Commercially Reasonable Debt Opinions
Kroll Corporate Finance advises companies as to whether the economic terms of their intercompany debt are commercially reasonable. In 2018, Duff & Phelps acquired Kroll and unified under the Kroll brand in 2020.
Contact UsExplore Fairness and Solvency Opinions
Companies issue debt securities to related parties for numerous reasons. It is critical that such debt is respected as debt by tax authorities. One key factor in assessing if an intercompany debt should be characterized as debt for tax purposes is whether or not the terms of the debt are “commercially reasonable”, defined as being substantially similar to the terms to which an unrelated third party bargaining at arm’s length would reasonably be expected to agree.
Kroll’s advice can cover the amount of the proposed leverage in the capital structure, the interest rate on the debt, and the other economic terms of the debt security. In addition, Kroll is often requested to provide a financial opinion regarding the commercial reasonableness of the economic terms of the debt and the leverage in the company’s capital structure.
The following are typical transactions for which Kroll has been engaged to provide advice and opinions with respect to intercompany debt:
- Multi-national companies utilizing intercompany debt in cross-border acquisitions or in recapitalization or restructuring transactions
- Current equity holders of a company providing additional capital in the form of debt
- Canadian Income Fund offerings and other similar transactions
For nearly 15 years, company management, boards of directors, trustees of income funds as well as tax attorneys and tax advisors have relied on Kroll’s advice and opinions to support their view that an intercompany debt security should be characterized as debt for tax purposes.
Connect with us on LinkedIn
Kroll Corporate Finance and Restructuring is now on LinkedIn. Connect with us for the latest insights on investment banking, corporate finance, restructuring and insolvency solutions.
Connect with us
Explore areas we can helpStay Ahead with Kroll
Fairness Opinions
#1 ranked provider of fairness opinions for boards of directors and special committees.
Solvency Opinions
Duff & Phelps Opinions practice helps boards of directors and special committees formed by boards fulfill their fiduciary responsibilities when considering many corporate transactions. In 2018, Duff & Phelps acquired Kroll and unified under the Kroll brand in 2020.
Food and Beverage M&A Industry Insights — Fall 2023
Nov 21, 2023
by Bob Bartell, CFA, Josh Benn, Mark Kramer, Devin Kennealy, Howard Johnson, Stephanie Lau, Farzad Mukhi, Jennifer Terrell, Jon Pratt
ESMA's Common Supervisory Action on Valuation: What Investment Manager Need to Know
Nov 08, 2023
by Tiago Caldeira
Special Purpose Acquisition Companies—Half-Year 2023 Highlights
Nov 08, 2023
Kroll Advised the Special Committee of the Board of Directors of Seaboard Corporation in Connection with Seaboard's Share Repurchase Transaction and Provided a Fairness Opinion to the Special Committee and the Board
The Duff & Phelps Opinions Practice of Kroll Rendered a Fairness Opinion to Andretti Acquisition Corp. in Connection with Its Proposed Merger with Zapata AI
The Opinions Practice of Kroll Rendered a Fairness Opinion to Pathfinder Acquisition Corporation
Dating App Grindr Is Set to Go Public Via a De-SPAC Transaction Valued at $2.1 Billion. Our Opinions Practice Rendered a Fairness Opinion to Tiga Acquisition Corp. in Connection with Its Proposed Merger with Grindr Group, LLC.
Our Opinions Practice Rendered a Fairness Opinion to the Board of Managers of the Bardstown Bourbon Company on Its Sale to Pritzker Private Capital
Our Opinions Practice Provided a Fairness Opinion to LAACO, Ltd., in Connection With Its Sale to CubeSmart for Approximately $1.7 Billion
Kroll Advised the Special Committee of the Board of Directors of Seaboard Corporation in Connection with Seaboard's Share Repurchase Transaction and Provided a Fairness Opinion to the Special Committee and the Board
The Duff & Phelps Opinions Practice of Kroll Rendered a Fairness Opinion to Andretti Acquisition Corp. in Connection with Its Proposed Merger with Zapata AI
The Opinions Practice of Kroll Rendered a Fairness Opinion to Pathfinder Acquisition Corporation
Dating App Grindr Is Set to Go Public Via a De-SPAC Transaction Valued at $2.1 Billion. Our Opinions Practice Rendered a Fairness Opinion to Tiga Acquisition Corp. in Connection with Its Proposed Merger with Grindr Group, LLC.
Our Opinions Practice Rendered a Fairness Opinion to the Board of Managers of the Bardstown Bourbon Company on Its Sale to Pritzker Private Capital
Our Opinions Practice Provided a Fairness Opinion to LAACO, Ltd., in Connection With Its Sale to CubeSmart for Approximately $1.7 Billion