Tax Issues in MBO's

Tax issues affecting the target business

• Acquisition of trade and assets or shares in the target
  • Structuring the initial transaction to achieve commercial aims without prejudicing the tax position
• Possible tax charges if the target company is acquired
• Preserving trading losses where relevant

Taxation of Venture Capitalist/ Private Equity Funding Structure

• Tax treatment of debt and equity
  • Understanding the basics of how PE funding is structured
• Problems with “stranded interest” and transfer pricing
  • How these issues can remove the attractiveness of PE funded deals
• Taxation of share buy-backs (share buyback taxation) and share sales
  • How the exit strategy has an impact on planning for the initial structure

The tax treatment of managers’ shares

• Interest on money borrowed to buy shares
  • Insuring that interest relief is available
• Capital gains treatment on the eventual sale
  • To ensure the maximum return on MBO investment
• Availability of relief under the Enterprise Investment Scheme
  • To widen the potential investor pool
• Potential income tax charges under employment-related securities legislation
  • To focus on the real risks associated with MBOs/MBO risks
  • Complying with the “safe harbour” conditions in the memorandum of understanding between BVCA and Inland Revenue
  • Structuring ratchets to avoid income tax charges on the manager shares

Using EMI options to recruit, retain and incentivise key staff

• Creating mechanisms to incentivise staff once the MBO is undertaken
  • Qualifying companies
  • Conditions to be satisfied by employees
  • Exercise conditions, forfeiture, restrictions
  • Disqualifying events

The use of ESOTs as an alternative to the MBO

• The use of Employee Share Ownership Trusts – when might these work better?
• The mechanics of setting up the ESOT

Our trainer is the Director of a consultancy company specialising in taxation, share scheme advice, reward and lecturing. He has developed a specialised share scheme service for small companies and advises FTSE companies on communication. The lecturing covers most aspects of Direct Taxation but his particular interests include employment taxation and transfer pricing, which poses unusual conceptual challenges.

Previous to this he worked for Henderson for nearly 9 years, leading the Share Schemes team for part of this time.

He took the level 7 CIPD Masters qualification whilst at Henderson. Before Henderson, he was with Australian Mutual Provident (AMP) and helped set up one of the first Share Incentive Plans (SIP) for large companies in 2001. It was so unusual at the time that the Revenue phoned the trainer to find out how they could encourage more large companies to adopt SIP.

Our trainer started his career in taxation and for the following 16 years worked in three of the “Big Four” accountancy firms. He ended up as a Senior Manager with Deloitte & Touche, having worked on issues such as profit-related pay, share schemes, expatriate tax, tax investigations, reward management, US taxation, transfer pricing and corporate tax.

Away from work, the trainer likes cricket, history, skiing, tennis and gardening. He gives lectures on history which helps keep his presentation skills fresh.

• Understand the technical issues involved in MBO transactions through analysis of the specific legislation.
• To cover employment-related securities, interest relief, exit planning and other key features of relevance.
• Consider the MBO taxation pitfalls and opportunities that arise involved in such transactions.
• Understand the taxation and commercial drivers from the perspective of all parties involved including managers, investors, and Private Equity.
• To plot a course through a typical MBO scenario covering all phases of the project.
• To consider alternatives to a traditional MBO.

• This MBO training is designed to give a practical insight into this topic rather than a theoretical analysis of the legislation.
• The tax issues in MBO webinar is presented by an independent advisor who has advised on transactions and solved some of the problems which have arisen.
• Delegates will be encouraged to ask questions and clarify any issues which arise during the presentation.
• The tax issues in MBO course will cover all current legislation and practice

This tax issues in MBO training course is a ‘must know’ for:

• Tax and legal professionals undertaking MBO-type advisory work, including those working in M&A, private client, and share scheme roles.

Our MBO training is also a ‘nice to know’ for:

• Any tax professional working in compliance who wishes to progress their careers into advisory or planning work.

The tax issues in MBO training course is designed to cover the taxation aspects of MBOs and similar transactions.

The course will cover all aspects of planning and implementation of such schemes, considering the problems which may arise and the solutions to such issues, as well as reviewing alternatives which may provide better outcomes for clients. A step-by-step review of the schemes will enable a practical understanding of starting to advise clients.

The tax issues in MBO training course will include practical examples of real-life scenarios where these technical issues have been addressed. Case Law will be reviewed to show where HMRC compliance may focus.