Randolph Love III | The Liquidity Journal | Q3 2026

One of the most expensive things a business owner can have is the wrong perspective on time.

Ask an entrepreneur when they plan to sell their company and you will often hear something like, “Maybe in five years,” “When the right offer comes along,” or my personal favorite, “I’m not thinking about selling yet.”

That last answer sounds reasonable.

It can also be incredibly expensive.

I was reminded of that during our first online Liquidity Event, when I hosted Braden Chase, Manager of Business Structuring Secrets LLC. Braden’s company works with entrepreneurs and investors on business structuring, asset protection, tax strategy, entity formation, and trusts. I have worked with Braden for several years, and I invited him because he sees businesses through a lens many entrepreneurs rarely use.

His presentation had a title designed to get your attention: “The $15 Million Tax Break Your CPA Didn’t Tell You About.” (Watch the full presentation here)

The subject was Internal Revenue Code Section 1202, better known as the Qualified Small Business Stock, or QSBS, gain exclusion.

But as I listened, I realized the bigger lesson was not really about a section of the tax code.

It was about perspective.

It was about understanding that the financial outcome of selling a company may be influenced by decisions made three, four, five, or even more years before anybody writes you a check.

The Buyer May Arrive Too Late

Most business owners think about an exit from the finish line backward.

A buyer appears. A valuation is discussed. Attorneys get involved. The CPA starts running numbers. Everyone looks at taxes. Then the owner asks, “What can we do?”

Sometimes, the answer is plenty.

Sometimes, the answer is, “You should have asked that question several years ago.”

That was the landmine Braden kept returning to throughout his presentation.

At one point he said:

“If you strategize correctly, right? And if you're planning for the future, if you're waiting and being like, ‘Oh, hey, I have this business. Maybe I should sell it. I don't know.’ You're going to blow yourself up.”

His alternative was much more deliberate:

“This is what we will do. This is the goal. This is how we're going to be in control and we're going to make decisions.”

That is exit planning in a nutshell.

You stop treating the sale of your business as an event and start treating it as a strategy.

Why Section 1202 Gets People's Attention

Here is the concept without turning this article into a tax seminar.

Section 1202 can allow certain noncorporate taxpayers who own qualifying stock in certain domestic C corporations to exclude some or all of the federal gain when that stock is eventually sold.

Recent federal legislation significantly expanded the opportunity.

For qualifying stock acquired after July 4, 2025, current law establishes a tiered exclusion based on the holding period: up to 50 percent after three years, 75 percent after four years, and 100 percent after five years or more. The legislation also increased the applicable per issuer dollar limit for newly acquired stock from $10 million to $15 million, with inflation adjustments scheduled to begin after 2026.

That $15 million figure is not necessarily an absolute ceiling. Section 1202 also contains a separate limitation tied to a multiple of the taxpayer's basis in qualifying stock, which can produce a larger exclusion in some circumstances. That is exactly where I want readers to resist the temptation to become their own tax strategist. The details matter.

The 2025 legislation also increased the gross asset threshold for stock issued after July 4, 2025, from $50 million to $75 million.

Those are enormous numbers.

But the number is not the lesson.

The clock is.

You Cannot Microwave a Five-Year Strategy

We live in an on-demand world.

We want groceries delivered today, answers in seconds, financing approvals in minutes, and businesses that scale by next quarter.

The tax code does not necessarily care about our preferred speed.

QSBS is a perfect example.

The stock has to satisfy very specific requirements. Among other conditions, it generally must involve stock in a qualifying domestic C corporation, satisfy original issuance requirements, meet applicable gross asset limitations, and maintain required active business characteristics. At least 80 percent of the corporation's assets generally must be used in one or more qualified businesses during the applicable period. Certain industries and service businesses are specifically excluded.

In other words, this is not a box you check the month before closing.

Braden kept using the word “landmines,” and I think it is the right metaphor.

A business owner can spend years building something valuable, find the perfect buyer, negotiate a tremendous price, and then discover that a structural decision made years earlier has tax consequences that cannot simply be wished away at closing.

The government is not grading on effort.

You either satisfy the requirements or you do not.

That is why one of the simplest comments Braden made may have been one of the most important:

“The key is you have to hold on to it.”

Then he added two words that every business owner should remember:

“Years of planning.”

The Structure You Choose Today Can Affect the Exit Tomorrow

Entrepreneurs usually select an entity based on the problem immediately in front of them.

“How do I start the company?”

“How do I reduce administrative headaches?”

“What works for my taxes this year?”

Those are legitimate questions.

They are simply incomplete questions.

A better conversation includes another one:

What do I eventually want this business to become?

If your goal is to create a company that produces income for the rest of your life, one structure may make sense.

If your goal is to build, scale, and sell the business, other considerations enter the picture.

If you want children or key employees to take over, the planning changes again.

If you want private equity or another strategic buyer to acquire the company, your decisions years in advance can matter.

This is why I believe exit planning should begin while the owner still has options.

Once the buyer is sitting across the table, leverage starts disappearing.

Time becomes a negotiating partner, and time does not negotiate.

$15 Million Is Exciting. Keeping Perspective Is More Important.

A headline about potentially excluding millions of dollars in gain is going to attract attention.

It should.

But I would be doing readers a disservice if I made QSBS sound like a magic trick.

It is not.

There are detailed requirements concerning the corporation, the stock, its issuance, ownership, the company's assets, its business activities, the holding period, and the transaction itself. Federal qualification also does not automatically settle every state tax question.

Some businesses will qualify.

Some will not.

Some owners may discover that Section 1202 is highly relevant to their long-term strategy.

Others may determine that a completely different structure is better.

That decision should be made with qualified tax and legal professionals looking at the actual facts.

Nothing in this article is intended as tax advice, legal advice, or a recommendation to create, convert, purchase, sell, or restructure any entity. It is educational information intended to help business owners ask better questions.

And that may be the most valuable thing Braden gave the Liquidity Group that evening: better questions.

Start With the Value of What You Already Own

Before debating C corporations, stock issuance, holding periods, or tax exclusions, I would start somewhere much simpler.

What is your business worth today?

I am continually surprised by the number of business owners who can tell me their annual revenue, payroll, monthly expenses, biggest customer, and even what their competitors are doing, but cannot give me a reasonable estimate of the value of their largest personal asset.

That is like planning a road trip without knowing where you are starting.

A business valuation creates perspective.

Maybe your business is worth less than you assumed. That gives you time to work on value drivers.

Maybe it is worth more than you assumed. That could change your retirement planning, estate planning, insurance needs, succession decisions, or timing.

Maybe you discover that the company is too dependent on you personally.

Maybe the books need cleaning up.

Maybe customer concentration is suppressing value.

Maybe there is no management team capable of operating without the founder.

Maybe your buy-sell agreement is outdated or unfunded.

Or maybe you discover that you have built something a buyer would pay substantially more for than you ever imagined.

You cannot intelligently design the exit until you understand the asset.

Exit Planning Is Really Optionality Planning

This is where my perspective on Braden’s presentation ultimately landed.

Exit planning is not simply planning to leave.

It is planning to have choices.

A prepared business owner can choose to sell.

Choose to stay.

Choose to transfer ownership.

Choose to bring in investors.

Choose to reward key people.

Choose to transition gradually.

Choose to retire.

Choose to start another company.

Preparation creates optionality.

Waiting removes it.

Braden spent much of his presentation connecting entities, holding periods, tax rules, stock ownership, and future transactions. When he finished, I joked that he had connected “the hipbone to the knee bone, the knee bone to the shin bone.”

It sounded complicated because, in many cases, it is complicated.

I followed that observation with something I still believe:

That is why you have specialists.

A business owner does not need to memorize Section 1202.

You do need to know that Section 1202 exists.

You do not need to become a valuation expert.

You should know what your business is worth.

You do not need to become an estate attorney, tax attorney, CPA, insurance professional, investment banker, and business broker simultaneously.

You do need a strategy that gets the right professionals asking the right questions before your options disappear.

The Question To Ask Today

If you own a business, I would not ask you, “When are you selling?”

I would ask something different:

If the right buyer offered you the right number five years from now, are you making the decisions today that would allow you to keep as much of that value as legally possible?

If you cannot answer that confidently, that is not a failure.

It is a signal.

And signals are useful when we pay attention to them early enough.

The first online Liquidity Event gave our group a tax conversation, but what Braden Chase really gave us was a different perspective on time.

The biggest mistake may not be paying a tax you could have legally avoided.

The bigger mistake may be waiting until the transaction is already in motion before asking what could have been done.

Take the First Step

If this article has you looking at your company differently, you have three places to begin.

Schedule a consultation with ShieldWolf Strongholds. We can start with the bigger picture, including what you want from the business, what an eventual exit might look like, and which professionals may need to be involved.

Request a no-cost informal business valuation at ShieldWolfStrong.com/valuation. Before designing an exit strategy, establish a clearer perspective on the asset you are planning around.

Begin your business exit planning now. Even if you have no intention of selling this year, the decisions that create your best exit may need to be made years before the buyer arrives.

The check may be written at closing.

The outcome is often written much earlier.

Watch Bradens Full Presentation Inside The Liquidity Group here

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