Mergers and Acquisitions
Sellers and buyers should be concerned about the after-tax consideration they receive or pay for a business, whether that business is conducted in the form of a regular corporation, S corporation, limited liability company, or partnership.
For example, after selling your corporation, you might be disappointed to be left with about half the proceeds after paying combined corporate and individual, federal and state taxes of approximately 65 percent. Or, you may realize you paid too much for corporate stock when you come to learn depreciation or amortization deductions cannot be taken after the acquisition for the full purchase price.
These examples demonstrate the need for careful planning to minimize and defer tax to the sellers and maximize and accelerate tax benefits to the buyers. Further, both sellers and buyers should consider the resulting tax consequences in the negotiation process.
BDO can help sellers and buyers of a corporate business:
- Determine whether the acquisition should be structured as a taxable or nontaxable transaction
- If nontaxable, determine the type of tax-free transaction that should be used to accomplish the parties' individual goals
- If taxable, decide whether the transaction should be structured as a stock or asset acquisition
- Maximize the use of any net operating losses and other tax attributes of the business being acquired
- Identify other consequences that should be addressed in the negotiation process, including where the purchaser and/or seller are members of an affiliated group filing a consolidated return
Our experienced professionals also can help sellers and buyers of businesses conducted as sole proprietorships or partnerships. In addition, we can help identify other possible tax concerns as part of the due diligence and negotiation process.