M & A and Tax Planning

Mergers & Acquisitions

Both Mergers and Acquisitions consist in actions through which companies seek economies of scale, efficiencies and enhanced market visibility. From the perspective of business structures, there is a whole host of different types of mergers and acquisitions. Here are a few types, distinguished by the relationship between the two companies that are merging, how the merger is financed, every one of them having certain implications for the companies involved and for investors:

Horizontal merger
Two companies that are in direct competition and share the same product lines and markets
Vertical merger
A customer and company or a supplier and company
Market-extension merger
Two companies that sell the same products in different markets.
Product-extension merger
Two companies selling different but related products in the same market.
Conglomeration
Two companies that have no common business areas.

Consolidation Mergers
Both companies are bought and combined under the new entity that is formed through this merger.
Acquisitions
A company can buy another company with cash, stock or a combination of the two, not being involved any exchange of stock or consolidation as a new company.
Transfers of Assets
One company to acquire all the assets of another company.
Reverse merger
A deal that enables a private company to get publicly-listed and to raise financing buys in a relatively short time period, by acquiring a publicly-listed shell company, usually one with no business and limited assets.

Regardless of their category or structure, all mergers and acquisitions have one common goal: they are all meant to create synergy that makes the value of the combined companies greater than the sum of the two parts. The success of a merger or acquisition depends on whether this synergy is achieved. Our consultants can assist you either on the “sell” or the “buy” side in such achievements by offering services such as:

Linking M&A to Strategy
Understanding M&A implications of corporate strategy;
Developing acquisition criteria from corporate strategy
Evaluating different vectors for expansion by M&A.
Business Valuation
Business valuation
Calculating strategic deal value;
Qualitative impacts on valuation and offer price;
Using payment strategies and deal structures to bridge valuation gaps;
Due Diligence
Organizing and managing an M&A deal team;
Focusing due diligence resources on key risks;
Key issues in commercial due diligence;
Key issues in financial due diligence;
Key issues in operational and regulatory due diligence;
Evaluating and managing post-merger integration risk.

Contract Negotiation & Deal Structure
Understanding the implications of asset deals and share deals;
Key issues in Supply Agreements;
Key issues in Group Service Agreements;
Negotiations and drafting of the Sale and Purchase Agreement.
Post Merger Integration
Setting up and controlling an effective integration project;
Managing in people selection and cultural due diligence;
Customer, channel and pricing issues when merging sales operations;
Delivering operational synergies.

Tax Planning

Tax efficiency is an attempt to minimize tax liability when given many different financial decisions. A financial decision is said to be tax efficient if the tax outcome is lower than an alternative financial structure that achieves the same end.

With changes proposed to ‘hybrid’ tax arrangements, tax treaties, and the deductibility of intercompany payments, the substance and motive of structures face increasing surveillance in order to be in compliance with OECD’s recommendations and to ensure alignment with the changes and are BEPS proof, our team offers tax planning and cross-border services which may include the following:

International Tax Planning
Tax-efficient group reorganization
Tax structuring advice in the pre-acquisition phase as well as pre- and post- acquisition restructuring;

Group tax-planning programs
Share plans
Retirement and savings plans;
Deferred compensation plans;

in order to ensure tax efficiency for you as individual and/or your company by:

Obtain the flexibility to accommodate future business changes.
Design tax efficient investment structures;
Financing alternatives for acquisition of target companies, leveraged buy-outs and IPOs;
Reorganization and M&A tax implications;
Simulation of tax consequences of various transaction scenarios;
Tax planning for domestic and cross-border mergers.

Align tax/fiscal and operational models
Attain sustainable structural tax improvements, increase shareholder value and cash flow
Achieve a rationalized manufacturing capacity and optimized physical distribution network
Establish potential synergies within your supply chain and operating structure
Align profits with restructured business processes, and

Escrow

Having partnerships with more banks and holding funds, this line is very useful business tool in M&A transactions, trading activities and for selling and buying commodities. It ensures that the funds linked to these trade lines are held and released by a secure third party, as agreed on within the escrow agreement. These services may include:

Client/partner due diligence and compliance
Execution of transactions within the agreed timeframe
Funds held bankruptcy

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Phone: +40 728 122 431 | Email: office@lextax.ro
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