Mergers & Acquisitions Services

One of the most significant costs when buying or selling a company is the tax cost. Planning in advance of a transaction allows for identification of possible tax-reduction strategies, which can lead to greater cash flow for the business owners.

At Drucker & Scaccetti, we focus on Tax As A Business Strategy^®. The decisions you make as you buy or sell a business often have nuanced or unforeseen tax consequences. Having the tax professionals at Drucker & Scaccetti on your side as you buy or sell your business can help you uncover tax-saving and cash flow opportunities at each step of the process: from financial and tax structuring and planning before a buyer is identified, through reviewing financial terms of the legal documents (including working capital requirements, agreement of sale, and Letter of Intent) and finishing with assisting with post-closing accounting and filing the income tax returns to report the transaction.

We work with your existing team (usually an in-house accountant, broker, and transaction attorney) to reduce risk and advise on the tax and financial implications of the deal. Our unique in-depth knowledge of the intersection between tax, law, and accounting can help identify planning opportunities, often resulting in greater cash flow from the transaction.

Drucker & Scaccetti has a dedicated Mergers & Acquisitions team that focuses on the cash flow and tax impacts of buying or selling a middle market private business. Our services include:

• Working as part of your team to provide tax and cash flow computations and highlight potential savings
• Analyzing company balance sheet, income statement and cash flow reports for presale distributions working to improve the tax impact to the seller/cash flow
• Offering a preliminary business valuation for planning purposes if needed
• Creating cash flow and sale projections for potential or actual sales and communicating potential planning opportunities
• Reviewing purchase agreements for financial implications and providing guidance to improve cash flow
• Analyzing proposed changes to an agreement of sale, Letter of Intent (LOI), or structure of the sale to determine the tax cost and impact to cash flow
• Preparing or reviewing of the entity and individual tax returns for the year of sale to ensure the sale is being reported correctly and determining if there are tax saving opportunities within the reporting framework

The Tax Warriors® at Drucker & Scaccetti have provided their expertise to sales ranging from $12M to $500M, in a variety of industries from service companies to manufacturing companies, and covering a wide breadth of issues, including working capital, F reorganizations and Section 338(h)(10) elections.

A few examples of transactions The Tax Warriors have assisted with include:

• Provided tax and cash flow projections and planning for $265M multi-company sale, including comparison of asset vs. stock sale and providing gross-up computations of additional proceeds needed to equalize seller for buyer-requested change to sale structure.
• $16M manufacturing company sale, where we did a deep dive into the LOI and purchase agreement language and were able to provide tens of thousands of dollars in tax savings by proposing changes to certain terms in the agreement. We also successfully proposed writing off certain worthless assets to provide a very generous tax benefit to seller.
• Analysis of a potential target company’s financials and, through our cash flow analysis, provided the buyer (our client) with the data it needed to determine the sale was not beneficial and to pursue a different target.
• $12M sale of a services company, where our successful advocacy for a change in the definition of working capital saved the client over $80,000.
• Review of a purchase agreement led us to discover a discrepancy between the definition of working capital and purchase price, saving the seller over $300,000.
• Review of a draft tax return reporting a sale prepared by another accountant and identified an error in the state allocation, saving the seller almost $130,000 in tax.

Call on us today to arrange a consultation where we can learn about your situation and describe in more depth the value our team can bring to your transaction.

ARTICLES BY THE TAX WARRIORS:

November 2019 - M&A: Things Sellers Should Not Overlook

October 2018 - Keep Your Eye on the Exit

August 2017 - Selling a Family Business? Set up a Family Office First!

WEBINARS & PODCASTS:

Cash Flow Impact of M&A - XPX Exit Planning Exchange - Recorded June 19, 2020