Buying, selling or restructuring a business is a critical point in any business’ lifecycle. Transactions of this nature are often high pressure, time sensitive and the tax implications will often be a significant consideration, with material implications for any affected parties.

The tax environment applicable to corporate reorganisations and transactions is also complex. Carefully planning the process and carrying out robust due diligence is crucial to ensure that any tax reliefs are maximised, structures operate efficiently and effectively, opportunities and efficiencies are identified and maximised and any risks and pitfalls are avoided.

Menzies has a team of dedicated and specialist advisers who advise on all aspects of buying, selling and restructuring businesses. We work proactively with clients to ensure transactions are structured effectively to achieve any commercial objectives, whilst ensuring business and shareholder value is maximised through identification of any opportunities for tax efficiencies and effective tax risk management.

Click below to access the areas we can help you with:

Buying a business

Business growth can be accelerated through mergers, joint ventures and buying other companies or businesses.

Buying a business is, however, often a demanding process. Different transactions will all have different commercial, practical and tax considerations. Depending on the transaction structure, it is also possible that the buyer will assume responsibility for any historic tax risks.

Ensuring an effective acquisition structure and carrying out robust due diligence are key parts of achieving a successful acquisition and maximising the value of a business purchase. It is important that advice is sought early in the process to ensure a strategy is put in place to manage any tax risks and that any opportunities for longer term efficiencies are identified. Addressing these early in the process can minimise the prospect of complications arising later and, in some cases, issues or uncertainties identified in the due diligence process can fundamentally affect the value proposition, warrant further negotiation, or influence the deal structure.

Our team of specialist tax advisers regularly advise on business and share acquisitions and work proactively with clients to:

Structuring corporate transactions:

Maximise tax efficiencies through effective structuring

Advising on optimal acquisition structures and tax structuring for company acquisitions.
Advising on the different tax implications of share purchases, trade and asset purchases, management buy outs (MBOs) and management buy ins (MBIs), mergers and joint ventures.
Advising on the tax and commercial implications of different consideration mechanics, as well as incentivising target management with equity.
Assessing the tax cost of acquisitions, including opportunities and risks in relation to financing, corporate and shareholder taxes, stamp taxes and VAT.
Advising on financing structures and the deductibility of financing costs.
Advising on post-transaction restructuring to integrate, rationalise or streamline operations and group structures after an acquisition.
Assisting with any associated compliance and reporting.

Tax due diligence and risk management:

Maximising the value of business acquisition through management of historic and future tax risks

Assisting with tax due diligence, with a view to identifying material risks in the target’s tax reporting, compliance arrangements and record keeping, as well as opportunities for future efficiencies.
Advising on the tax aspects of share and business purchase agreements, tax warranties and indemnities and other relevant buyer protections.
Advising on the value impact of tax assets, liabilities and risks, and negotiation strategies.

Our team of tax experts also collaborate closely with our team of corporate finance specialists to support in the planning, negotiation, and completion of acquisitions, providing a seamless service before, throughout, and after the transaction process.

As a member of HLB International, we also have access to local tax experts in 157 countries worldwide, who can support in respect of international and cross border transactions.

Structuring and Restructuring

There are a number of reasons why a business may benefit from being restructured, for example:

To achieve operational efficiencies, reduce complexity or create economies of scale.
To manage or mitigate different levels of risk that may exist in different parts of a business.
To aid in raising funds or incentivising employees, including in respect of specific parts of a business or the whole.
To separate or amalgamate business components, or to provide flexibility or tax efficiencies, when preparing for a sale.
To facilitate the merger of two or more businesses, or to allow for business partners to separate.
To complement or facilitate a strategy for succession of the business.
To improve business reporting and accountability.
Because business or personal objectives have changed since a structure was established.

Regularly reviewing a business’ operating structure is advisable to ensure that this remains aligned with the shareholders’ tax and commercial prerogatives remain aligned with the shareholders’ overarching commercial and personal objectives.

The tax environment applicable to corporate reorganisations is, however, complex, because a number of taxes are often applicable, and the way in which different taxes interact can create significant risks, as well as opportunities, that can be material. This is particularly the case where businesses are being separated or demerged, where property is involved and where transactions of this nature don’t tend to create cash and so any tax charges need to be separately funded. Careful planning is therefore necessary to identify and establish the feasibility of the most effective restructuring solutions, provide certainty to any relevant parties early in the process, to ensure tax and transaction costs are managed and that any opportunities for efficiencies are identified and explored.

Our team of specialist tax advisers have extensive experience advising on corporate reorganisations, reconstructions, mergers and demergers, including to:

PLAN AND STRUCTURE CORPORATE TRANSACTIONS:

Minimise tax exposures and maximise tax efficiencies through effective structuring

Advising on the effectiveness and appropriateness of different business and operating structures.
Assessing the tax cost and optimisation of restructuring processes, including in respect of corporate and shareholder taxes, stamp taxes, VAT and inheritance tax.
Assessing the feasibility of relevant options for restructuring, and identifying structures and strategies to optimise the business depending on the shareholders’ objectives.
Designing the restructuring process and steps plans to minimise any tax costs and maximise any tax efficiencies achievable in respect of group reorganisations, mergers, partitions and demergers, as well as pre and post-sale restructuring including amalgamations, group simplification and post-acquisition integrations.
Advising on business valuations and capital structures.
Coordinating with HMRC to obtain any relevant HMRC clearances.
Assisting with communication restructuring objectives and process to key stakeholders, including financiers, investors, employees, etc.
Dealing with associated administration, reporting, disclosures, elections or relief claims, including in respect of personal, corporate and employment taxes, stamp taxes and VAT
Providing practical, commercial and technical input to support in the implementation of complex transactions.
Ensuring your structure is optimised to achieve the shareholders’ medium and longer term objectives, including raising funds, offering share incentives and selling the business.

As a member of HLB International, we also have access to local tax experts in 157 countries worldwide, who can support on international and cross border transactions.

Selling a business or retiring from business

Selling a business is a demanding process with high financial and emotional stakes. Almost all commercial transactions have a significant tax implication, and tax is often an important component in optimising shareholder value and returns on an exit.

The tax environment applicable in selling a business can also be complex and seeking advice early in the process can help establish and implement a structure and plan that maximises a business’ value, minimises shareholder tax costs and limits the possibility of challenges, whether during an impending due diligence process or from HMRC.

Our team of specialist tax advisers regularly advise on buying and selling businesses, working proactively with clients, including to:

PLAN AND STRUCTURE CORPORATE TRANSACTIONS:

Minimise tax costs and maximise available tax reliefs through effective structuring

Advising on and modelling the tax implications of different disposal structures and succession strategies: including share sales, trade and asset sales, management buy outs (MBOs) and management buy ins (MBIs), as well as more complex structures for divestiture of assets.
Establishing structures for enduring employee ownership, including disposals of shares to employee ownership trusts (EOTs).
Reviewing existing business structures and advising on pre-sale restructuring to optimise a structure for sale.
Advising on the availability and optimisation of capital gains tax reliefs, such as business asset disposal relief (formerly entrepreneurs’ relief), investors’ relief and disposals of shares acquired under enterprise investment schemes and tax-advantaged share option schemes.
Coordinating with HMRC to obtain any relevant HMRC clearances.
Dealing with associated administration, reporting, disclosures, elections or relief claims, including in respect of personal, corporate and employment taxes, stamp taxes and VAT.
Providing practical, commercial and technical input to support in the implementation of complex transactions.

TAX DUE DILIGENCE AND RISK MANAGEMENT:

Maximise business value through effective risk management

Reviewing the current affairs of the company to identify any matters that could affect the value of your business, and advising on how any risks can be mitigated or resolved;
Advising on the tax aspects of share and business purchase agreements, tax warranties and indemnities;
Advising on the value of any tax assets and negotiation strategies.

Our tax experts also collaborate closely with our team of corporate finance specialists to support in the planning, negotiation and completion of business disposals, before, during and after the transaction process, to ensure your business is primed for sale and that you realise the maximum value and reap the rewards you deserve for a lifetime of effort.

As a member of HLB International, we also have access to local tax experts in 157 countries worldwide, who can support on international and cross border transactions.

Selling a business is often a fundamental change in a shareholder’s life, and we also have a team of highly qualified and experienced financial planners at Menzies Wealth Management, who can assist and advise on strategies to achieve your longer term financial and personal goals

For more information on how our restructuring/demerger team can help you, contact our #BrighterThinking team below, or complete our contact form: