Case Study – Mergers & Acquisition

19th October 2022

Is your business looking to undergo a merger or acquisition? Have you thought about the due diligence process? Concerned about the tax complexities? Don’t panic, the Edwards team are here to help!

We’re experts in business sales, mergers and acquisitions, and we have recently supported our clients with the completion of several business sales worth a total of approximately £200 million.

These merger and acquisition deals mainly existed in the tech, manufacturing, and financial services sectors, with each one being worth approximately £4-10 million, including some multi-year deals reaching £20 million.

Seeking professional advice was key for each of these business sales, due to the risk, complexity and time criticalness involved. Read on for the three main ways our accountants and auditors can help.


1. Due diligence

When it comes to making an informed decision on whether or not to go through with a merger or acquisition, a thorough investigation or audit of both companies’ financial records can help identify merger suitability and manage the risk for both buyer and seller.

We will work on both sides of the deal for our client, ensuring that you get the best value whether you are the target or initiator of the merger or acquisition. We are even able to help you with MBOs, too!

As a buyer, examining the target business’s financial statements and assessing their tax profile, including their tax attributes, compliance position and operating model allows you to gain a clear insight into the company’s financial footing, identify any irregularities in their numbers and spot any potential risks or opportunities.

Here, we will investigate the historic tax exposure of the target company, searching for the previous usage of aggressive tax schemes or breaches of compliance obligations which could reduce the overall purchase price.

However, if you’re selling your company, due diligence is equally as important. It allows you to understand the true value of your company when it comes to merging or being bought by another company.

We would also help to defend your company against investigative attacks from the advisors of the purchaser, preventing any erosion of the deal value.


2. Tax support

Professional tax support is key when it comes to a business merger, acquisition, or restructure, as it can minimise any tax surprises post-sale.

Corporate restructuring can encourage long term value by implementing a tax efficient operating model and financing structure. Tax structuring involves considering any tax implications or liability involved, including:

  • Stamp Duty – when buying another company, all transferring stock and marketable securities (e.g. shares) may be liable for Stamp Duty tax.
  • Corporation Tax – both the buyer and seller can be liable for corporation tax changes on profits.
  • Capital Gains Tax and Income Tax – personal gains made on asset sales (e.g. shares) may be liable for both capital gains and income tax.
  • VAT – applicable to some asset sales.
  • R&D Tax Credits – once acquiring another company, there may be potential for claiming R&D tax credits.

However, if the companies involved are both corporations, the tax issues involved can be different. By checking with a professional, you and your business can decide whether to structure this as a tax-free transaction.


3. Corporate finance

Finally, seeking professional support throughout the transition can help provide an experienced voice and enable a smooth process. Mergers and acquisitions both pose their own legal and financial nuances that can easily be overcome with the help of experienced professionals.

Whether you need additional funds for the initial stock or asset purchase of your target company, or you need to instigate stability after the takeover, our corporate finance service can help with streamlining your process.

We can help analyse the options you have when it comes to available loans and ensure that you are able to choose the right deal not only for you, but for both businesses throughout the process.


Edwards Accountants

Are you looking to sell your business, or acquire or merge with another business? Our experts can help prevent any risk and uncover any hidden surprises in the other companies accounting records.

Our auditors in Walsall can help with screening your business for merger suitability and manage the due diligence process, ensure your business is utilising the most tax efficient methods for merging or acquiring a business, as well as supporting with corporate finance, such as aligning different share structure and negotiating price.

Interested in discussing your options with one of our expert team? Get in touch today, we are always happy to help!


For our West Midlands office:

Tel: 01922 743 100