Most companies will face one or more transactions in their lifetime. This might be an acquisition or a merger, a significant investment, the departure of a shareholder, or a complete sale to a third party. Alternatively, a single entity may be spun out or demerged from the group. All of these transactions will have associated tax consequences, which may affect the company or key shareholders. This is where we step in.
A transaction can be complex and we take care to demonstrate attention to detail when making decisions. Taking advice at the right time is key to avoiding tax inefficiencies for the parties involved, or at worst, discovering issues late in the day which prevent the transaction occurring. If you anticipate a transaction in the future, it is worth reviewing the tax position of the company to resolve any potential issues before they become critical.
Transaction structure planning
Due diligence and transaction support
Shareholders and employers
Getting the transaction done
Transaction structure planning
A payment to shareholders of immediate cash, a share issue and deferred consideration are just some of the situations that can trigger a transaction. The nature (and timing) of payments will have tax implications for all parties and overseas considerations can add further complications. We will help you understand the impact of these transactions on all relevant parties and produce a tax efficient solution that meets your commercial objectives.
A transaction may require debt or equity to be introduced by an investor which will have significant tax considerations and may require the formation of new entities to facilitate the investment, particularly where the transaction is cross border. In this case, we work with local PKF International advisors to structure these investments efficiently and legitimately.
Due diligence and transaction support
We work with both acquirers and target companies to manage the tax due diligence process, and work alongside financial and legal due diligence teams to cover all relevant tax risks. For businesses that are planning an exit or investment transaction, we can carry out vendor due diligence in advance to address any issues before the transaction process occurs so that exercise runs smoothly.
Following completion of due diligence, we support companies and their legal advisors in negotiating tax warranties and covenants in a share purchase or investment agreement, to ensure that tax risks are adequately covered.
Shareholders and employees
A significant transaction is likely to give rise to a liquidity event for major shareholders who will want to consider their personal tax position and the availability of reliefs. We work closely with our personal tax team to give clear advice on the options available.
Similarly, a transaction may give rise to a trigger event in respect of shares held by employees. It is important not to overlook their interests, as they are likely to form a significant element of value for a prospective purchaser. Whether we put the share scheme in place or otherwise, we can assist the company in identifying any personal tax liabilities that may fall due and ensure that arrangements are in place to enable the individuals to fund any such cost.
Getting the transaction done
With any transaction, there are clearly key many tax matters to consider. Our reliable team has assisted many companies and their shareholders – in what is potentially a once in a lifetime event – to understand the tax risks involved, and take sensible actions in good time to make the process go as smoothly as possible from a tax perspective and staying true to the commercial intentions.
