Tax Considerations in Negotiating, Structuring, and Documenting M&A Transactions

Stock Sales Versus Asset Sales, Taxable Deals Versus Tax-Free Reorganizations, Earnouts, Potential Impacts of Tax Legislative Changes, and More

Note: CPE credit is not offered on this program

Recording of a 90-minute premium CLE video webinar with Q&A


Conducted on Wednesday, March 31, 2021

Recorded event now available

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Course Materials

This CLE course will provide an advanced discussion of tax considerations deal attorneys must consider when negotiating, structuring, and documenting M&A deals. The panel will discuss key issues relevant to stock sales versus asset sales, stock purchases with a Section 338 election, taxable transactions versus tax-free reorganizations, earnouts and other deferred payments, and other related issues. The panel will also consider the impacts of potential legislative changes, including to the corporate tax rate and capital gains rates.

Description

Tax consequences are a crucial factor impacting the negotiation, structure, and documentation of M&A deals. Deal counsel advising buyers and sellers must understand the tax ramifications of a planned transaction at the outset to negotiate and structure the deal in the most tax efficient manner possible.

Practitioners must consider a broad spectrum of buy- and sell-side issues, including evaluating the benefits and risks of a stock sale versus asset sale and determining whether to structure the deal as a taxable or tax-free transaction or reorganization. Counsel must also weigh the tax implications involved in structuring earnouts and other deferred payments connected with an M&A transaction.

When drafting the purchase and sale agreement and other deal documents, counsel must be careful to reflect their respective client's intent regarding tax outcomes and include tax indemnification provisions to protect their interests.

Listen as our panel of experienced tax attorneys outlines and analyzes the wide range of tax issues to consider from the buyer and seller perspectives when negotiating, structuring, and documenting an M&A deal.

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Outline

  1. Overview of tax considerations for buyers and sellers in M&A transactions
  2. Common transactional patterns
    1. Taxable sale of corporate stock
    2. Taxable sale of corporate assets
    3. Taxable corporate stock sales treated as asset sales (Section 338 of the Code)
    4. Taxable acquisitions of S corporations or of C corporations with NOLs
    5. Taxable sales involving partnerships/LLCs
    6. Non-taxable reorganizations (under Section 368 of the Code)
    7. Non-taxable contributions (under Section 351 of the Code)
    8. "UP-C" structures
  3. Tax considerations with earnouts and other deferred payments
  4. Evaluating the potential benefits associated with net operating losses or transaction tax deductions
  5. Best practices for drafting tax provisions in the deal documents
  6. Potential implications of tax legislative changes

Benefits

The panel will review these and other relevant issues:

  • The benefits and risks of a stock sale versus an asset sale
  • Critical factors in determining whether to structure a deal as a taxable or tax-free transaction
  • Principal concerns in structuring earnouts and other deferred payments in connection with an M&A deal
  • Best practices for drafting tax provisions in documentation
  • The implications of potential tax legislative changes, including to the corporate tax rate and capital gains rates

Faculty

Mathieu, Kate
Kate L. Mathieu

Attorney
Skadden Arps Slate Meagher & Flom

Ms. Mathieu advises public and private companies on a broad range of U.S. federal income tax matters, with a particular...  |  Read More

Schockett, Paul
Paul Schockett

Partner
Skadden Arps Slate Meagher & Flom

Mr. Schockett advises public and private companies on a broad range of U.S. federal income tax matters, with...  |  Read More

Strong2, David
David (Dave) Strong

Partner
Wilson Sonsini Goodrich & Rosati

Mr. Strong’s practice is focused on mergers and acquisitions, joint ventures, private equity and venture capital...  |  Read More

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