Tax Issues for Rollover Equity in M&A Transactions: Key Considerations for Buyers and Sellers

Seller equity rollover transactions can be effective valuation mechanisms and minimize taxes in private equity mergers and acquisitions. Although these transactions can facilitate a smooth ownership transition, they require sophisticated knowledge of crucial tax provisions to avoid potential tax liability.

Rollovers are typically structured as an exchange by the seller of part of its equity for common or preferred stock, resulting in a reduction in the cash purchase. The rollover can be a tax-free transaction for the seller when properly structured. However, an equity transaction may limit the buyer's ability to step up the acquired company's assets tax basis. Counsel must understand the tax treatment in these deals to achieve the desired tax outcomes for the parties.

Listen as our authoritative panel discusses critical tax provisions and structuring considerations for equity rollovers in M&A transactions, tax-free mergers, holding company structures, use of LLCs, stock rights, and tax considerations for buyers and sellers.

1. Tax consequences of acquisition transactions
2. Achieving stepped-up basis for purchaser
3. Requirements for tax-free rollovers to sellers
4. Structuring options and key considerations

The panel will review these and other relevant issues:

• What are the critical tax issues to understand and consider when using equity rollovers?
• What are the available structuring options for equity rollover transactions?
• How can you properly structure a tax-free rollover transaction for sellers?
• How can you ensure a stepped-up basis for purchasers?
• What are the differences and tax implications of LLC drop-down and asset drop-down transactions?
• What are the critical challenges of rollovers involving Section 1202 qualified small business stock?

Learning Objectives

After completing this course, you will be able to:

• Identify tax consequences of a variety of acquisition transactions
• Ascertain mechanisms for achieving a stepped-up basis for purchasers in rollover equity transactions
• Understand the requirements for tax-free rollover transactions in acquisitions for sellers
• Recognize challenges of rollovers involving Section 1202 qualified small business stock
• Ascertain key tax considerations and structuring options for equity rollover transactions

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite:

  Three years+ business or professional firm experience at mid-level within the organization, preparing complex tax structures for businesses; supervisory authority over other professionals. Knowledge and understanding of business structures, purchase price allocation, tax indemnification provisions. Familiarity with basic concepts related to assets and stock sales, mergers, and acquisitions.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).