Due Diligence: Leveraging Today's Innovative Tools & Techniques for Securing a Good Deal Self-Study Webinar

To provide CPAs and other financial professionals with the knowledge and skills to leverage today’s modern tools and techniques in performing successful due diligence. You’ll gain the confidence to apply these tools for securing a good business deal. 

SPEAKERS: 

Kristen Limarzi, Partner, Gibson, Dunn, & Crutcher 

Johnny Montoya, Partner, BDO 

Ryan Reents, Operations Leader, Protiviti 

Daisy Wu, Counsel, Gibson, Dunn, & Crutcher

DETAILED LEARNING OBJECTIVES

• Understand the primary goal of global merger control, which is to ensure that mergers do not substantially lessen competition in relevant jurisdictions

• Recognize the specific thresholds that trigger a Hart-Scott-Rodino (HSR) filing in the US, which is a critical step in the merger review process

• Understand the next steps in the US merger review process if the government does not clear the transaction during the initial waiting period, focusing on the Second Request investigation

• Recognize the industries, such as pharmaceuticals, that are currently under scrutiny by US antitrust enforcement due to concerns over competition and innovation

• Identify the key consideration in UK merger control, which is whether a merger substantially lessens competition in the market

• Understand what constitutes a "red flag" deal in the EU, focusing on combined market share and competitive proximity between merging companies

• Recognize the Article 22 referral process in the EU and how it allows member states to refer mergers to the European Commission even if they do not meet the typical notification thresholds

• Recognize the global trend of increasing Foreign Direct Investment (FDI) regimes and understand how FDI regulations are expanding worldwide

• Understand the challenges facing antitrust enforcement agencies, specifically the issue of less judicial deference to agency decisions in courts

• Identify specific jurisdictions like China that trigger merger investigations even when there is minimal local market activity

• Understand the core purpose of due diligence, which is to evaluate risks and opportunities associated with the target company

• Recognize the role of financial due diligence in assessing the financial health and viability of the target company

• Recognize the importance of identifying and prioritizing “must-have” items in a due diligence request list

• Understand the importance of ESG due diligence in assessing a company's adherence to sustainability and governance practices

• Gain an understanding of operational due diligence and its role in evaluating the target company's operations and synergy potential

• Recognize that due diligence processes must be tailored to the specifics of each transaction to ensure accuracy and thoroughness

• Identify the role of IT/cybersecurity due diligence in identifying risks related to the company’s technology systems and data security

• Understand the importance of legal due diligence in evaluating potential legal risks such as litigation and contracts that may impact the transaction

• Understand the significance of HR/culture due diligence in evaluating the impact of the transaction on employees and the organizational culture

• Identify how AI can be leveraged to accelerate specific aspects of the due diligence process, such as document review and data structuring

• Understand the role of the Board of Directors in an M&A transaction, specifically their responsibility in approving the final agreement and ensuring that it aligns with the company’s overall strategy

• Identify the critical function of due diligence in assessing the target company’s risks, including financial, legal, and operational aspects, to make informed decisions about the transaction

• Recognize the role of legal counsel in M&A transactions, specifically their responsibility to draft and review transaction documents and oversee the legal aspects of the deal

• Understand the importance of obtaining regulatory approvals like HSR clearance to comply with legal and antitrust requirements before finalizing an M&A transaction

• Identify the importance of controlling the disclosure process to manage public perception and the reaction of the investment community, which can impact stock prices and the success of the transaction

• Understand how a tax "step-up" benefits the buyer by allowing higher depreciation and amortization deductions, improving the buyer's post-transaction tax position

• Identify how Section 338(h)(10) elections affect the tax treatment of a transaction by allowing it to be treated as an asset purchase for tax purposes, while remaining a stock purchase for legal purposes

• Understand the defining characteristics of a Type A reorganization, particularly its requirement to be a statutory merger or consolidation

• Distinguish between stock and asset purchases, particularly in terms of tax liability and the carryover of tax attributes

• Recognize the tax risks to sellers in a tax step-up transaction, including the potential for higher taxes

• Understand the requirements for a Type B reorganization, which mandates the use of at least 80% voting stock

• Identify the specific requirements of a Type C reorganization, including the use of stock and cash consideration

• Understand how a Section 754 election benefits the buyer by allowing a step-up in the tax basis of the partnership’s assets

• Identify how asset purchases allow buyers to selectively acquire assets and liabilities, offering more control over the transaction

• Understand the mechanics of a reverse triangular merger, where the target’s stock is canceled and replaced with the buyer’s stock

• Identify how the COSI doctrine ensures that shareholders maintain a continuing ownership interest in the new entity during a tax-free reorganization

• Understand the flexibility of a Type C reorganization in allowing the assumption of liabilities without losing tax-free status

• Recognize that a Section 338(g) election in foreign acquisitions provides indirect US tax benefits, such as reducing GILTI and Subpart F income

• Understand how Section 351 allows shareholders to defer recognizing gain or loss when exchanging property for stock in certain tax-free transactions

• Recognize the tax implications for the seller in a Section 338(h)(10) election, including the possibility of being taxed at both capital gains and ordinary income rates

• Understand the tax benefits for buyers in a Section 338(h)(10) deemed asset acquisition, particularly the ability to step up the basis of the seller’s assets

• Identify the purpose of F reorganizations, which include restructuring for tax deferral and rollover opportunities for shareholders

• Understand the criteria for a Section 355 distribution, including the requirement that the controlled company engages in an active trade or business for at least five years

• Identify the benefits of holding QSBS for more than five years, including the 100% exclusion of capital gains under Section 1202

• Understand the tax treatment of the selling partner in a Revenue Ruling 99-5 Situation 1 transaction, where the seller is treated as transferring a portion of the LLC’s assets and recognizing gain or loss

• Identify how a Section 754 election benefits the buyer by allowing a step-up in the basis of the partnership’s assets

• Understand the consequences of failing Section 355 requirements, including the distribution being taxed as a dividend under Section 301

• Understand the requirements for a Type B reorganization, specifically the need for at least 80% of the consideration to be in voting stock

• Recognize the advantages of an asset acquisition for the buyer, particularly the ability to selectively acquire assets while avoiding certain liabilities

• Understand the tax implications for the seller in a tax step-up transaction, including the potential for the seller’s gain to be taxed at both capital gains and ordinary income rates

• Regulatory Trends in Merger Review
  – Domestic and international merger control
  – Industries in focus
  – FDI key themes
• Due Diligence Best Practices
  – Importance of completing due diligence correctly
  – Categories of due diligence
     – Financial
     – Operational
     – Commercial
     – HR and Culture
     – Tax
     – Legal
     – IT/Cybersecurity
     – ESG
  – Mitigating risks
  – Using AI to accelerate due diligence
• Administrative Issues in Mergers & Acquisitions
  – Overview of M&A timeline and key players
  – Preliminary considerations
  – Structuring the transaction
  – Process and coordination
  – Negotiation of Definitive Agreements
  – Closing the transaction
  – Post Closing Activiites
• Tax Implications of Mergers & Acquisitions
  – M&A tax basics
  – “Step-Up” transactions
  – Tax free acquisitions
  – Judicial requirements
• Advanced M&A Tax and Structuring Strategies
  – Deemed asset acquisitions
  – LLC “Drop-Down” & F reorganization
  – Partnership transactions and structuring
  – Section 355 distributions and requirements
  – Qualified small business stock
  – Post transaction considerations

Kristen Limarzi, Partner, Gibson, Dunn, & Crutcher 

Johnny Montoya, Partner, BDO 

Ryan Reents, Operations Leader, Protiviti 

Daisy Wu, Counsel, Gibson, Dunn, & Crutcher