The pre-deal stage of mergers and acquisitions (M&A) arguably has the most bearing on the final value of a deal. Along with operations and finance, tax too is a critical determinant of the payoff of the deal. Effective tax strategies maximize deal value by mitigating tax risks and minimizing tax exposures while ensuring that business objectives are met. Due diligence, whether of buyer or seller, is the key starting point. Next, the transaction being contemplated must be evaluated for tax implications in light of the due-diligence information. Finally, an effective tax strategy then addresses the challenges and exploits the opportunities at the pre-deal stage. In practice, this three-step process is both complex and cumbersome. It may involve both domestic and international tax across two (and sometimes more) parties and needs deep expertise to uncover both hidden risks and opportunities. Constant changes in the tax and regulatory landscape further add to the complexity.
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