Vast Majority of Tax Departments Play Essential Role in M&A Activity Per Bloomberg Tax Survey
ARLINGTON, VA (April 10, 2018) — Bloomberg Tax today released the results from a survey of more than 225 corporate tax practitioners that highlights the critical role of the corporate tax department in mergers and acquisitions (M&As). The many wide-ranging impacts of the 2017 tax act have put a spotlight on the importance of tax departments to the success of M&A transactions, and the survey revealed that the vast majority (80 percent) of tax departments are extremely or highly involved in such transactions. To download a complimentary copy of the survey report, please visit this link.
M&A transactions present tax-related complexities, risks, hidden costs, and unknowns that tax departments must address. The majority of respondents (60 percent) report that they are becoming involved in M&A transactions before preliminary agreements are struck to help optimize tax structuring. Given their complexity, the three aspects of M&As that respondents deemed most likely to be difficult to handle are post-transaction (46 percent), international (non-U.S.-based) taxes (44 percent), and U.S.-based international taxes (42 percent).
M&A activity can have a dramatic impact directly on tax departments, with 31 percent of respondents reporting increased staff sizes, and more than half (58 percent) indicating that their roles and responsibilities had changed as a direct result of their company’s M&A activity. An uptick in financial resources allocated to tax departments in the wake of an acquisition or merger was also noted, with over half of respondents reporting increased budgets (52 percent) and three in four (78 percent) reporting increased spend on external consulting.
“It makes good business sense to involve tax departments early in the M&A process to fully understand and alleviate potential tax-related risks and issues, such as cross-border tax matters and the tax implications of transaction financing, which can greatly impact the attractiveness of a transaction,” said Lisa Fitzpatrick, Vice President and General Manager, Bloomberg Tax. “Corporations, and the tax and accounting firms that support them, can rely on Bloomberg Tax for practical insights and analysis on the developments and implications of the 2017 tax act on M&As.”
This Bloomberg Tax survey was conducted online in late 2017 and was completed by 226 respondents at the director level and above working in a tax department for an organization with more than $500 million in annual revenue.
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