Transaction Services For Buyers
Are you looking to acquire a business? The success of an acquisition can often turn based on detailed work that is done just prior to, during and immediately after the acquisition. CTW assists strategic buyers, private equity firms and joint venture partners to gain a detailed understanding of the business target so that the right action steps are taken to best ensure that the acquisition is successful.
Quality of Earnings Study
Historical earnings measures can serve as indicators of a business target's future free cash flow. This method is popular with buyers, investors, merger, and joint venture partners. This allows buyers to make choices based on data that will impact the value of the target instead of temporary phenomena.
CTW professionals will work with you to study the target's earnings history. This allows us to determine if historical earnings will be a good barometer of future free cash flow.
At the end of this process, you'll receive a quality of earnings report for use in setting a purchase price.
Tax Due Diligence Procedures
Buyers and other parties often perform due diligence procedures on the tax reporting practice of a target. This helps structure acquisitions efficiently and allows them to anticipate tax exposures.
CTW professionals can work with you to conduct a similar review on an outsourced basis. The scope of this work can encompass all tax types, including:
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Sales tax
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Property tax
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Income tax
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Gross receipts tax
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Margin taxes
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Capital based taxes
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Unclaimed property taxes
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Jurisdictions which have or have had a right to the tax target
You will receive a report detailing:
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The scope of the review
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The tax structure of the target
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The tax issues found
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Tax integration priorities
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Estimates of priority magnitude
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Suggestions to protect the buyer
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Suggestions for remediation of any issues
Tax Structuring of Investment or Purchase
There are many factors that make up the right tax structure for an acquisition. These include:
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The buyer
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The make-up of the buyer's ownership
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The tax jurisdictions where the buyer and target operate
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The anticipated post-transaction steps to achieve synergies
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The anticipated exit event
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Anticipated distributions
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How equity and debt capital are raised for the transaction
The tax professionals at CTW can advise buyers on an array of topics related to the investment or purchase. This includes choice of entity, specific steps to acquisition, joint venture and/or rollover.
CTW's approach encompasses the entire process, including:
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Reviewing the transaction documents
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Reviewing entity formation documentation
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Preparing tax elections
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Preparing purchase allocations
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Advising on the treatment of transaction costs
Post-Transaction Integration
Integrating the target's business functions into its desired future state within the buyer is a vital process. This integration is imperative to the short and long-term success of the transaction. It can also help avoid unnecessary tax costs or errors in financial reporting.
The team at CTW can work with you to develop a detailed step-by-step plan. This plan has impacts on both the finance and tax aspects of the target, providing clarity to both buyer and target personnel. Ultimately, this will serve to aid in the directed management of the integration.
On the finance side, this involves:
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Defining the future state of the finance group,
including anticipated changes in roles and responsibilities -
Working with information technology on key priorities
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Mapping the target’s financials systems for seamless external reporting
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Developing managerial reports that inform decisions
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Establishing target dates for migrating off the target’s systems
On the tax side, this involves:
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Determining the deductibility of transaction costs
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Determining whether the transaction terminates the tax year of the target
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Determining whether stub period returns are needed
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Completing/reviewing stub period returns
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Updating the income tax provision calculations as part of acquisition accounting
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Determining the tax impact of any planned integration steps
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Legal entity rationalization, tax process redesign
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Reorganization of the tax department roles and responsibilities
Post-Transaction Dispute Resolution and Controversy
Disputes do arise following a transaction. It's important to deal with them effectively.
These disputes can concern issues like:
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Breached representations or warranties
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Net working capital adjustment calculations
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Price allocations
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The computation of contingent consideration
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Disputed claims against escrowed consideration
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Computation of make-whole adjustments
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Accounting or tax definitions
CTW professionals are skilled at working with the buyer's counsel to resolve these controversies.