Structuring Corporate Acquisitions — Tax Aspects (Portfolio 770)


Barnet Phillips, IV

Senior Consultant

Silver Point Capital LP

At a glance

I. Introduction
II. Mechanics of Implementing an Acquisition
III. Forms of Consideration
IV. Taxable Acquisitions - Consequences to Selling Shareholders
V. Taxable Acquisitions - Consequences to the Target Corporation
VI. Taxable Acquisitions - Consequences to the Acquiror
VII. Tax-free Reorganizations - Definitions
VIII. Tax-free Reorganizations - Consequences
IX. Financing the Acquisition
X. Net Operating Losses and Related Issues
XI. Special Problems When a Corporation Is Acquired Out of an Affiliated Group
XII. Treatment of Transaction Costs
XIII. Selected Compensation Issues
XIV. Disposition of Unwanted Assets
XV. Other Special Problems and Planning Techniques
XVI. Documentation; Allocation of Risks Between the Buyer and Seller
XVII. Selected Non-tax Considerations


Bloomberg Tax Portfolio, Structuring Corporate Acquisitions — Tax Aspects, No. 770, discusses the principal tax planning considerations related to designing an appropriate transactional structure for a corporate acquisition. It introduces the basic concepts of taxable transactions and tax-free reorganizations, as well as stock and asset acquisition structures, and discusses the consequences to various parties of each transactional form, with particular emphasis on the factors which point to the use of a particular acquisition structure. In addition, it explains more complex acquisition structures, as well as the critical aspects of financing techniques (including the tax consequences of various financial instruments which may be used to finance acquisitions), several special applications of §351 in the context of corporate acquisitions, matters relating to the preservation and usability of loss carryovers and other tax attributes, issues arising when a corporation is acquired out of an affiliated group, tax treatment of transaction costs, acquisition-related compensation issues, techniques for disposing of unwanted assets, allocation of tax risks between a buyer and seller of a corporate business, and selected non-tax issues.


This Portfolio generally does not discuss: (i) the use of partnerships, S corporations, and other entities which are subject to special taxing regimes, (ii) special considerations where a party to an acquisition is foreign, or (iii) special considerations relating to financially troubled businesses (including bankruptcy situations).

Many of the topics discussed herein are considered in greater detail in other Bloomberg Tax Portfolios. Of particular relevance are 780 T.M., Net Operating Losses and Other Tax Attributes — Sections 381, 382, 383, 384 and 269; 565 T.M., Installment Sales; 784 T.M., Corporate Liquidations; 765T.M., Stock Rights and Stock Dividends — Sections 305 and 306; 776 T.M., Corporate Separations; 536 T.M., Interest Expense Deductions; 535 T.M., Time Value of Money: OID and Imputed Interest; 767 T.M., Redemptions; 758 T.M., Transfers to Controlled Corporations: In General; 384 T.M., Restricted Property — Section 83; 390 T.M., Reasonable Compensation; 772T.M., Corporate Acquisitions — (D) Reorganizations; and 771 T.M., Corporate Acquisitions — (A), (B), and (C) Reorganizations.

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