Corporate acquisitions

Pre-deal

Buyer due diligence

When planning the purchase of a corporation, it is necessary to investigate how tax matters in the target have been carried out and whether any tax risk or tax advantages come with the target as these always affect the sales price and clauses of the sales contract. We assess buyer due diligence and provide a report in which we describe potential risks and advantages of the target and provide our recommendation as to how these facts must be taken into account in contract negotiations.

Structuring of the buyer

Various things must be evaluated before the sale, such as the suitable procurement structure, how the financing will be carried out and whether a new company will be established for the trade or whether an old company will be used, as well as what company is the most appropriate one to execute the acquiring. The tax impacts of each option must be evaluated and taken into account in decision-making. Together with you, we will plan the appropriate procurement structure and steps in order to carry out the acquisition.

Execution

Advise on the sales contract

In the sales contract of a corporate acquisition, it must be stipulated how the responsibilities and obligations of the seller and buyer are determined with regard to the tax matters of the target.

We examine the sales contract from the tax viewpoint and provide our recommendation for appropriate tax clauses as well as how the possible observations found in the due diligence report, such as tax risk and tax advantages, must be taken into account in contract negotiations.

Advise on the Transfer Tax Form

Transfer tax is in principle collected from the sale of Finnish securities or immovable property, however many exceptions and special provisions apply to this. In connection to the corporate acquisition it must be clarified how the transfer tax base is determined and when e.g. potential debt of the target must be included in the tax base. PwC has vast experience on various transfer tax questions related to corporate acquisitions and we advise our clients on a continuous basis regarding the matter. We assist in determining the tax base, in calculating the tax and in drafting and filing the transfer tax return.

Planning the Financing Structure

Will the acquisition be financed with equity or through debt and in what proportion? For which company is it most viable to take out a loan and will the loan be taken within the group or from a bank? How are dividends paid on equity and interest paid for debt treated in taxation and do any exceptions apply? These questions must be addressed when planning the financing structure. We assist in clarifying the tax impacts of the various models and finding the optimal solution.

Funds Flow Analysis

Through cash flow modelling, the various cash flows relating to the execution of a transaction can be described and thus, all the parties to the transactions, investors included, have a clear vision of where the funds are coming from, what they are needed for, how they are used and to whom they are paid. We provide a modelling of cash flows in order for you to ensure that the funds will be paid to the correct recipient on time.

Post deal and integration

Post Deal Action

During the corporate acquisition process and tax due diligence various tax risks, potential tax advantages and other tax questions that require taking care of often arise. These can be various necessary registrations, applications, notifications or larger actions required for target integration. In addition, it must be taken care of that in the future tax returns are filed on time and with correct values. Additionally, possible transfer pricing documentation must be updated to correspond to the new structure and with regard to this, it may be necessary to also update value chain analysis. We comprehensively assist you in all taxation matters following the corporate acquisition in order to ensure that all necessary action is appropriately carried out and the structure is functional also in the future from the tax point of view.

Restructuring

After the sale it must be assessed what the most appropriate form for operating business is, taking into account the purchased target and its existing form. Sometimes it may be necessary to divide the existing company into two or more, corporatize the business into its own corporation or take care of the refinancing of the business. Together with you, we will plan the appropriate structure with regard to the future as well as the necessary actions in order to reach the wanted structure.

Exemption application for tax losses

When over half of the shares or interests of the company have changed ownership, the losses in the corporation’s taxation can no longer be deducted. Correspondingly, if a change in ownership is deemed to happen in a company owning at least 20% of the shares or interest of another company, a change in the ownership of the shares of the latter company is deemed to have taken place. In this case however it is possible to apply for a special exemption in order to deduct the losses in spite of the change in ownership. PwC has extensive experience in exemption applications. We will figure out whether the conditions for granting a special exemption exist, and if they do, we will draft the application and deliver it to the Tax Administration.

Services related to IPOs

When an IPO of a company is being planned out it is important to ensure all tax matters have been taken care of appropriately, and that the company meets the requirements and expectations of a listed company. We clarify the tax risks and tax advantages related to the company as these can affect the value of the company, and make our propositions for the possibly necessary remedial actions to take place before the IPO.