Business Finance
CSU Chapter 4 Selected Federal Securities Law Provisions Paper

California State University - Long Beach

Question Description

Write a research paper based upon a topic that is of personal interest to you. It can be from any topic covered in our textbook or a different aspect of mergers and acquisitions that was discussed or researched in the course. Thoroughly research it to make judgments, recommendations, etc. What are your proposed solutions to this topic or issue? Assess why this particular topic is of interest to you and why other individuals should also share this same concern as you. Your submission incorporate your interaction with professionals.


Support your paper with a minimum of six external resources. In addition to these specified resources, other appropriate scholarly resources, including older articles, may be included.

Length: 6-7 pages not including title and reference pages

Your paper should demonstrate thoughtful consideration of the ideas and concepts presented in the course and provide new thoughts and insights relating directly to this topic. Your response should reflect scholarly writing and current APA standards.

Attachment preview

Selected Federal Securities Law Provisions that Apply to Negotiated Business Combinations In chapter 2, we analyzed the state law provisions that regulate the different methods for structuring an acquisition.

Final Answer

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Running head: INTERNATIONAL STRATEGIES AND TAX IMPLICATIONS

M&A and International Strategies and Tax Implications
Name of Student
Institution Affiliation
Date

1

INTERNATIONAL STRATEGIES AND TAX IMPLICATIONS
M&A and International Strategies and Tax Implications
Mergers and acquisitions have become morphed into a critical juncture regarding a
company’s community globally. Companies and organizations alike using the merging concept
can be of many industries. Those include the alliances of the conglomeration, horizontal, and
virtual concepts. Some leaders in the industry incorporates the developments of their
organization via the merging of smaller companies while influencing their footprints
(Kalinowska & Mielcarz, 2014). There are many valuable methods behind the merging of
companies and the most important, is whereas two becomes one. The value of two companies
heightens the prospective future for both when merging is conducted. This creates a more
influential act on purchases given the other companies because of the more dynamic methods
being taken into consideration. The forcing of competition and cost-effective methods relies on
how the companies conduct their merging efforts. Thus, increases value for the shareholders.
There are also targeted companies that otherwise, agrees to make purchases in which without
them, they know they couldn’t survive (Crimmins et al., 2010).
One of the essential topics of interest in the Mergers and Acquisitions (M&A) concerns
the tax that impacts M&A transaction, which is contained in chapter 8 of the course. According
to Maynard (2013), one of the primary implications linked with M&A operations is the
possibility of tax liabilities between the involved businesses. The tax liabilities are either
partially or wholly charged to the transacting companies. The tax implications have been
witnessed in the past years and are still experienced to date by the organizations formulating
M&A transactions (Kalinowska & Mielcarz, 2014).
These tax obligations experienced in M&A transactions are based on two fundamental
factors. The structure of the M&A operations is one of the factors attributed to the tax

2

INTERNATIONAL STRATEGIES AND TAX IMPLICATIONS

3

implications (Caiazza & Volpe, 2015). This assertion is valid since the nature of the structure of
the M&A transactions determines which party of the M&A operations will bear the tax
implication. According to Koch, (2015), M&A deal in which involves asset purchases the tax
burden rests on the seller in an acquisition transaction. The purchaser bears the tax obligation of
M&A transaction involving stock purchases. The failure and neglect of the involved parties to
evaluate the financial position of the M&A operations is another factor that results in the tax
implications. The analysis and assessment of the financial statements of an organization is the
optimal way to determine the financial and liability position of a firm (Cai & Sevilir, 2012).
Thus, with the evaluation of the financial statements in M&A transactions would aid in detecting
tax obligations of the involved companies.
Thus, it would be essential for interested parties to undertake some considerations to
mitigate the possibility of tax implications in M&A transactions. Firstly, the interested parties
ought to evaluate the tax attribute carryovers to prevent tax implications in M&A transactions
(Crimmins et al., 2010). This declaration is centered on the fact that the assessment of the tax
attributes carryovers aid in the determination of charge basis of the operating assets of the
involved businesses. Secondly, the evaluation of the financing structure of the associated
companies is another way to mitigate the likelihood of tax obligations in M&A transactions.
Kalinowska and Mielcarz (2014) assert that the assessment of the financing structure in M&A
transactions aid in the determination of how purchases are financed. This initiative, in return,
determines the level of tax obligation connected to M&A transaction.
Mergers and acquisitions could be either taxable events or tax-free. The transaction tax
status may affect the value of the alliance from the sellers and buyer's viewpoints. The firm's
assets that are selling are revalued in taxable acquisitions. Thus, the depreciation deduction rises.

INTERNATIONAL STRATEGIES AND TAX IMPLICATIONS

4

However, selling shareholders are obligated to pay taxes (capital gains) therefore, which makes
them want more shares so that they compensate. It is referred and identified as the capital gains
effect. These effects (i.e., write-up and capital gains effects) cancel out each other (Maynard,
2013).
Some of the stock exchanges are regarded as tax-free, which enables owners of one firm
to exchange some of their shares of some of these stocks without having to pay taxes. We have
three types of tax-free reorganizations (Maynard, 2013). For instance, Type A, allows the buyer
of the capital to use nonvoting or voting stock and is structured in specific ways. Also, it will
enable the buyer to spend more cash as the law does not state the maximum money that may be
used. Type B demands that the acquiring corporation use mainly, it is voting common stock as a
reason for the buying of the targeted corporation stock (Maynard, 2013).
This topic of consideration is of interest to me since it entails one of the substantial
aspects that determines the success or failure of M&A transactions. This assertion rests on the
fact that the tax implications of M&A deals are crucial in the determination of the future
existence of the M&A operations. As a result, this topic should be of concern to all people ...

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