10 Key takeaways: What M&A tax leaders need to know
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Where the taxation of M&A is concerned, both private equity and strategic buyers continue to face uncertainty and change from an array of forces. In the years ahead, tax uncertainty and complexity will continue to be a prominent feature of the deal landscape.
Over one-third of recent deals involve companies in the technology, media and telecommunications sectors. Many strategic buyers are actively acquiring or merging with companies in these sectors to boost their own technological capabilities.
The US is currently seeing a wave of restructurings, and a similar wave is expected in Europe and elsewhere when pandemic financial support is wound down.
Interest in special-interest acquisition companies has revived, with record amounts of cash raised for SPACs in the US in the past year and record amounts of deals involving them.
Tax teams can contribute significantly to value creation discussions by identifying forward-looking opportunities to improve a target’s tax position and to assist dealmakers in identifying and modelling significant tax uncertainties.
With rising competition, increasing tax complexity and faster deal speeds, effective tax due diligence now depends on multidisciplinary teams with expertise in:
Skills in tax technology, data and analytics are especially important for modelling the tax implications of due diligence findings to help ensure deals are structured tax effectively, both qualitatively and quantitatively.
The rising reliance on W&I insurance is complicating tax due diligence decisions over what is in scope, what exclusions should be covered, and what amount of tax analysis is required.
The movement toward greater environmental, social and governance (ESG) across global companies is having significant impacts on M&A markets as businesses face pressure from investors, customers and other stakeholders to integrate ESG in their processes and policies.
As low interest rates continue, the hunt for better returns has led private individuals, companies, funds and other investors to focus on the potential to create value in target companies.