Corporate Reorganizations: Structuring Internal Mergers, Asset Transfers

Description

There are a variety of ways to approach a corporate reorganization. The selected method will depend on the desired goals of the company, the state laws which govern its entities or assets, the impact on its employees, and the tax ramifications of the reorganization, among other factors.

An acquisition or merger also often involves transferring employees from one entity to another. Some may be terminated, and others may continue on with the acquirer, and there may be tax considerations as to payouts related to vesting of the equity or other payments in the transaction.

Several issues should be considered upfront. Shareholder approval and board approval as well as third-party consents (for the transfer of IP rights, for example) may also be required as a part of the transaction.

Section 368 of the IRC provides for tax-free reorganizations when structured under its provisions. Tax counsel should be involved in any reorganization to minimize tax consequences and preserve tax attributes. The issues are particularly complex, and counterintuitive, when stock or assets move across borders.

Listen as our authoritative panel discusses the multifaceted issues companies and their counsel must navigate in planning and implementing corporate reorganizations.