Mergers & acquisitions - Road map

 Road map

- Understand clearly the goals and the tax situation of both the vendor and   the seller.
 
- Structure a win-win deal to secure the agreement of all the parties to   the deal.
 
- Buyer must perform due diligences to check the value of the assets and   liabilities he plans to acquire.
 
- Acquirer should request a valid guarantee to protect him against any   unidentified/undisclosed tax exposure which may have a material effect on   the purchase price if knew before signing the deal.

- Acquirer must check that the net operating losses and the carry-back   receivable he will acquire will survive the change of control.

- Acquirer and vendor must agree on the purchase price, on the   scheduling of the payment of the acquisition price i.e. up-front   payment and/or earn-out i.e. several installments over the time, each one   calculated according to the performance of the acquired business after the   acquisition. Agree whether the price will be paid in shares or/and in cash   and on the collateral necessary to secure the guarantee.
 
- Check how the buyer will secure the tax deductibility of the interest   generated by the acquisition debt. The location of the debt must be   carefully reviewed as well because many restrictions apply to the tax   deductibility of this interest.
 
- Check the tax deductibility of the acquisition cost e.g. fees of the   external advisers hired to make the acquisition (Bankers fees may be very   sizeable) .

- Check up front if a tax consolidation is advisable. In some cases it is   difficult and/or costly to implement a tax consolidation afterward
  "Tax consolidation".

- Anticipate the consequences of the transaction on VAT, salary tax and   business tax.

- Propose long term incentive plan if the buyer want to retain key   managers of the target (check "Executives").

- Anticipate the tax side effects of the transaction on Wealth Tax of both the   seller and the buyer (check  "Wealth tax").

- Consider carefully the registration duties which may vary significantly   depending the acquisition structure e.g. shares of a corporation or shares   of a partnership, shares of a "real estate" company, securities listed or not,   agreement signed in France or abroad (check "Facts and figures").

- Transfer pricing rules must be carefully reviewed in case of cross border   acquisition  (check "Transfer pricing").