Buying and selling a business is one of the most difficult decisions an owner or executive can make in the lifespan of their Company or career. At Hall & Company, through our Directors and Principals collective experience, we have consulted on and/or been a part of hundreds of merger & acquisition (M&A) transactions. The breadth of the services offered include general consulting on the transaction, tax structuring of the transaction and the ongoing tax impacts, and buyer and sell side due diligence through informal and formal engagements such as a quality of earnings report. Our relationships with private equity groups, investment bankers, valuation firms and other service providers gives our clients a valuable, integrated approach to serve their M&A needs.
Consulting on an M&A transaction starts with a conversation. Most of our initial consultations with a prospective client are complimentary. The consultation is a discussion to set out strategic objectives and paint a picture of what the end result will look like to the client – and which island to buy and retire to. Objectives are not always the same. Some clients want tax effective strategies while others are more worried about continuing a legacy with family members or key employees. No matter the objective, we’ve been there and done that and can help put a plan in place to get you there.
For those clients where tax structuring is important, which is most, we will work with you, based on your strategic objectives to put in place the most effective and efficient tax planning.
Due Diligence and Quality of Earnings
Have you ever heard the phrase “kick the tires”? Whether buying or selling a business its best to know where the “bodies are buried” and streamline the business operations on what will matter to a prospective buyer or seller.
For anyone selling a business, we always recommend at least an informal review of operations with our team or a formal quality of earnings engagement. As a seller, this engagement helps focus your executive team on what’s going to be important to a potential buyer and identify potential areas of weakness and improvement up front before you go to market which helps obtain a higher purchase price and reduces headaches. The value in this engagement is immense and can increase the purchase price of a transaction and avoid those last-minute surprises. The report can also reduce the level of work and due diligence a prospective buyer will conduct in their process reducing the time needed from a letter of intent to a close. As the saying goes, “time is money”.
For those buying a business, we always recommend a quality of earnings report. Let us help you “kick the tires” of your potential business opportunity. Buying a business is overwhelming and who knows where the risks are. Our quality of earnings engagements are customized to your needs and the business target to both be fee efficient and to focus on what’s important or of value to you as the purchaser. The engagement will help the buyer with negotiations when its time to settle on pricing and terms, or, in some cases, when its time to walk away. As a buyer, you should always want to know what you are getting into and make sure you’re paying the right price for your new opportunity.
Working With Experts
Finding the right business partner for your company can be a difficult task. At Hall & Company, we assist you in the merger and acquisition (M&A) process by assessing critical elements, such as tax considerations, product/service compatibility, competitive tactics and position, financial impact, and issues surrounding cash flow. In the last few years alone, we have seen a spike in prominent companies complete huge M&A deals.
What is the difference between Acquisitions and Mergers?
An Acquisition typically is when one company buys a major chunk of another business. Usually the acquired company retains its own name or assumes that of the purchasing company. Where as a Merger is the birth of an entirely new business entity. The companies merging together are usually about the same size and act as equal partners.
If I am participating in M&A, what does the IRS need from me?
First you must report the transaction to the IRS, failure to do so will result in in an audit. If the sale involves a business asset, you must report the purchase price to the IRS. Both companies must attach the IRS Form 8594 the “asset Acquisition Statement”