Transfer Pricing — and it’s Impact on M&A Transactions

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Originally published in ACQUISITION INTERNATIONAL 53: SECTOR SPOTLIGHT: Transfer Pricing and it’s Impact on M&A Transactions, April 2012.

Mergers and acquisitions raise a whole host of transfer pricing issues from tax regulatory issues and compliance aspects to having influence over evaluation and business structure. In M&A transactions, the interaction between transfer pricing and purchase accounting can play a critical role in determining the allocation of the purchase price among the target company’s tangible and intangible assets. Transfer pricing can also play an important role in selecting the financing structure of the proposed transaction.

M&A deals can often provide opportunities to harmonize existing policies. In developing consistency across the organization, a number of factors should be considered in determining which policies should be implemented. It can be difficult enough for acquirers to extract value for their shareholders from transactions and is harder still when due account is not taken of transfer pricing issues. It is therefore of the upmost importance for such companies to seek advice from leading experts to advise them best in this way.

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