Empowering Growth: Tax Strategy That Fuels Long-Term Success
How our State and Local Tax team empowered growth and enhanced business intelligence through innovative tax strategies that streamlined the acquisition process and generated savings.
Client
Our client, a Philadelphia-based investment group, specializes in acquiring and leading companies to achieve sustained growth and long-term success. They value hands-on entrepreneurship and strong operational execution, and they sought a partner who shared their commitment to strategic, effective communication and close collaboration.
Referred to EisnerAmper by a long-time client, the new client contacted our Private Client Services and Tax teams to provide tax consulting services for their acquisition of a target company. During the acquisition, the client had concerns about the target’s historical state tax exposures and how the target’s tax advisors were computing the tax equalization (gross up) payment. After carefully reviewing our analysis, calculations, and communications, the client quickly recognized that our professionals could meet their needs.
Challenge
The target company operated in a unique industry and had complex state and local tax reporting issues. After initially engaging other accounting firms, the client did not feel comfortable that the other service providers were properly assessing the target’s historical exposures or able to properly compute the tax equalization payment. To establish trust with the client and demonstrate that we were up for the challenge, Eisner relied on its seasoned tax and transaction professionals to show industry knowledge and transaction experience.
Approach
Our tax team has significant experience advising clients during transactions, and we strive to deliver excellent and tailored tax services to every client. Following productive client communications and our evaluation of the information provided, EisnerAmper delivered a clear pre-and post-acquisition roadmap to the client. The client’s trust in EisnerAmper grew with each milestone of the transaction, as we continued to identify and mitigate tax risks, while refining our recommendations for achieving tax efficiencies post-close.
Pre-Acquisition
Post-Acquisiton
Pre-Acquisition
In the pre-acquisition phase, our team started by evaluating the target company’s historical state income tax obligations. To do so, we reviewed the target company’s revenue streams and industry to determine how they should source their service sales and what methodology they should use to do so. From there, we computed the gross-up or tax equalization payment that the client owed to the seller, and in doing so, we uncovered a significant miscalculation that resulted in saving our client nearly $2 million on the purchase price.
Post-Acquisition
After the acquisition, the client sought additional guidance from our audit team to assist with properly reporting the transaction on its books and records. The client continued to rely on EisnerAmper’s tax professional to determine the most tax-efficient structure for the acquired company and advise on how the client could amend its partnership agreement to facilitate future growth. The post-acquisition services included analyzing the target’s tax status and building tax models to determine the income tax impact of different scenarios.
Results
EisnerAmper’s tax services enhanced the client’s business acumen and decision-making capabilities during a business acquisition. Notably, the tax services resulted in saving the client nearly $2 million dollars in purchase price consideration. Further, the post-transaction consulting services assisted the client in understanding the tax implications of different potential operating structures for the target and in creating a business plan that aligned with their long-term goals and objectives.
Contact Us
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