Pragmatic Tax Solutions Driving M&A Value Realization
Can You Maximize the Value of Your Transaction and Limit Tax Exposure?
The successful execution of an M&A transaction requires a comprehensive understanding of both potential tax issues and potential tax opportunities. The buying, selling, or restructuring of a business can trigger significant tax exposure, and our transaction tax professionals know just how to handle it. Whether it is private equity, venture capital or family offices, we are here to help you with tax structuring and tax diligence services designed to maximize value as you undertake acquisitions and navigate divestiture activities.
Leveraging Tax to Drive Deal Value
A tax analysis is best introduced early in the M&A transaction process to avoid unnecessary risks and optimize deal efficiency and value. As a key advisor to our clients, our professionals provide high-value analysis, ensuring any tax issues are addressed promptly and adequately. We routinely address basic and complex transaction tax issues, and provide practical solutions throughout the process. The only question is, what will your business accomplish next?
“The M&A tax function has evolved to a critical value-add lever. It not only alleviates risk but when proper advice on transaction structuring is combined with tax diligence, the M&A tax function can identify opportunities that drive M&A value realization.”
– Chris Truitt, Transaction Tax Leader
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Transaction Tax Services
Considering both the short- and long-term objectives of the buyer, we help our clients assess alternative structures to achieve maximum tax efficiency while balancing the need for business efficiency. To do so, we consider the complexity of the proposed structure and promote operationally and legally feasible alternatives where the exist. In assessing alternative structures, we consider investor group entity requirements, expected holding period, presence of international operations and desire to create tax efficient equity participation by key members of management.
Working with the buyer to assess the risk factors associated with an acquisition and agreeing on the appropriate scope to address those risks is critical to a successful diligence process. Communication throughout the process as well as assisting in quantifying any potential exposure and cost-effectively mitigating any risk, is our primary objective in the tax diligence process.
State & Local Tax
A variety of state and local tax issues come into play as it relates to M&A transactions. A diligence process is rarely completed without discovering potential state and local tax exposure. The continued expansion of concepts such as “economic nexus” from both a sales tax and income tax perspective have created many business traps and typically create issues for even the most sophisticated market participants, often requiring them to balance tax regulatory compliance with accepting a certain amount of business risk. In any diligence project we involve our State & Local Tax group to help understand the risks as well as the cost to mitigating them.
Our international tax professionals align your business strategies and desired outcomes with successful international tax strategies by providing an extensive array of international tax planning, compliance, and advisory services to help you achieve your goals. Our professionals have extensive experience in strategic tax planning and implementation considerations related to multi-jurisdictional and cross-border transactions.
Credits & Accounting Methods
As part of any diligence project, we assess the accuracy of the accounting methods being used by the target company. Embedded tax liabilities as a result of an improper accounting method can create a significant deal barrier depending on the structure of the transaction and the impact on future taxable income to correct the accounting method. While diligence is often thought of as identifying potential issues, we also seek to identify opportunities for the buyer in terms of more favorable accounting methods, such as R&D tax credits or cost segregation studies.
Qualified Small Business Stock (Section 1202)
In assessing potential structures, we explore whether the qualified small business stock regime is a viable option. This powerful tax provision can offer significant tax saving opportunities for qualifying investments. Our professionals understand the benefits, opportunities and restrictions necessary to get clients the optimal after-tax rate of return upon exit.
We fully recognize there is no “one-size-fits-all” solution when it comes to deciphering how partnership agreements allocate income, loss, and/or cash distribution provisions. Our M&A tax experts help clients navigate these complex calculations at the onset of a transaction. Working through hypothetical waterfalls can help highlight any issues in the operating agreement that are inconsistent with the overriding economic desires of the owners.