$12 billion Intuit-Mailchimp Deal Could be Last Major Deal Before BBBA (Build Back Better Act) Possibly Slashes QSBS Exclusion

Intuit, the maker of TurboTax, QuickBooks, Mint, and Credit Karma, is buying Mailchimp, for $12 billion in cash and stock. While the global technology platform has previously maintained a strictly financial vertical, there are many reasons to celebrate the acquired all-in-one Marketing Platform. 

What is Mailchimp?

Mailchimp is an email marketing platform that is purpose-built for small businesses. Designed as an alternative to the expensive and oversized marketing solutions of the early 21st century, it aims to empower entrepreneurs around the world to connect with their most important audience. 

Largest Acquisition of a Privately-Owned Company

Mailchimp is 100% founder-owned and highly profitable before-and-during the current boom in e-commerce and online small businesses, making this deal the largest acquisition of a privately-owned bootstrapped company. The founders, Ben and Dan, have not taken any outside funding since they began in 2001 and opted for a profit-sharing compensation structure rather than a stock-based one.

Another noteworthy factor of this deal would come if the Build Back Better legislation passes with the currently proposed amendments. As a founder-owned company, it is possible that early issued stock could be eligible for Qualified Small Business Stock treatment under Section 1202, and if a gain was recognized by the founders or early employees during the deal, some or all of that gain could be 100% tax free.

According to the amendment currently on the table, any gain recognized after September 13, 2021 by taxpayers with an adjusted gross income of $400K will be capped at 50% tax exclusion. Read more about the detrimental impact of this amendment and how it could stifle innovation in the American startup environment. 

This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.

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