So far, you’ve gotten a glimpse of how a tax advisor is helpful in a business transaction process. Let’s dive a little deeper. In this episode of PKF Texas – The Entrepreneur’s Playbook®, Tax Director Chris Dodd, CPA, and Tax Senior Manager, Thang Ngo, CPA, discuss what a tax advisor can provide for the buy-side perspective.
Jen: This is the PKF Texas – Entrepreneur’s Playbook®. I’m Jen Lemanski and I’m back once again with Chris Dodd and Thang Ngo, two of the Approachable Advisors™ on our tax team. Chris, Thang, welcome back.
Chris and Thang: Thank you for having us, Jen.
What Tax Advisors Can Do
Jen: So, we’ve been talking about kind of getting tax advisors involved in a business transaction generically but say you’re on the buy side. What can we do as tax advisors for somebody who’s looking at buying a business?
Chris: Well, as a tax advisor, I really want to appreciate what you’re trying to do. We want to start with the end in mind and then we want to make sure that you know what you’re getting into. And when I say the end in mind, it’s: how are you going to exit this potential business? Who’s going to be the buyer? How do you want this structured? Who do you want to compensate and how do you want to compensate them?
There’s different vehicles that you can use in order to structure these transactions. There are also different entity types. Do you want to do a partnership with C corporation? Partnerships are a lot more flexible than C corporations. There’s also the pass-through issue with partnerships, but C corporations are also attractive with the 21% after the Tax Cuts and Jobs Act. So, you have different methods that you can go about structuring these transactions, and we want to be able to give you the information that you need to make a smart decision.
Thang: Yeah, I agree with Chris. And as the buyer, you want to also know what you’re getting into. So, as your tax advisor, we want to help you with that tax due diligence process. We want to help you identify and quantify the risk. You just want to understand what you’re stepping into, potentially any tax liabilities.
We can start helping you with the process, different function like federal tax, state and local payroll tax, strength tax, and then also international tax. So, one of the benefits of serving clients in Houston, we have experience working with multinational company, multi-state businesses and also across different industries. So, we’ll be able to help you with our expertise and our experience.
Jen: That sounds great. Anything else?
Chris: Yes. As we talked about in our earlier conversation, it’s all about preserving options. And the more that we’re able to do this at the very beginning of the transaction, the less negotiations or the less issues that you’re going to have later on in the transaction.
Jen: Perfect. Well, we’ll get you guys back to talk about some more things, probably on the sell side next. Sound good?
Chris and Thang: Great to hear. Thank you.
Jen: Awesome. This has been another thought Leader Production, brought to you by PKF Texas – The Entrepreneur’s Playbook®. For more information about this and other topics, visit our website PKFTexas.com. Tune in next week for another chapter.