A merger and acquisition (M&A) deal can result in tax obligations. A failure to prepare for these obligations can mean the deal is not as profitable as it should be. Proper planning before, after, and during negotiations can help to better ensure you make the most of the deal.
Three specific areas to watch for with regards to taxes and M&A deals include the following.
#1: Historical tax issues
As part of any thorough due diligence process, it is important to carefully review a target acquisition for previous or current tax issues. Once you have the information you can take action to negotiate the other party cure the issue or consider alternatives.
#2: The transaction
Next, look at the transaction itself. Taxes can apply on the purchase of the business’ assets and stocks. The chosen business structure can also impact the taxes associated with the deal. Take these and any other outlaying tax considerations into account when negotiating the deal.
This negotiation and transition process may also provide an opportunity to review the business’ tax structure and adjust to make the most of potential tax savings — which leads us to our final area of consideration.
#3: Future growth
It is helpful to take the time to identify potential future tax issues and savings opportunities. Proactive planning efforts during initial discussions and negotiations can pay off in the long run.
It is important to note that in today’s global market, it is also important to take local as well as foreign tax considerations into account before finalizing any deal. The attorneys at Goldburd McCone are experienced in foreign and domestic tax issues as well as merger and acquisition deals. They can review a proposed transaction, provide guidance on the best way to move forward, and discuss tax planning strategies to proactively take advantage of opportunities for savings.