Structuring

Question 1

What points would you need to consider if you were advising a client on a carve out of part of a business?

Answer 1

1 - transaction perimeter

—> establish the transaction perimeter
—> identify legal entities (target & divested business)
—> identify assets and liabilities (target & divested business)

2 - shared services or dependencies

—> identify any business relationships (target & divested business)
—> check need for any TSAs (eg re accounting, HR, IT)

3 - regulatory / third party consents
—> identify

4 - pricing

—> check if standalone financials
—> if not, likely pricing balance sheet required

5 - tax

—> need tax advice
—> identify preferred structure for extracting target business and packaging it for the buyer

Not checked

Question 2

What are tax points to consider when advising on the structure of a transaction?

Answer 2

1 - debt
—> cancelling/releasing/transferring at a discount
—> equal give and take

2 - taxes
—> minimising transfer & ongoing taxes
—> efficient income flows

Not checked

Question 3

What are issues to issue spot for when advising on the structure of a transaction?

Answer 3

1 - debt
—> moving debts around the group
— > set-offs and mutuality between the parties

2 - dividends
—> requirements for payment of dividends
—> disguised distributions (book vs MV transfers)

3 - consents / approvals
—> third party, SH, regulators, banks etc

3 - sequencing

Not checked