In today’s tax environment, there are no run-of-the-mill merger and acquisition transactions. From exploring a potential transaction, to obtaining IRS and regulatory approvals, to closing and post-closing transitions, we provide tailored guidance that helps minimize potential tax burdens and maximize the value of the deal.
In all merger and stock purchase transactions, buyers must be concerned about the tax history of the purchased entity and, in the case of an acquisition out of a consolidated group, the tax history of that consolidated group. Our lawyers regularly work with buyers in conducting tax due diligence with respect to a particular acquisition candidate. We help buyers analyze the target’s tax history and, where appropriate, secure additional representations, warranties and indemnities from the sellers.
In taxable asset sales (including many merger transactions), we help buyers formulate a purchase price allocation that results in the fastest write-off for tax purposes. We advise sellers on tools for maximizing the capital gain and minimizing the ordinary income that otherwise results from the transaction. In a taxable stock sale, we help buyers calculate the “tax cost” of purchasing stock, analyze the tax attributes of the purchased entity, and determine which form of entity represents the best vehicle for the acquisition.
We also work with buyers and sellers to ensure compliance with tax rules that apply to transactions that potentially qualify as tax-free under the US Internal Revenue Code, regularly seeking private letter rulings or issuing tax opinions to facilitate transactions. We draft tax representations and tax-sharing agreements, and structure tax-free spin-off and split-off transactions.
When multinational companies seek to form international joint ventures, we guide clients through the complex tax issues related to all stages of the international joint venture, including formation, operation and exit.
Mergers & Acquisitions
We regularly advise on many of the largest public mergers and acquisitions along with intercompany restructurings involving Fortune 500 companies. We are frequently retained as special tax counsel to advise on transactions that are particularly tax sensitive or involve cutting-edge tax issues. We work closely with our corporate lawyers to help structure transactions in a manner that is most tax-efficient for all parties involved. Our team includes former IRS rulings officials whose backgrounds and insights have proven to be critical to procuring favorable, timely responses and private letter rulings from the IRS. We also represent clients before the US Department of Treasury with respect to legislative and regulatory matters, and have been instrumental in influencing pending legislative proposals and regulations projects.
We advise private equity funds—and investors poised to deploy capital for investments and acquisition activities—on all aspects of US and cross-border taxation. We provide counsel at each stage of the private equity life cycle, from fund formation and management, to transaction and investments, optimizing fund and portfolio company operations, and exit planning. We also provide tailored US inbound services to international and offshore funds undertaking US fundraising, establishing US offices and making US investments. Our international team represents all types of investment funds, pooled investment vehicles, fund sponsors and fund investors, including LBO funds, hedge funds, private equity divisions of investment banks, venture capital funds, mezzanine funds, public permanent capital vehicles, public fund managers, fund-of-funds, general partners, fund managers, and US, international, tax-exempt and institutional investors.
Spin-offs & Restructurings
McDermott’s corporate spin-off and restructurings tax practice is unsurpassed in depth of experience, sophistication and volume. We are engaged continuously in planning and implementing some of the largest and most complex corporate separation, reorganization and integration projects. Given the unusually wide range of tax issues that arise in such engagements, we work closely with experienced lawyers in many of the Firm’s core practices, and help coordinate the work of top accounting firms, economists, valuation consultants and other third-party advisors. We counsel public and private US- and non-US-based corporations on tax-free and taxable spin-offs and structures, manage related tax processes to ensure proper sequencing of transaction steps, prepare legal opinions and SEC filings, and work with the IRS to obtain tax rulings.