Families who own businesses are getting this piece of New Year’s advice: Sell.

Not only is it a great time to put a private company up for sale while the economy is strong and many deep-pocketed buyers are circling, wealth advisers are also reminding clients of looming political uncertainty toward the end of 2020.

If President Donald Trump loses the election, Democrats running to replace him have promised to boost taxes on the rich. While the wealth tax proposed by senators Elizabeth Warren and Bernie Sanders gets the most attention, other top candidates have ideas for squeezing the 0.1%. Former Vice President Joe Biden, for example, said he wants to almost double the rate on long-term capital gains to 39.6% for taxpayers earning more than $1 million a year.

“The Democratic zeitgeist now seems to be higher taxes,” said Brad Dillon, senior wealth strategist at UBS Group AG in New York. “If you were thinking about selling your business in the next two years, it’s definitely something to think about.”

For the owner of a multimillion-dollar company, selling by the end of 2020 could result in a much smaller tax bill than striking a deal in 2021 under new rules. Of course, a new president would need Congress to go along with a tax hike, and that’s hardly a certainty even if Trump is defeated.Nonetheless, the political risks also coincide with excellent conditions for selling.“This is as good as it gets,” said Marshall Rowe, president for business-owner services at Colony Group, where he advises owners of companies worth about $50 million to $350 million.

Deal Hunters
U.S. stocks have continued to rise, with the S&P 500 advancing 1.8% this month after surging 29% last year.

With the stock market setting record highs almost daily, interest rates near historic lows and the broader economy doing well, owners are getting high valuations for their businesses. The family of the founder of Les Schwab Tire Centers is weighing a sale that could value the Bend, Oregon-based retail chain, with more than 450 locations in 10 states, at more than $3 billion.

There are plenty of potential buyers seeking acquisitions.

Private equity firms have an unprecedented amount of cash to deploy. Blackstone Group Inc., Carlyle Group LP and other firms have almost $1.5 trillion in unspent capital, the highest year-end total on record, according to Prequin data. Private equity firms executed about $450 billion of deals last year.

Many super-rich families are also in the hunt, adding to the competition. They’re building out family offices -- mini investment firms set up to manage their personal wealth -- and looking for recession-proof businesses to include in their portfolios. In July, for example, the family office tied to billionaire Chicagoan Tony Pritzker acquired wastewater treatment company Valicor Environmental Services.

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