5. Market Regulations

5. Market Regulations

1. Tax consideration

   • Sellers
     • Buyers
       • Taxable
         • Asset acquisition
           • Implications
             • Stepping up
               • Possible to amortise acquired goodwill arising from asset acquisition
           • Stock acquisition
             • Implications
               • Step up = taxable gain
                 • Double taxation
                   • Benefit for acquirer if section 338
                     • 80 % or more of voting stock
                     • May handle as asset acquisition
             • Tax free transactions
               • Requirements
                 • Continuity of ownership
                   • Contiuity of business enterprice
                     • Valid business purpose
                       • Step transaction doctrine
                 • Tax free structures
                   • Type A
                     • Type B
                       • Type C
                         • Type D
                     • Forward triangular merger most used for tax free asset acquisition
               • NOL
                 • Carrybacks
                   • Carryforwards
                 • Tax inversion
                   • Change domicile
                     • Cross border
         • Non-equity usually taxable
           • Shareholders pay if stock aquisition
             • Firm pay if asset acquisition
               • Imidiate gain recignised by target shareholders
                 • Acquirer loses NOLS and tax credits???
       • Increase tax basis
         • Relocate tax domicile
     • Demand higher price for taxable transaction

2. M&A Market reulations

   • Equality of treatment
     • Mandatory offer above ownership treshold
       • Certainty of financing
         • Squeexe out rights
   • Legislation
     • Companies act
       • City code
         • Eu competition rules
           • Listing rules
     • Launching bid
       • Firstly to target
         • Public announcement
           • Putup or shut up