Tax Due Diligence/Structuring
Kroll's tax due diligence and structuring group has extensive experience in evaluating and structuring transactions from a tax perspective. Duff & Phelps acquired Kroll in 2018 and unified under the Kroll brand in 2022.
Our tax team has strong technical and industry experience, which allows us to provide “real-time” feedback regarding any potential tax issues or deal breakers. We ensure that senior level tax professionals are involved with the day-to-day aspects on every tax project, providing clients with the highest level of attention.
We create unique tax structuring opportunities that are not typically known or utilized by other providers, which has resulted in substantial savings to our clients. In addition, we have flexible fee arrangements that help add value for clients. We prepare comprehensive and easy-to-understand tax models, which enable effective negotiation of tax structuring items.
Our fully integrated tax team works closely with other due diligence streams and service providers (e.g., legal, financial, IT, etc.) to maximize outcomes for our clients.
Tax Due Diligence Key Services
- Understand the Target’s existing tax structure, as different legal entities can have an impact regarding the tax due diligence procedures performed
- Understand the expected transaction structure, as the transaction structure can impact the procedures performed and the overall risk of historical tax liabilities
- Provide a comprehensive review of the Target’s historical income tax and non-income tax (i.e., payroll tax, property tax, sales/use tax, and unclaimed property) compliance and identify any historical tax exposures
- Analyze current tax reserves (including FIN 48 posture) for any tax contingencies
- Identify tax “deal breakers”
Key Tax Due Diligence Differentiators
- Dedicated tax team with strong technical and industry experience (all with Big Four experience)
- Ability to create savings in property taxes, escheat/unclaimed property, payroll taxes, and incentives, which can enhance a Company’s cash flow and EBITDA (as these taxes are not added back or deducted from that benchmark)
- Senior level tax professionals involved with day-to-day aspects on all engagements
- Provide “real-time” feedback regarding any potential tax issues or “deal breaker”
- Ability to assist with post-close mitigation and/or resolution of tax issues identified during the tax due diligence process
- We have an international network of tax due diligence and valuation specialists (in over 100+ non-U.S. jurisdictions) that allow us to execute large cross-border deals quickly and efficiently
- We work closely together with other due diligence streams (e.g., legal, financial, etc.) to support strong outcomes for our clients
- Our Tax Structuring Services Create Enhanced Value:
- Structure merger and acquisition transactions in a cooperative way to maximize after-tax value for both the buyer and seller
- Capture the value inherent in tax basis step-ups in a way that minimizes or defers a seller’s tax liability (which can potentially reduce the purchase price for the buyer)
- Optimize the impact of entity-level taxation on the buyer and seller
- Evaluate the potential tax benefits of using various acquisition structures (i.e., legal entity structure analysis, modeling the anticipated tax benefits of the contemplated transaction, etc.)
- Model the post-close utilization of the Target’s tax attributes (e.g., NOLs, tax credits, tax depreciation, and amortization)
- Perform an estimate of the potential tax benefit associated with Section 338(h)(10) election, including an estimate of the potential gross-up payment required from the buyer to the seller
- Analyze the tax consequences associated with management/executive compensation payments pursuant to a change-in-control (e.g., analyzing the application and effects of IRC Section 280G)
Key Tax Structuring Differentiators
- Our tax structuring services create unique opportunities that are not typically known or utilized by other providers, which has resulted in substantial savings to our clients
- We prepare comprehensive and easy-to-understand tax models, which enable effective negotiation of tax structuring items
- We work closely with the buyer’s and seller’s advisors to ensure timely resolution of tax issues
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