U.S. Tax Due Diligence

​Besides the Financial Due Diligence, we commonly perform a Tax Due Diligence of the Target Company in both Share Deal and Asset Deal situations. U.S. tax laws, divided into Federal and State Taxes, tend to be complex, and the Target Company may not have been subject to regular tax audits in the past.

Our U.S. Tax professionals are experienced in identifying tax risks prior to the Purchase Agreement preparation, so that adequate protection can be negotiated. Potential risks are primarily related to federal and state income tax, personnel-related tax, and sales and use tax. As an example, the requirement to file state tax returns can already be met by having activities in a respective state that may be construed as minor from a business perspective, but nonetheless give rise to tax reporting obligations in a given jurisdiction.

Mitigating identified tax risks for the future is regularly a task of the Post-Transaction Integration Phase and is based on the findings of the Tax Due Diligence.

The determination of the Transaction Structure is typically both tax and legal driven and often agreed in the initial Letter of Intent. Therefore, we can tailor our due diligence scope to the contemplated Structure.

For Canadian Tax Due Diligence Projects, we usually refer to our Canadian cooperation partners, with whom we have worked on a multitude of deals in the past. We routinely perform the Financial Due Diligence while our cooperation partner is engaged for the Canada Tax Due Diligence.