OBBBA Leaves Room for Planning — A Better Way to Prepare Your Business Exit in South Dakota
- Legacy Point Financial
- 23 hours ago
- 5 min read
Updated: 9 hours ago
If you own a business in South Dakota, you know your company isn’t just an asset on a balance sheet — it’s your work, your reputation, your team, and often your identity. For many owners, the business has funded the life you’ve built. But at some point, the question shifts from “How do I grow this business?” to “How does this business take care of me and my family when I step back?”
That transition — from owner to investor — is meaningful, and it deserves a plan that’s both practical and personal.
Many advisors recommend beginning exit or succession planning 3–5 years before a transition — long before there’s pressure to make a decision(Regions Bank; Citizens Bank; Associated Bank; Kiplinger 2022-2024).
There’s No Longer a “Beat the Deadline” Rush — But Planning Still Matters
For years, business owners heard that the federal estate and gift tax exemption would “sunset” at the end of 2025, creating urgency and rushed decisions.
However, with the One Big Beautiful Bill Act (OBBBA) signed into law in July 2025, the federal estate and gift tax exemption remains permanently higher (approximately $15M for 2026, indexed) (Public Law 119-21; IRS 2025 Inflation Adjustment Notice).
That means exit planning today can be intentional, not reaction-driven.
More room to think.
More room to evaluate.
More room to make decisions aligned with your goals — not a deadline.
What Business Owners Are Really Solving For
In conversations with business owners across Brookings, and nearby communities, we consistently hear three priorities:
A clear “walk-away number.”
Your walk-away number isn’t the business sale price—it’s what remains after any:
Federal capital gains tax
State-level considerations (SD has no personal income tax, which is a strategic benefit)
Deal-structure impacts (asset vs. stock sale)
Advisor/transaction fees
Debt payoff
Reinvestment strategy for post-exit income
A tax-aware exit structure.
For instance, an asset sale often results in higher tax drag for the seller but may be preferred by buyers for liability reasons (AICPA The Tax Adviser, ‘Selling Your Business – Asset vs. Stock Sales,’ 2023).
A stock sale, on the other hand, may allow more favorable tax treatment for the seller — but requires buyer acceptance of existing corporation structure and liabilities. (IRS Publication 544)[HA2]
Taking care of people.
Whether that means a successor, a long-time employee, or family — transition decisions are personal, not just financial.
Where Transitions Get Stuck
Many South Dakota owners have most of their wealth tied up in:
the business itself
land or equipment
accounts receivable
working capital
This can make stepping away feel like an all-or-nothing decision.
But in reality, transitions can be gradual — internal sale, successor development, co-ownership, third-party sale, staged buyout, or family handoff. Each has different tax and cash-flow implications. For additional perspective, see FINRA’s guidance on succession planning and business continuity (FINRA Reg Notice 22-23; FINRA Rule 4370 Business Continuity Planning).
The key is exploring options before you’re forced to choose one.
A Practical Exit-Readiness Framework
Clarify Your Personal Financial Picture
How much income do you need to maintain your lifestyle — and how will your sale proceeds convert into retirement income? (FINRA Investor Education, 2024)
Establish Valuation Readiness (Not Just a Number)
Stronger valuations tend to come from:
· Documented processes (not owner-held “in your head” operations)
· Formal customer contracts vs. handshake terms
· Diversified revenue streams (no overreliance on a single customer)
· Succession bench strength (someone other than you can run the shop)
Map Out Potential Deal Structures
Some owners choose installment sales to spread income — and therefore taxes — over several years (IRS Publication 537; Topic 705). Others prefer a lump-sum exit to accelerate reinvestment or simplify retirement planning.
The right choice depends on cash flow needs, market conditions, and successor makeup.
Build Your Post-Exit Investor Plan
Your investment and withdrawal approach should reflect your new priorities and financial picture as you transition from builder to steward.
This isn’t about selling tomorrow.
It’s about optional outcomes.
Optionality offers flexibility.
Why Coordination Matters
Most owners already have a CPA and an attorney. The challenge tends to appear between those roles — where tax decisions, legal structure, and personal retirement goals intersect.
Coordinated planning can help align:
Your tax strategy aligns with your deal structure
Your estate intentions align with legal documents
Your investment strategy aligns with your post-exit lifestyle and risk tolerance
This is where CFP® and CEPA® training can add value— connecting the financial, tax, and transition strategy into one coordinated plan.
If You’re Thinking About Your Next Chapter — That’s Enough to Start the Conversation
Not to make a commitment.
But to gain clarity.
If you're beginning to consider retirement or a business transition over the next 3–5 years, we’re here to help you explore your options— at your pace.
Disclosures
Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
Investing involves risk including loss of principal.No strategy assures success or protects against loss.Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against loss.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
All performance referenced is historical and is no guarantee of future results.
All indices are unmanaged and may not be invested into directly.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
Tax treatment at the federal and state levels may vary; consult your tax advisor before investing or implementing tax strategies.Withdrawals or sales of certain investments may be subject to taxation, including capital gains or income tax.
Prior to investing, investors should consider whether their home state offers any state tax or other benefits that are only available for investments in that state’s qualified programs.
Sources: Public Law 119-21 (One Big Beautiful Bill Act, 2025); IRS Newsroom (2025): Estate & Gift Tax Inflation Adjustments; IRS Publication 544 (2024): Sales and Dispositions of Assets; IRS Publication 537 (2024) and IRS Topic 705 (Installment Sales); South Dakota Department of Revenue (2024): No Personal Income Tax; FINRA Regulatory Notice 22-23 (2022): Succession Planning and FINRA Rule 4370 (2023): Business Continuity Planning; AICPA The Tax Adviser (2023): Selling Your Business – Asset vs. Stock Sales; Regions Bank (2023): Exit Planning Checklist; Citizens Bank (2023): Selling Your Business Timeline; Associated Bank (2022): Plan 3–5 Years Ahead; Kiplinger (2024): Five-Year Exit Plan; Exit Planning Institute (2024): State of Owner Readiness Report.
Sources
· Public Law 119-21 (One Big Beautiful Bill Act, 2025); IRS Newsroom (2025): Estate & Gift Tax Inflation Adjustments
· IRS Publication 544 (2024): Sales and Dispositions of Assets
· IRS Publication 537 (2024); IRS Topic 705 (Installment Sales)
· South Dakota Department of Revenue (2024): No Personal Income Tax
· FINRA Regulatory Notice 22-23 (2022): Succession Planning; FINRA Rule 4370 (2023): Business Continuity Planning
· AICPA The Tax Adviser (2023): Selling Your Business – Asset vs. Stock Sales
· Regions Bank (2023): Exit Planning Checklist; Citizens Bank (2023): Selling Your Business Timeline; Associated Bank (2022): Plan 3–5 Years Ahead; Kiplinger (2024): Five-Year Exit Plan
· Exit Planning Institute (2024): State of Owner Readiness Report