Tax Structuring
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 the:
- Investor group entity requirements
- Expected holding period
- Presence of international operations
- Desire to create tax efficient equity participation by key members of management
Tax Diligence
For a diligence process to be successful, it is critical to work with the buyer to assess the risk factors associated with an acquisition and agree on the appropriate scope to address those risks. Communication throughout the transaction, 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 and income tax perspective has created many business traps. This, in turn, can 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 you understand and mitigate the risks, as well as the costs.
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International Tax
Our International Tax professionals align your business strategies and desired outcomes with successful international tax strategies by providing an extensive array of planning, compliance and advisory services. Our professionals have extensive experience in strategic tax planning and implementation considerations related to multi-jurisdictional and cross-border transactions.
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Tax Credits & Incentives Advisory
As part of any diligence project, we assess the accuracy of the accounting methods being used by the target company. Embedded tax liabilities, 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 tax credits, deductions and tax planning, such as research and development (R&D) tax credits or cost segregation studies.
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Qualified Small Business Stock (Section 1202)
When 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 for clients to get the optimal after-tax rate of return upon exit.
Waterfall Allocations
We recognize there is no one-size-fits-all solution when it comes to deciphering how partnership agreements allocate income, loss and cash distribution provisions. Our Transaction Tax professionals 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.
