Private equity funds will typically target an exit and seek to maximise value on their investment.
Exit preparation should not start when the information request list arrives on a DD and by taking a proactive approach to tax during the ownership period, CFOs can reduce the risk of buyer challenge, valuation chips and time-consuming deal queries.
| Area to Consider | Why it Matters | What Does Good Look Like? |
| Tax risk assessment | Buyers will scrutinise historic tax positions, unresolved issues and the quality of the group’s tax governance. | Tax risk registers are implemented identify and control key risk areas. |
| Tax assets | The group may have accrued tax assets, such as losses or interest restriction carry-forwards, which can affect value. | Tax assets are identified early, supported technically and considered in transaction negotiations where they may have value. |
| Management incentives | An exit can trigger tax consequences for management shareholders and option holders. | The expected tax treatment is understood before transaction documents are finalised, and any required reporting is planned. |
| Buyer Q&A | The sale process can be time-intensive for CFOs, especially when tax queries overlap with commercial and financial diligence. | Tax advisers manage technical queries efficiently, allowing CFOs to focus on deal execution and key stakeholder management. |
By preparing tax positions before the exit process starts, CFOs can reduce the risk of last-minute value chips and present the business as well controlled, well documented and ready for sale.
Speak to Menzies
At Menzies, we work with private equity-backed businesses throughout the investment lifecycle, from post-deal structuring and management incentives through to international expansion, tax governance and exit readiness. By identifying tax risks early and documenting positions clearly, CFOs can reduce value leakage, support investor returns and enter an exit process with greater confidence.
For an initial discussion, please contact our team below:
