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The structure of your business and how you undertake an acquisition or divestment can make a significant difference to the value that the opportunity ultimately presents.
Understanding the implications of your corporate structure from a commercial and tax perspective is an important part of any transaction and is best considered in the planning stages.
An unnecessarily complex structure can be difficult to communicate to potential investors and can raise questions about the risk involved in the transaction. Simplifying a structure or aligning the structure more closely with the corporate strategy can unlock significant value.
Considering the structure of the transaction may also have implications for the extent of the risk you are taking on and the extent of the due diligence you undertake. Understanding the strategy and rational behind an asset deal and / or a share deal (and preparing for each) is a very important part of the M&A process.
If you have formed a tax consolidated group understanding the implications of a subsidiary joining or leaving the group will be key to managing your capital gains tax obligations.
When a client had an opportunity to sell a significant part of their portfolio we knew that the structure of the deal would make a significant difference to how much of the proceeds they actually received.
Before the offer had been finalised we worked with the client to prepare a model comparing the outcome for each shareholder based on whether they accepted an offer based on a share sale or an asset sale.
Armed with this information the client was able to enter into negotiations with each potential purchaser knowing what the gross value would actually mean in net dollar terms.