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fully integrate with the tax advisors.
Problems can arise when teams fail to do
that throughout the entire negotiation and
deal-structuring process.
"We speak tax and we speak lawyer, so
we're often the ones that are able to make
sure that all the tax concerns that surfaced
with the tax and finance team are reflected in
the documents that we are putting in place,"
says Oliver.
"It's important to explain to a non-tax
person something that's very technical, in a
way that's understandable," agrees Alan
Bowman, a partner in the tax group at
Goodmans LLP. "It's about getting them to
understand the highly technical issues and
making sure they are applied both in their tax
filings and also in how they book their journal
entries to make sure everything is consistent
across the board." In-house counsel should
also be careful to ensure that accountants
involved in the transaction treat the
accounting records in the same way as the
tax lawyers, so everyone is on the same page,
Bowman says.
"Generally, there is a desire to maximize
tax attributes in M&A, looking at the
perspective of the buyer," says Morand.
"From the seller's perspective, they are
looking at structuring their exit in the most
tax-efficient manner to maximize their
after-tax returns." Management incentive
plans are vital for the target if they plan to
stay post-acquisition, which is common in
private equity transactions, Morand says.
In a restructuring transaction, aside from
the commercial goal of typically reducing
the outstanding debt of the troubled
company, there is also a desire to preserve
the debtor's tax attributes. If the debts are
going to be settled as part of the restruc-
turing, which is often the case, Morand says,
settlements must occur in the most
tax-efficient manner.
"It's about getting [non-tax people] to
understand the highly technical issues
and making sure they are applied both
in their tax filings and also in how they
book their journal entries."
Alan Bowman, Goodmans LLP
