Deal structuring considerations when dating, expert answer
Considerations for foreign bidders targeting Brazilian entities
Common Equity 3, Long-Term Debt 2, Total Liabilities 5, Private Company Valuation Ch. Avoids transfer taxes, requires consents to assignment, and potentially dilutive to acquirer shareholders.
Buyer can elect to have a taxable stock purchase treated as an asset purchase and acquired assets increased to FMV. Taxes must be paid on any gains on acquired assets.
Acquirer and target shareholder approval required in most states; dissenting shareholders may have appraisal rights. Using the data on the following table, fill in the blanks containing question marks to show the deal could have been presented for financial reporting purposes.
Current Liabilities 3, A portion of the original company is separated from the parent, and shareholders in the original company may exchange their shares for shares in the separated entity.
Explain how tax considerations affect the deal structuring process? No asset writeup; consequently, tax attributes transfer to acquirer subject to limitation.
Discounted Cash Flow Valuation Ch. Flexible form of payment as little as half of the purchase price may consist of acquirer non-voting or voting stock.
Deal Structuring and Financing Part V: Total Equity 4, Continued involvement intended to demonstrate long-term commitment by acquiring company to the target.
No new firm created. Intellectual property and contracts transfer automatically; may insulate acquirer from target liabilities and avoid acquirer shareholder approval.
Topical M&A Videos
When does it make sense for a buyer to use a Type A reorganization? Acquirer and Target companies reach an agreement to merge. Relative Valuation Methodologies Ch.
To provide students with knowledge of — Purchase acquisition method accounting used for financial reporting purposes; — Goodwill and how it is created; and — Alternative taxable and non-taxable transactions.
Structuring the Deal Tax and Accounting Considerations
Long-Term Assets 5, Goodwill is an accounting entry equal to the difference between purchase price and the fair market value of net acquired assets. Both the parent and the entity to be spun-off must have been in business for at least five years prior to the spin-off.
Bankruptcy and Liquidation Ch.
Alternative Business and Restructuring Strategies Ch. Suitable for target shareholders with large capital gains and therefore willing to accept acquirer shares to avoid capital gains taxes triggered in a stock for cash sale.
However, as target eliminated, nontransferable assets and contracts may be lost.
The original company ceases to exist, and one or more new companies are formed from the original business as original shareholders exchange their shares for shares in the new companies.
Consider the factors that make a transaction taxable or non-taxable.
How might the buyer structure the transaction in order to avoid EPS dilution? Tax and Accounting Considerations One person of integrity can make a difference, a difference of life and death. To provide students with knowledge of how accounting treatment and tax considerations impact the deal structuring process.