Handing over the reins of a business, or performing due diligence to acquire one, is no easy task. The goals may seem simple, but different buyers and sellers present different challenges to a fair sale.
Tax Issues Related to Merger and Acquisition Activity
Transitions come with a variety of tax issues. Restructuring, merging, selling and/or acquiring another business is a complicated process with obstacles to overcome and considerations on how to save both time and money—not to mention emotional capital. Knowing if your transaction is taxable or tax-free, and if it's a sale of assets or stock sale, can help ensure compliance with taxes and reporting requirements associated with the transaction.
Reviewing purchase agreements, SEC filings, board minutes, organizational charts, cap tables and other professional advisor opinions can be overwhelming and confusing. However, failing to report the transaction accurately or file a required document can put the transaction and expected tax consequences at risk. A transaction plan can help.
Why Work with a Transaction Advisor
The confusion and complexity of mergers and acquisitions can be helped by an experienced advisor who knows how to get a deal done.
Engaging transaction advisors and due diligence providers can be as simple or extensive as the seller or buyer wishes. Involving your advisors early in the due diligence process allows them to better understand your needs and help you formulate an appropriate due diligence strategy for your sale or acquisition.
Whether it’s a high-level analysis of the entity in preparation for a potential sale, a gross margin analysis of a seller’s new product offering or detailed historical four-year and projected EBITDA and working capital analysis, your advisor can make sure you don’t overlook things that could cause surprises.
Eide Bailly is a Top-Rated Transaction Advisory Firm
Eide Bailly has the experience and resources to make your deal or due diligence as seamless as possible. We've handled it all, from family transfers to large-scale purchases. Our personal approach puts your goals in the spotlight, and our connections with other private equity groups can help put all your options on the table.
Our team is ready to best position your business in the marketplace. We’ll create an actionable plan to help you make the most of opportunities for your business.
“We would recommend the Eide Bailly team to any seller … It’s a great investment and will result in achieving the highest value possible for the business.”
In my opinion the most important members of the merger/ acquisition, other than the internal management team, is a very knowledgeable CPA firm and legal team. Eide Bailly’s team exceeded our expectations and delivered just as they’d promised."
The personal touch and extraordinary effort the Eide Bailly team put forward has far exceeded our expectations and any experiences we've had with past CPA firms. "
“The Eide Bailly quality of earnings team was great to work with – the first engagement that we worked on together was very complex from an accounting perspective and we would not have been able to complete the sale of the business without their support.”
Disruptions related to COVID-19 led to a quick slowdown in the M&A market near the end of Q1 2020, but economic stimulus and vaccine relief brought hope and activity back to the M&A markets at the end of the year. Buyer capital remains high and interest rates remain favorable. Compounded by fewer available targets and swirling uncertainty of future tax regulations, the opportunity to sell is uniquely attractive in the current environment.
The risk of new outbreaks persists, leading to heightened focus on quality of earnings and responses to COVID-19. Lender adjustments to borrowing requirements and key terms have yet to be widely understood, but additional diligence will almost certainly ensue to fully understand risk factors.