QSBS Spotlight: $300M Deel Secondary Nets Massive Tax Bill, Paves Way for QSBS Rollover
A weekly series where we cover recent acquisitions, capital raises, and pending IPOs that may be Qualified Small Business Stock (QSBS) tax exemption eligible, granting investors and planners insight into real world planning opportunities using QSBS rollovers.
Deel, a global HR and payroll startup, recently announced a sale of about $300 million in secondary shares to General Catalyst and Abu Dhabi’s Mubadala Investment Company, raising its valuation to more than $12B as it prepares to go public over the coming 12 - 24 months.
Early investors, employees, and founders who sold shares during this round of funding are booking millions worth of pre-5-year sale gains (and likely racking up a $50-90M tax bill in the process), given that the company launched in 2019, just over 5 years ago. Since full QSBS exclusion requires a 5 year holding period, many sellers may still be eligible for full tax exclusion via QSBS rollovers.
(Bridge the 5-year holding period gap)
With a 60-day QSBS rollover clock likely ending around early April, investors and shareholders who got liquid from the acquisition have a short window to extend, preserve, or multiply their tax exclusion eligibility through a rollover. In the case of Deel’s founders and early investors, who could also have gains in excess of $10M, a QSBS rollover could be used as a tool to expand the amount of gain that can be excluded from federal income tax as well.
Congratulations to everyone involved in this transaction!
For more information on QSBS rollovers and how they can help to bridge the 5-year hold period gap, or multiply the $10M exclusion limit, read more below or contact our team Program Director at brady@QSBSrollover.com, or take our eligibility quiz, here.
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You could benefit from a QSBS rollover if:
You recently sold QSBS before the 5 year minimum hold period
You recently sold QSBS that you held for 5 years, but your gain exceeds $10M
You’re considering an exit in the next 1-4 years and want to think ahead about tax planning
Are an angel investor seeking flexible QSBS opportunities to help defer gains
The Vint Retail Partnership Program can be a solution for QSBS gain holders in need of a flexible, low-risk, and relatively liquid QSBS opportunity. Get in touch with our team today to learn how to partner with us and potentially save millions in gains tax from a stock sale.
Here are some of the questions we typically ask when having a first meeting with potential partners:
Did you recently sell or are you holding Qualified Small Business Stock?
When did you sell your stock?
Was this your first liquidity event?
Are you a founder, early employee, outside investor/angel, etc?
Are you certain that your stock met the Active Trade/Business and other requirements under Section 1202? (Outside of holding period requirements)
What is your intended rollover amount?
How long did you hold your initial stock?
(Read more about QSBS planning and see some example situations)
