Mergers & Acquisitions and Corporate Reorganizations

M&A transactions present numerous tax planning and compliance issues, from due diligence analysis identifying areas of potential tax exposure to implementation of specific tax strategies and the ultimate assimilation of the target group into the acquiring group. The Firm handles all aspects of the M&A process from the tax and corporate perspectives and has represented buyers and sellers for numerous transactions over the years. 

Corporate reorganizations may involve an external acquisition of a third party or an internal restructure of a group. They can take the form of transfers of assets for stock or stock-for-stock exchanges. In some cases, the transactions include receipt of other “boot consideration.” The Firm practice concentrates on the maximization of the tax-free or tax-deferred consequences of the transaction and the proper alignment of tax attributes (earnings and profits accounts, carryover or stepped-up tax bases in assets) to the appropriate parties. 

Sample Representations

  • We advised a U.S.-based distributor with respect to the acquisition of its key U.S.-based supplier. We addressed the issues encountered when a pure distributor was transitioned to an integrated manufacturing/sales entity. We advised on purchase price allocations for both financial- and tax-reporting purposes.

  • We advised on the restructure of an existing U.S. investment of a foreign-based group to reduce the overall tax costs of generating income and distributing profits. The investor was based in a non-treaty jurisdiction. A unique solution, suggested by us, enabled the client to restructure the ownership chain, cash out profits tax free, and access treaty benefits in a way that was consistent with the economic substance principles and the provisions of the limitation on benefits article of an applicable income tax treaty.

  • We advised a web-based learning business with respect to a planned internal reorganization designed to better align ownership interests in the business with the conduct of U.S. business operations. In order to meet the client’s needs, we structured a spin-off of the U.S. operations that was tax free under Code §355. We advised on both technical and practical implementation issues, including revised incentive compensation plans, staffing of the U.S. business, and ongoing commercial relationships, with a goal to maintain tax-free status after completion of the spin-off. We coordinated with foreign tax counsel to ensure an absence of adverse tax effects in the relevant overseas jurisdiction.

  • We advised a multinational conglomerate based in Europe on the consequences of a tax-free spin-off of a non-core business. The issues that were addressed included a detailed analysis of the historical business operation required by Code §355, the current legal documentation to effect the spin-off, and ongoing business requirements.