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Addressing Tax Considerations in an M&A Transaction

Whether you’re the buyer or seller in an M&A transaction, it is important to understand and address the various tax considerations associated with the transaction.


Whether you’re the buyer or seller in an M&A transaction, it is important to understand and address the various tax considerations associated with the transaction. Numerous factors during the buying/selling process will shape the transaction, and without a tax specialist advising you, it is likely you may miss the myriad of important tax issues that are involved.

What You Need to Know

Before any deal between a buyer and seller is structured, it is vital to clarify between each party what form the transaction will take. A stock purchase acquisition has different tax implications than an asset acquisition and will affect how the deal is structured. Another factor is the form of consideration, which may determine whether the transaction is taxable or not. If the consideration is mostly cash or debt, then the transaction will likely be taxable. However, if the payment is made in stock and is properly structured, the transaction may be non-taxable.

Once the type of deal is agreed upon, the next item to address is the deal’s structure, specified in a Letter Of Intent (LOI). It is important the LOI include information regarding the tax consequences of the transaction.

The purchase agreement between the parties should address the allocation of the purchase price to the assets, which may require qualified experts, such as CPAs or other valuation experts, to ensure proper allocation of the purchase price to the assets.

M&A transactions are complex and can lead to unexpected issues, which may have tax implications. At Fraser Trebilcock, we have M&A attorneys with experience in handling transactions for both buyers and sellers.

If you have any questions, please contact Ed Castellani or your Fraser Trebilcock attorney.


Fraser Trebilcock Business Tax Attorney Edward J. CastellaniEdward J. Castellani is an attorney and CPA who represents clients involved with alcohol beverages as a manufacturer, wholesaler, or retailer. He leads the firm’s Business & Tax practice group, and may be contacted at ecast@fraserlawfirm.com or 517-377-0845.