Transaction Advisory Services

We are excited to announce we have a new Director joining our firm. His name is Matthew Goldston, CPA, CM&AA, CVA, and he is joining our Entrepreneurial Advisory Services team.

Matthew’s experience as a CFO includes leading multiple companies through transactions from mergers and acquisitions to integrations, spin-offs and successful exits. Additionally, he has extensive experience with growth consulting, audit and business valuation. In addition, he has served industries including manufacturing, technology, construction, industrial services and private equity.

“PKF Texas continually evaluates ways to further enhance our client service offerings,” said Byron Hebert, CPA, CTP, Chief Growth Officer. “With the experience Matt brings to the firm, we have added another layer to our ability to co-develop solutions with our clients who may be considering a transaction.”

To learn more about Matthew, visit our website!

Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, this week’s guest host, and I’m here with Martin Euson, one of our Tax Directors on our Transaction Advisory Services team.  Welcome to the Playbook, Martin.

Martin: Thank you very much, Jen. It’s a pleasure to be here.

Jen: So, when we talk transaction advisory services I know there are some considerations, tax considerations to make when you’re advising, you know, a business owner on potentially buying another business. What types of things do you tell them?

Martin: Jen, I would say first and foremost it is critically important for any buyer to really understand the form of the transaction, the substance of the transaction, and the structure of the transaction that they are proposing to undertake.  As you might imagine, when you’re thinking about that, you have the legal form and then you also have how the transaction is going to be treated for tax purposes, and they are not always the same. So, it’s really important for buyers to understand where those two roads diverge because all of the future decisions after that really are going to be driven by that distinction.

Jen: And so, what else do you tend to tell people when you’re advising them on things to know about the buy side?

Martin: I would say another important factor is for buyers to really be able to manage and limit their exposure, manage their risk and limit their exposure when we’re talking about the historical tax liabilities of the business that they’re proposing to buy.

Jen: So, what does that mean?

Martin: What that really means is that there is a concept that’s referred to a successor liability, and when a buyer buys another business, depending on how they buy it, they may be assuming any historical tax liabilities that that business may or may not have. If there’s unpaid taxes, in other words, the buyer may step into the shoes of that former owner and then become liable for those taxes.

Jen: Ok, so that’s when they would call us so that we can take a look at the contracts, take a look and give them the proper advice?

Martin: Exactly. That is really going to unfold through a process of tax due diligence. You’re going to have a purchase and sale agreement, you’re going to want to make sure that you have the maximum protection that you can have in that agreement, yes.

Jen: Perfect. Well, it sounds like we need to get you back to talk a little bit more to talk about what buyers need to know.  Can we get you back?

Martin: Absolutely.

Jen: Perfect. To learn more about how we can assist you with potential transactions, visit pkftexas.com/transactionadivosryservices/. And this has been another Thought Leader Production brought to you by the PKF Texas Entrepreneur’s Playbook.

Jen:  This is the PKF Texas Entrepreneur’s Playbook.  I’m Jen Lemanski, this week’s guest host, and I’m back again with Chris Hatten and Martin Euson, two of the Directors on our Transaction Advisory Services team.  Guys welcome back to the playbook.

Chris:  Thanks, Jen.

Martin:  Thank you, Jen.

Jen:  Now I’ve heard you guys talk about due diligence, what is it?

Martin:  On the tax side Jen due diligence really comes down to a process of investigating and examining a target company’s tax filings and tax records historically to see if there’s anything in there that may present risk or exposure that the buyer wants to be aware of so they can take that into their decision-making ahead of time before learning about those things afterward.

Chris:  From the financial reporting side of things it’s more so an income statement approach because a lot of times the transaction is based off some multiple of earnings or revenue and so as the buyer you want to make sure that there are some reliability and predictability behind those numbers, and so we kind of go in and do a deeper dive on that.

Jen:  So it sounds like it’s usually the buyer doing the due diligence, is that?

Martin:  That’s correct Jen but oftentimes the seller will also due diligence on itself.  Diligence can be a disruptive process if you’re having multiple buyers come in and multiple bidders come in and going through that process, so that can be a little bit disruptive.  And it also gives the seller a chance to find out what, if any, skeletons are in their closet before a buyer comes in and does diligence and so it can occur on both sides.

Chris:  Definitely.  To further Martin’s point it is a very disruptive process and so they want to make sure that they’ve got all their historical records, their financial statements, everything else in order to add a little smoothness to the process.

Jen:  Perfect.  Well, I think we might need to dive into the sell side a little bit later, can I get you guys back?

Martin:  Absolutely.

Chris:  We can do that.

Jen:  All right, perfect.  To learn more about how we can assist you with potential transactions visit PKFTexas.com/transactionadvisoryservices.  This has been another Thought Leader production brought to you by PKF Texas The Entrepreneur’s Playbook.  Tune in next week for another chapter.

Jen:  This is the PKF Texas Entrepreneur’s Playbook.  I’m Jen Lemanski, this week’s guest host, and I’m here with Martin Euson, one of our tax directors on our Transaction Advisory Services team. Welcome to the Playbook Martin.

Martin:  Thank you, Jen.

Jen:  So Transaction Advisory Services, I know you’ve told me before that we advise people when they’re looking to purchase a business, what are some of the top tax issues that you want them to consider when looking into something like that?

Martin:  There are three key areas that I advise clients on who are looking to buy a business. First and foremost I advise them that they should really understand the form, the substance and the structure of the transaction they’re proposing to undertake from both a legal perspective and a tax perspective because as you may imagine those two can differ. Secondly, I advise them they should really be able to manage their risk and limit their exposure to the historical tax liabilities of the business that they’re proposing to buy.  And thirdly I advise them that they should really understand the tax attribute profile of the business that they’re proposing to acquire.  In other words are there any loss carryovers or credit carryovers that may be available to then in the future?

Jen:  So it sounds like there are a lot of moving parts when you’re potentially thinking about buying a business.  What sort of timing should all of this take?

Martin:  Jen the most important issue here with respect to timing is that all of this stuff be accomplished prior to the transaction.  If you’re looking at this stuff after the transaction’s already happened it’s really of limited value.

Jen:  So it’s really too late?

Martin:  Yes.

Jen:  Perfect. So they need to call you and get you on the phone now if they’re even thinking about buying a company?

Martin:  Absolutely.

Jen:  Perfect. Well, we’ll get you back to talk some more because I think this is a little bit more in depth than we can go into right now.

Martin:  Thanks, Jen, I look forward to it.

Jen:  To learn more about how we can assist you with your potential transactions visit PKFTexas.com/transactionadvisoryservices/.  This has been anther Thought Leader production brought to you by PKF Texas The Entrepreneur’s Playbook.