Structuring of the operation (fiscal, legal, financial)
The structuring of a merger or acquisition (M&A) operation is a decisive phase in conducting a transaction. It consists of defining and articulating the legal, tax, and financial terms of the operation, in order to optimize its implementation conditions, ensure the security of the parties' interests, and promote value creation while respecting the applicable regulatory framework.
Defining a relevant structuring scheme requires an in-depth analysis of several factors, including the strategic objectives of the parties, the legal, tax, and financial situation of the target company, the applicable regulatory constraints, and the financing methods envisaged for the transaction.
The objectives of structuring an M&A operation
The structuring of a merger or acquisition operation pursues several complementary objectives, the nature and intensity of which may vary depending on the type of operation envisaged.
Firstly, it aims to optimize the tax treatment of the operation. In the context of an acquisition, this analysis focuses in particular on the taxation of the acquisition and the organization of post-transaction financial flows (cash repatriation, capital gains on disposal, etc.). In the context of a merger or similar operation, it particularly involves examining the tax regimes applicable to restructuring operations. Appropriate structuring thus makes it possible to control the overall tax cost of the operation.
The structuring also aims to legally secure the operation, particularly by organizing the risk allocation between the parties and by anticipating difficulties that may arise during the integration of the target company or the reorganization of the entities concerned.
It also makes it possible to define a financial organization adapted to the transaction. In acquisition operations, this dimension notably covers the implementation of the financing of the operation and the balance between equity contributions and the use of debt.
Finally, effective structuring allows for anticipation of the group's future developments, whether in terms of internal reorganization operations, capital restructurings, or a potential exit operation.
The legal structuring of the operation
The legal structuring of an M&A operation consists of determining the form of the transaction and the organization of the entities involved in the acquisition.
The first structuring choice concerns the nature of the operation:
- the acquisition of shares (share deal), which consists of acquiring the shares or equity interests of the target company;
- the acquisition of assets (asset deal), concerning all or part of the company's assets;
- certain restructuring operations, such as mergers or partial asset contributions.
The choice between a share deal, an asset deal, or a restructuring operation depends on multiple factors, including the applicable legal and tax framework, the nature of the assets and liabilities concerned, operational constraints related to the transfer of contracts, employees, or administrative authorizations, as well as the strategic and financial objectives pursued by the parties.
Finally, contractual documentation plays a central role in securing the operation. It notably includes asset and liability guarantee mechanisms, price adjustment clauses,earn-out provisions, and non-compete undertakings.earn-out ou encore les engagements de non-concurrence.
The tax structuring of the operation
Tax structuring is a key element of merger and acquisition operations. It aims to optimize the tax cost of the operation while ensuring its compliance with applicable tax rules.
This analysis focuses in particular on the tax regime applicable to the disposal of shares or assets, the taxation of capital gains, and the tax mechanisms that can be mobilized. When the operation has an international dimension, the analysis must include international tax issues, particularly tax treaties, transfer pricing rules, etc.
The financial structuring of the acquisition
The financial structuring of an M&A operation consists of determining the financing methods for the acquisition and the balance between the different sources of financing.
In many operations, the creation of an acquisition vehicle allows for the centralization of financing and the organization of debt repayment through the cash flows generated by the target company. This type of arrangement is notably used in LBO (leveraged buy-out operations).
Financial structuring must also take into account the constraints imposed by lenders, particularly the security interests associated with the financing.
A coordinated approach to fiscal, legal, and financial dimensions
The success of M&A structuring relies on a global approach integrating the legal, contractual, tax, and financial dimensions of the operation.
The choices made in one area can have significant consequences in others. For example, legal structuring can have a direct impact on the tax treatment of the operation or on the financing methods.
Given the complexity of merger and acquisition operations, support from a law firm specializing in corporate and tax law is a key success factor.
Lawyers are involved at all stages of the transaction: preliminary analysis of the existing structure, definition of the acquisition scheme, tax optimization, drafting and negotiation of contractual documentation, as well as legal security of the operation.
Thanks to a cross-functional approach, we are able to offer structuring solutions tailored to the strategic objectives of the parties and the specificities of each transaction.