What happens when an M&A deal terminates before it reaches its conclusion? Whilst economically the deal might unwind as if it never existed, the tax treatment is unlikely to be that simple. You could have two deals: a transfer one way, and a transfer back. Or more complex interim measures that have to be concluded. And if money changes hands on termination, it might be payment for a buy-back, payment for transitional services rendered, payment for the right to terminate, or something else entirely. Every deal will be different, but at a basic level one will need to distinguish what happens commercially, legally, and for tax purposes.
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What happens when an M&A deal terminates before it reaches its conclusion? Whilst economically the deal might unwind as if it never existed, the tax treatment is unlikely to be that simple. You could have two deals: a transfer one way, and a transfer back. Or more complex interim measures that have to be concluded. And if money changes hands on termination, it might be payment for a buy-back, payment for transitional services rendered, payment for the right to terminate, or something else entirely. Every deal will be different, but at a basic level one will need to distinguish what happens commercially, legally, and for tax purposes.
If you are not a subscriber, subscribe now to read this content.
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