Cross Border M&A Related Tax Advice
Circumstances / Situation
A Defence Force Consulting firm was in the process of selling its Australian and US operations to Private Equity. They were taking advantage of the AUKUS partnership. As they were US based,there were a variety of tax issues impacting how the sale might occur to ensure they retained an ownership stake. Requiring help with tax and their M & A transaction, this was their first sale transaction dealing with a sophisticated private equity purchaser.
Solution
Providing up-front tax advice, we detailed how the business could be sold tax free under the US Double Tax Agreement with Australia. We then advised on other potential tax outcomes, peculiar to this cross-border deal, including on earn-outs and any scrip that might be retained. Together with their US advisors, advice was also provided on the final after tax outcome in the US.
Other work included assisting with calculations and changes to the term sheet in their favour and then in the later contracts. We also prepared modelling around working capital and net debt calculations through to agreeing completion accounts with the vendors. Due to our experience in M & A transactions we could work with ownership and their legal advisers to deal with virtually any scenario.
Outcome
Tax liabilities were reduced on sale to $nil in Australia and a better overall outcome was achieved in dealing with a sophisticated purchaser. We were able to provide peace of mind due to our experience in this type of transaction, providing an experienced sounding board no matter what issue arose.
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