Make Your Tax Credit More Attractive to Buyers: A Guide for Project Developers

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Tax credits can significantly enhance the financial viability of various clean energy and renewable energy projects. The transferability of these tax credits adds another layer of financial flexibility, allowing project developers to sell them to corporations with substantial tax liabilities or high-net-worth individuals with passive income. However, making your tax credit more attractive to potential buyers requires a strategic approach.

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Here’s how you can achieve that:

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1. Ensure Compliance and Documentation

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Before you’re ready to market your credit, you must ensure that your project fully complies with all relevant federal, state, and local regulations. Buyers want assurance that the tax credits are legitimate and risk-free.

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• Compliance: Adhere strictly to the guidelines set forth by the IRS and other governing bodies. Non-compliance can result in disallowed credits.
• Documentation: Maintain thorough and organized records that prove eligibility. This includes certification from relevant authorities, proof of expenses, and any other required documentation such as project financials, a statement of qualifications, and a cost segregation report. Gathering these supporting documents also helps establish trust early in the deal process. 

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Download the Atheva Seller Checklist to see what you need to be prepared. 

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2. Work with Experienced Legal and Financial Advisors

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Engaging experienced legal and financial advisors can significantly increase the attractiveness of your tax credits. These professionals can help structure the transaction to maximize benefits for both parties.

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• Legal Advisors: Ensure that the transferability of the tax credits is legally sound and free from potential disputes.
• Financial Advisors: They can help in valuing the tax credits accurately and in structuring the deal in a tax-efficient manner for buyers.

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3. Offer Competitive Pricing & Inclusions

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Pricing is a critical factor in making your tax credits attractive relative to the going rates for similar tax credits. 

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• Discount: Buyers typically purchase tax credits at a discount. Ensure your discount rate is competitive with what is included (insurance, etc.) but still meets your financial needs.
• Incentives: Consider offering additional incentives, such as flexible payment terms or bundled credits, to sweeten the deal.
• Inclusions: Investing in insurance and having indemnities included in the deal is one of the top ways to make credits, particularly ITCs, more attractive to buyers. Having the credit fully wrapped with insurance protects buyers against both recapture and qualification risk. 

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Atheva works hand-in-hand with sellers to determine the right package and price for a credit to ensure sellers get the best outcome. Explore how the numbers can break down in our transaction calculator.

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4. Highlight Project Impacts

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Effectively communicating the impacts of your project can enhance the appeal of your tax credits. Highlight the broader impacts and benefits of your project to attract ESG leaders and socially responsible investors. This can help set your project apart and help the business case for some buyers. 

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• Environmental Impact: If applicable, emphasize the environmental benefits, such as reduced carbon emissions for renewable energy projects.
• Social Impact: Highlight benefits like job creation, community development, or preservation of historic landmarks.

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Atheva works with sellers to create a credit summary document, helping us share your story and market the credit to our network of matched buyers. 

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5. Establish Credibility and Trust

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Building trust with potential buyers is essential. Demonstrate your credibility and the reliability of your tax credits.

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• Track Record: Showcase your past successful projects.
• Third-Party Audits: Consider having your project and tax credits audited by reputable third parties to provide additional assurance to buyers.

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Atheva can help strategize with you on how to best establish credibility with buyers and provide that added confidence. 

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6. Connect with Atheva to Match with Buyers

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The Atheva dedicated team will work with you hand-in-hand to understand your financial goals and match you with potential buyers. With Atheva’s concierge services, you can streamline the transfer process, negotiate favorable terms, and net out with the best outcome. 

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• Expertise: A dedicated team understands market dynamics and can provide valuable insights, advice, template legal documents, and referrals.
• Negotiation: From start to close, the team works with you to ensure you have the terms you desire with the buyer. 

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View Atheva’s streamlined process here. 

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7. Promote Transparency

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Transparency in your dealings fosters trust and reduces perceived risks. Be open about all aspects of your tax credit and the associated project.

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• Clear Communication: Provide detailed information about the project, the tax credits, and any associated risks.
• Regular Updates: Keep potential buyers informed throughout the process with regular updates.

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Conclusion

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Making your tax credit for transferability attractive to buyers involves a combination of compliance, strategic pricing, effective communication, and professional assistance. By ensuring your project is well-documented, engaging the right advisors, pricing competitively, and highlighting the broader benefits of your project, you can enhance the appeal of your tax credits. Building credibility and promoting transparency further solidifies the attractiveness of your credit. 

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Work with Atheva to successfully market your credit, connect with buyers, and facilitate the sale of your tax credits. Our hands-on, consultative approach allows us to hyper-focus on getting you the best net outcome that meets your financial goals. 

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Get started by contacting us today. 

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