Published on July 05, 2011

When Peoria, Illinois-based Caterpillar threatened to move from the state due to income tax increases, it sparked a flurry of debate over corporate relocation and relocation tax incentives for companies.

The threat actually hurt stock prices of the heavy equipment manufacturer, as well as reducing company morale and productivity. While Caterpillar's CEO stressed to Illinois governor Pat Quinn that he prefers to stay in the state, the damage was done.

Factors to Consider Prior to Company Relocation

At CapRelo, we'd be the last people to tell anyone that corporate relocation is a bad idea, but we would like to emphasize some of the factors you should consider before deciding if it's the right decision for your company.

  1. Can you recruit new talent in your new location? Choosing the right area is one of the key factors in whether or not a company will be successful in recruiting new talent after relocation. Shop carefully, and think about the types of people you need to help your company operate optimally.
  2. Will you be able to retain most of your top talent? Again, it's all about location, location, location. No matter how desirable your corporate relocation package, if you're not relocating to a place your employees want to live, you won't retain them.
  3. Will the tax incentives offset some or all of the corporate relocation costs? When you factor in all the real and hidden costs of relocation, do the tax incentives still sound as appealing? Are tax benefits long term (such as lower corporate taxes) or one-time bonuses?