BirminghamShipt sells to Target
Shipt, the Birmingham grocery delivery company, sold to Target for $550 million in cash in December 2017 after raising about $65 million.
Play Money, 2017
Sell a business in Alabama
The road from today to the years after a sale runs through Alabama's rules. Here it is in the order you will meet them: where you stand, what the state takes, the rules of the sale, who buys, and what the money can do after.
ComplexityMediumTax on the gain5% 2025Deal volumeMedium
Alabama is a mid-sized market, where the right buyers usually have to be found rather than met. The state takes a meaningful share of the gain, 5% at the top. Expect a tax-clearance or bulk-sale notice before closing.
Today
Where you stand
Alabama taxes a sale at 5 percent at most, lets you deduct your federal bill, and asks little of the business itself.
Roughly 449,000 small businesses employ close to half of the private workforce; a defense and aerospace cluster in Huntsville draws out-of-state buyers.
Small business footprint
0
small businesses
0
employees
0.0%
of workforce
SBA Office of Advocacy, 2024
Alabama had 449,024 small businesses, 99.4 percent of all firms, employing 802,607 people or 46.7 percent of the workforce.
Net new jobs
0
added by small firms in 2022, close to 80 percent of net job growth.
SBA Office of Advocacy, 2022
Small-firm exports
0
small exporters
$0.0B
of goods
0.0%
of state exports
SBA Office of Advocacy, 2024
More than 3,300 small Alabama firms exported $4.4 billion of goods, 17.7 percent of the exports of the state.
The elements this touches
- TmTime The years before you want out. It feeds the exit-readiness score and never moves the price; every other decision is planned against it.
ListenThe Alabama briefing, read aloud
The deal team on what changes when you sell a business in Alabama.
Before the letter of intent
What Alabama takes
The tax on the gain, and what to settle before a buyer names a price
Gains are ordinary income at a top rate of 5 percent, softened by a full deduction for federal tax; there is no estate tax, and the business privilege tax minimum is gone.
State tax on the gain
0%
Tax Foundation, 2025
A founder on film
On what he learned about tax on the way to the sale.
Lewis Titus Wastewater purification and manufacturing · Wyoming
Gains taxed as ordinary income
Alabama has no separate capital gains rate; a long-term gain is taxed as ordinary income at 2, 4, or 5 percent.
Federal tax is deductible
Federal income tax is deductible on the Alabama return without a cap, which pulls the effective rate on a large gain toward 4 to 4.3 percent.
Minimum privilege tax is gone
Act 2022-252 eliminated the $100 minimum business privilege tax from tax year 2024, ending the annual payment for an estimated 230,000 entities.
The rate is the state's top rate on the gain for the year shown, the same figure as the indicator in the hero, so the two can never disagree.
The elements this touches
- TxTax Strategy The deal and entity structure, set before the letter of intent. FNDRS tracks whether it is in place. It never moves the price; it changes what you keep.
- ApAfter-Tax Proceeds What you keep at close. FNDRS records the pre-tax walk-away and the gap to your number. It never moves the price, and the tax on it is a question for your CPA.
Under contract and at closing
The rules of the sale
The rules a sale in Alabama runs under
A buyer must hold back purchase money until the seller shows a tax certificate of good standing; sale-of-business non-competes are enforceable, and no broker licence is required.
01The buyer holds back money
Under sections 40-23-25 and 40-23-82 a buyer must withhold enough purchase money for unpaid sales and use tax unless the seller shows a certificate of good standing.
Alabama Department of Revenue
02One year presumed reasonable
The 2016 non-compete statute presumes one year reasonable for a covenant given with the sale of a business, and a court may narrow an overbroad one.
Bradley Arant Boult Cummings, 2016
03No licence to broker
Alabama is not among the 17 states that require a business broker to hold a real estate licence.
E. Howard Law
The elements this touches
- LcLegal & Compliance Contracts, licences, and filings in order and enforceable. The FNDRS valuation reads it, and the score moves the multiple.
- DrData Room The documents a buyer will ask for, ready before they ask. FNDRS tracks it in the deal-readiness report card; it decides how fast and how cleanly a deal closes.
One thing you would not guess
Alabama is the last state that lets you deduct your whole federal income tax bill, for individuals and corporations alike.
Alabama is the only state that still allows a full, uncapped deduction of federal income tax for both individuals and corporations.
When the process opens
Who buys
Who shows up for a business in Alabama
Birmingham produced the best-known founder exit in the state; Huntsville defense engineers are being rolled up by private-equity-backed platforms from out of state.
HuntsvilleGodspeed platform buys Concordia
Special Aerospace Services, backed by Godspeed Capital, bought Huntsville missile and hypersonics specialist Concordia Technologies in a deal closed October 24, 2024.
PrivSource, 2024
HuntsvilleIntrepid sells to SPA
Systems Planning & Analysis, an Arlington Capital Partners company, acquired Intrepid, a Huntsville engineering firm with prime positions in missiles and space.
PrivSource
The elements this touches
- SyStrategic Synergy What one buyer gains that another cannot. The buyer at the table prices it, which is why the sell-side process goes looking for them.
Day 0, and the years after
After the close
What Alabama lets the proceeds do
Alabama trusts may run 360 years, and since 2021 a founder can settle a self-protecting trust at home; there is no estate or inheritance tax.
CloseDay 0
Proceeds land. What the state keeps of them is settled above; what it lets them do from here is below.
Code section 35-4A-5360 yrs
Code section 35-4A-5 lets a trust governed by Alabama law last up to 360 years outside the rule against perpetuities.
Self-settled trusts since 2021
The Qualified Dispositions in Trust Act, enacted in 2021, made Alabama the 20th state to allow self-settled asset protection trusts.
WealthNo estate or inheritance tax
Alabama levies no estate tax and no inheritance tax.
WealthWhere FNDRS comes in
The post-exit wealth plan is the third act of the same engagement, and it starts in diligence, before the letter of intent, when a move or a trust can still change the answer.
FNDRSThe elements this touches
- EsEstate Architecture Trusts and ownership set up before the letter of intent. It changes what the family keeps, not what a buyer pays.
- ApAfter-Tax Proceeds What you keep at close. FNDRS records the pre-tax walk-away and the gap to your number. It never moves the price, and the tax on it is a question for your CPA.
People who walked it
Founders
Founders who worked with FNDRS, in their own words
From founders elsewhere
What founders say about working with FNDRS
No founder in Alabama is quoted yet. These are founders in other states, quoted word for word, each described by role and state.
1 of 3
“I definitely don't think we'd be in the same spot without you guys.”
No founder in Alabama is on film yet. These are founders in other states who worked with FNDRS.47 founders on film
Nearby
Other states in the South
| South | Tax on the gain | Complexity | Deal volume |
|---|---|---|---|
| Arkansas | 3.9% 2025 | Low | Low |
| Delaware | 6.6% 2025 | Medium | Very low |
| Florida | None 2025 | Medium | Very high |
| Georgia | 5.19% 2025 | Medium | High |
| Kentucky | 4% 2025 | Medium | Medium |
| Louisiana | 3% 2025 | Low | Medium |
| Maryland | 8.5% 2025 | Medium | Medium |
| Mississippi | 4.4% 2025 | Low | Low |
| North Carolina | 4.25% 2025 | Medium | High |
| Oklahoma | 4.75% 2025 | Low | Medium |
| South Carolina | 6% 2025 | Low | Medium |
| Tennessee | None 2025 | Low | Medium |
| Texas | None 2025 | Medium | Very high |
| Virginia | 5.75% 2025 | Medium | High |
| West Virginia | 4.82% 2025 | Medium | Low |
Your next step
The road starts with one step
Know where you stand in fifteen minutes, or talk the Alabama sale through with a dealmaker. Either way, no pitch and no obligation.
Selling in Alabama? Start with a conversation
No pitch and no obligation. If the honest answer is not yet, we will say so, and say what to work on.