Discover more: The Growing Importance of Sales and Use Tax During Acquisition Due Diligence (M&A)
Authored By:
Alex Joya
Laurie Wik
Louis Mancini
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An acquisition requires careful consideration during the due diligence phase because the last thing any buyer wants is a surprise material tax exposure that should have been identified during due diligence. Similarly, the integration of the acquired company is made that much smoother by having undertaken thorough due diligence. Preparation is key. Ensure that you have the correct resources to address sales tax diligence so that deals are made from a well-informed perspective and so that realistic post-acquisition integration plans for the acquired company can be made. Alvarez and Marsal notes that industry-specific and jurisdictional expertise and most of all, deep sales tax technical experience is key to identifying, quantifying, and remediating sales tax exposure as well as improving sales tax processes after the acquisition. Timely identification of sales tax issues in the sales tax diligence process keeps cash from unexpectedly leaking away to a taxing authority over an undetected sales tax issue. In any economic downturn, be it sooner or later, cash is king. Properly addressing sales and use tax diligence as well as properly addressing sales tax compliance keeps cash in the door.