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Global survey confirms importance of tax in M&A

On 24 October 2012 Ernst & Yong released its third annual Global M&A Tax Survey & Trends: The Tax Director’s Search for Value, which features responses from tax directors from 14 countries on their views
on how tax does or should fit into their considerations on transactions.

The Survey highlights that companies are having to think more strategically about the value that tax can deliver in the M&A space, and critically, in the integration process.

As businesses continue to navigate uncertain territories both in the domestic market and abroad, the current business climate means that many tax directors are involved in assessing the potential tax impact of the proposed transaction well in advance of the decision to divest or acquire ultimately being made. 

In addition, tax complexity in the M&A space continues to grow, despite efforts at simplification.  At the same time that tax directors look for deal value and post-deal benefits, it is precisely this area coming under more scrutiny from tax authorities.

Tax directors also need to consider the following:

  • Tax efficiencies must be reviewed well in advance of divestments or acquisitions, and structuring should consider post-deal opportunities;
  • It is essential to seek value from a wide range of sources, and assess deal impact on the whole business, including remaining involved in the integration process to realise tax synergies;
  • Increasingly, organisations require a formal protocol for other functions involved in the M&A process to involve tax;
  • Tax authority scrutiny of transactions is increasing, particularly around debt funding, meaning all tax positions must be robustly substantiated and documented.

It is clear that earlier and closer collaboration between tax and other functions on the deal team, and taking a wide view of the tax impact and opportunities are key to realising transaction value.

For a copy of the Survey results, please click here.

If you have any questions, please contact Richard Williams, Brad Wheeler or your usual EY advisor.


Richard Williams                                                      
New Zealand Transaction Tax Leader                 
Tel: +64 9 308 1075                                                            

Brad Wheeler
Partner, Transaction Tax
Tel: +64 9 300 8165 
 

     

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