The deal structure in an M&A transaction is the collection of terms and conditions that encompass the deal. Three traditional ways of structuring an M&A deal are through an asset purchase, a stock purchase, or a merger. The preferred deal structure is usually agreed to in the Letter of Intent. Once due diligence is complete, …
Category: Tax and Legal
Be Specific About Price In the Letter of Intent
Don’t rush to get a signed letter of intent (LOI) by kicking the can down the road on price. A signed LOI is a significant milestone in the M&A process, indicating mutual interest in an acquisition. The document covers the basic parameters of the deal that both buyer and seller agree to including what will …
What Not to Include in the Letter of Intent
A letter of intent (LOI) is one of the most commonly used tools for moving a deal forward. The LOI outlines the basic parameters for an acquisition including the period of exclusivity, purchase price and consideration, preferred deal structure, and expiration date. The LOI is your chance to communicate the strategic value of an acquisition …
How Will Changes to Tax Policy Affect M&A?
Cash of US non-financial companies has reached $1.9 trillion, a 10 percent increase from 2016, and it is estimated that $1.1 trillion will return to the US if a tax holiday is granted under the Trump administration. Alexander Lee, a leading Tax Attorney and Partner at McDermott Will & Emery, recently commented on this topic …
3 Ways to Maintain Momentum from LOI to Close
After signing a letter of intent, you expect the deal to close, but there are a number of reasons acquisitions fail ranging from regulatory hurdles to unexpected challenges that arise during due diligence to cultural clashes. In my last post, I discussed reasons deals fall apart even after both parties sign a LOI. Here are …
Pfizer and Allergan Break Up: Lessons in Staying Ahead of M&A Hazards
Pfizer and Allergan have announced that they are abandoning their $160 billion merger. This resulted from a political storm around tax inversions, a technique whereby US companies relocate abroad to avoid the high US corporate tax rates. The Treasury department took action to insert new rules that effectively killed the financial benefits of the deal. …
The LOI Audience: More than Just the Owner
Do you know who will read your letter of intent? Many assume that only the owner of the company you wish to purchase will read the LOI, but often there’s a wider audience. While the owner is your top priority, there are other likely readers of the LOI you need to consider: the board of …
Buyers vs. Sellers: Strategies for Agreeing on Deal Structure
If buyers want asset purchases and sellers want stock purchases how do the two ever come to an agreement? Leading Tax Attorney Alexander Lee of Paul Hastings, answered this question in our webinar “Tax Considerations for M&A.“ There are several factors that are important when the buyer and seller discuss deal structure. Specify Deal Structure in …
Tax Inversions: Foreign Acquisitions for a Lower Tax Rate
As tax day approaches in the U.S. I thought it’d be appropriate to discuss a business tax trend. As you may be with your own return, U.S. corporations are looking for more tax advantages. Many are seeking tax inversions, where they reincorporate in a new country with a lower tax rate as a result of …
To Shop or Not to Shop?
I typically advise my clients to have a binding no-shop in the Letter of Intent. This will ensure that the seller cannot try to find a better deal somewhere else, once the LOI is signed. Sellers may insist on including a go-shop clause, which provides a certain period of time (usually around 50 days) to …
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