New York (June 18, 2024) – Valuation Research Corporation (VRC), a leading global provider of independent valuation support and advisory services, is pleased to announce the publication of the article, “Tax Valuation Considerations for M&A Transactions,” authored by Tom Gottfried and Charles Sapnas, is featured in the new issue of Tax Executive, the esteemed professional journal of the Tax Executives Institute.

In today’s dynamic business environment, mergers and acquisitions are a cornerstone strategy for growth and value creation. However, the intricate financial and tax implications of these transactions require thorough and sophisticated valuation analyses. This article provides an essential guide for public corporations, private equity-backed portfolio companies, and privately held firms navigating these complexities.

The article offers a detailed examination of critical valuation considerations essential for M&A transactions. Key topic covered include:

• Purchase Price Allocations: A breakdown of differences between financial and tax reporting standards, highlighting the impact of fair value (FV) and fair market value (FMV) assessments.
• Section 382 Limitation Calculations: Guidance on managing ownership changes and the associated limitations on net operating losses and tax credits.
• Tax Receivable Agreements (TRAs): Insight into the valuation of TRAs and their role in compensating sellers for valuable tax attributes.

Gottfried and Sapnas emphasize the importance of identifying the correct valuation standard and methodology and explains how different standards like FV, FMV and the arm’s length standard diverge and the implications of these differences on financial and tax reporting. The duo also focus on the practical aspects of coordinating FV and FMV analyses to ensure consistency and mitigate audit risks. The pairs’ expertise provides clarity on handling contingent considerations, transaction and restructuring costs, and the inclusion of deferred taxes and accrued liabilities in valuations.

The article provides an ideal resource for tax professionals, financial executives, and corporate decision-makers involved in M&A transaction. It not only elucidates the technical nuances of tax valuations but also offers practical strategies to comply with evolving regulatory requirements and optimize transaction outcomes.

For the full article, we welcome you to visit Tax Executive or download the feature article below.

About VRC

Valuation Research Corporation is a full-service, independent, global valuation firm. Since 1975, our network of nearly 1,500 valuation professionals, which includes VRC’s 300+ U.S.-based colleagues, has provided objective, supportable conclusions of value to domestic and international clients. VRC has locations in Atlanta, Boston, Chicago, Cincinnati, Dallas, Los Angeles, Milwaukee, New York, Princeton, San Francisco, and Tampa; as well as international member firms operating as VRG in Argentina, Australia, Brazil, Canada, China, Colombia, Germany, India, Israel, Japan, Luxembourg, Mexico, Singapore, Spain, and the United Kingdom.