
  • Continued focus on job creation and the direction of unemployment rate which ticked down to 8.5% at the end of 2011, still far from pre-recession levels.
  • Issues and politics within the Euro-Zone and its volatility continue to impact investor sentiment and the overall global markets.
  • Inflation for the general consumer is expected to increase with a rise in rent, gas and food (2012 CPI is projected to be 3.0%[1]) hampering a quicker economic recovery.
  • It’s an election year.


  • Capital gain rates and effective income tax rates for individuals will be highly debated.
  • The Bush Tax Cuts will end in 2012 with capital gains reverting back to 20% if no action is taken by Congress.
  • The tax discussion is two-fold, the first being how to reduce the deficit and allow the U.S. to remain competitive and the second being the effective tax rate across income brackets.
  • For corporate rates, the focus is ensuring that U.S. corporations can remain competitive with other nations that have lower rates than our top bracket of 35%.
  • For individual tax rates, the focus will be on tax increases for the highest tax bracket(s) due to lower effective rates that some individuals experience as a result of passive investment income taxed at capital gains. In summary, taxes will be a big component of the 2012 election, with many different solutions being touted.

As always it is Verit’s vision to bring a fresh approach and customized solutions to advise private business owners on ownership transition.

[1] Based upon Wall Street Estimates