Mergers and Acquisitions Tax Services

Navigating the complex landscape of tax considerations in mergers and acquisitions demands expertise and precision. Kroll’s M&A Tax Services offer a comprehensive suite of solutions designed to help businesses unlock value, mitigate risks, and ensure compliance during these transformative transactions. Whether on the buy-side, sell-side, or addressing post-close challenges, Kroll’s specialists bring unparalleled experience to guide clients through every tax-related aspect of the deal. - intro section for M&A tax page

Service Offerings

• Tax Due Diligence - Whether acquiring or divesting of a business, understanding tax risks and opportunities is essential to facilitate full value creation from the M&A event. Kroll M&A Tax specializes in tax due diligence across industry verticals, with a focus on middle market transactions, and a scalable solution to meet the needs of large platform acquisitions, small add-on transactions, or businesses preparing for exit.


• Tax Structuring - Kroll structures buy-side transactions to maximize Tax Shield or post-close tax risk mitigation, and assists sellers in achieving tax efficiency from the exit of a business. Kroll M&A tax professionals bring experience from thousands of transactions to deliver the right solution tailored for the situation.


• Tax Shield / Attribute Modeling - Buyers can acquire significant incremental value in the form of future deductions against taxable income, often referred to as the “Tax Shield.” This can take the form of a “step-up” in the tax basis of a target company’s assets, or the acquisition of tax attributes such as net operating losses. Buyer’s need to understand the magnitude of the potential Tax Shield, and sellers can maximize value of the business at exit by articulating the Tax Shield value to a potential buyer. Kroll M&A Tax can estimate and model the potential value of the Tax Shield or tax attributes.


• Post-Close Tax Risk Mitigation - Kroll can assist with post-close remediation or correction of tax risks or exposures. This includes assistance with voluntary disclosures (VDAs) or tax amnesty programs, amended tax returns, accounting method changes and other remedial actions to mitigate downside risk and eliminate adding to exposures post-close.


• Tax Purchase Price Allocation & Deferred Tax Analysis (ASC 740) - In transactions with many complex economic components and sophisticated legal structures, determining the total consideration for tax purposes and the tax purchase price allocation can be difficult and unintuitive. Kroll’s M&A Tax team has the experience and specialized knowledge to accurately and timely determine the tax purchase price allocation and related tax reporting. Kroll can also assist in measuring and reporting deferred income taxes under ASC 740 acquired in a transaction.


• Sec. 382 Change in Control Limitations - Acquiring a corporation with federal or state net operating losses requires the buyer to understand the implications of Sec. 382, which can limit the acquirer’s use of the net operating losses after a change in control. Sec. 382 can also apply to shifts in ownership over time that might cause a cumulative shift of more than 50% of a corporation’s ownership without a single defining acquisition event. Kroll’s M&A tax team is experienced in navigating these complexities and can offer solutions to measure and mitigate the downside of a Sec. 382 limitations.


• Transaction Cost Analysis - Stakeholders often incur significant transaction expenses to consummate an M&A transaction. The tax rules regarding deductibility of these expenses can be complex and nuanced. Often a significant portion of these costs are required to be capitalized and may never be deductible for tax purpose. Kroll’s M&A tax team has the technical depth and experience to analyze what costs may be deductible, minimizing capitalization and assisting clients with the complex rules and reporting requirements.


• Sec. 280G “Golden Parachute Payments” - Corporations undergoing a change in control must consider the applicability of Sec. 280G, also known as the “Golden Parachute Payment” rules. Payments made in connection with the transaction may be non-deductible and the recipient may be subject to a 20% excise tax. Kroll can analyze whether payments are subject to these rules, and can help provide solutions to mitigate or eliminate downside to the company and recipient.