A simplistic way to explain mergers and acquisitions is by saying it is like shopping. When we have money to spend, and we have a need, we go out and spend it on that thing that we need. It is the same way with companies. If they have a gap they need to fill, and they have the money, they go out and buy part or a whole of another company to supply what they need. It sounds easy enough, but it really is not.
One of the most complex issues in mergers and acquisitions in Salt Lake City handled by firms like TannerCo.com is taxation.
Some tax advisors shy away from the task of preparing a company for tax compliance before a merger or acquisition. There are many transactions involved, mainly driven by the need to restructure the company. In some cases, the tax advisor may even need to recommend against a merger or acquisition because of tax consequences. Some tax professionals simply do not feel competent about tackling the job.
Some of the issues that a tax advisor may have to consider include:
- Tax attributes
- Business structure
- Capital gains
- Purchase price
- Sales and transfer taxes
- Filing requirement and tax elections
- Legal, accounting, and other transaction costs
- Liabilities and contingent expenses
The role of the tax advisor
The value of the tax advisor before a merger or acquisition happens is not really to do an audit or prepare the tax forms. Their role is to find out what is in the best interest of the client based on their goals. It takes time and a lot of digging to get to that point, but a competent tax professional can provide the client with clear reasons for or against pursuing a merger or acquisition from a taxation point of view.
The role of the tax advisor is crucial to the success of any merger or acquisition. It is therefore important to find an experienced one that can deliver the goods.