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Profound technological changes are occurring in today’s global marketplace at lightning-quick  speeds. Even for those companies that prefer to grow organically, under pressure to innovate and adapt, such companies often find that the need to remain competitive may require them to acquire, merge or consolidate. Much of our careers has been spent on mergers and acquisitions of corporate and other entities, representing public and private clients both on the buy-side and the sell-side of these transactions. Our experience and practice mirror the fact that M&A transactions in the global economy rarely respect country borders, but rather involve subsidiaries and operations in multiple jurisdictions.  Working with local counsel, we have represented clients in M&A transactions involving companies around the world, including throughout the United States, Western and Eastern Europe, Israel, Japan, Russia, Australia and China.

 

Any border crossing ­– whether in-bound to the United States or outbound from the United States –requires careful consideration of tax consequences.  When structuring a merger, acquisition or other strategic partnering arrangement, a company should consult tax counsel in the relevant jurisdictions from the very outset of the transaction.  For example, one of the most important decisions in structuring an acquisition or divestiture is whether the transaction will be a stock or asset deal.  In addition, some M&A transactions may be structured as tax free in the United States, depending on what may appear to be minor differences in how the transaction is structured.  If non-U.S. acquirers expect to receive a dividend stream from the U.S. target, the transaction should be properly structured to deal with withholding tax requirements.  Ignorance or neglect of these issues can have serious tax consequences that can not only impact the parent company but also the entire group of companies.  We have counseled numerous clients at the outset of their businesses, and as they expand their operations through the formation of new legal entities, acquire other companies, or enter into strategic partnering arrangements with other market participants. Most clients have the most flexibility, and the legal solutions tend to be the least costly early on; on occasion we see transactions derail or value lost due to lack of planning or early advice.

 

A company’s core competence and strategic objectives change over time, and a company may find it to be advantageous to acquire or divest a subsidiary or division.  When some but not all resources of a company are to be acquired, close attention must be paid to identifying the parts integral to the purchaser’s needs, ensure that the parts severed from the seller company can operate on a stand-alone basis without any parts that were previously shared with the seller, that the liabilities associated with the severed and remaining assets are equitably allocated between the purchaser and seller, and that adverse tax consequence are not triggered by the separation. We have substantial experience in addressing these and other complex issues that arise in acquisitions and divestitures of subsidiaries and divisions.