A detailed plan is critical to accomplishing all the tax-related tasks that need to occur in the months after an M&A transaction closes. Your 100-day plan for managing the tax process should include five key steps.

1. By Russ Daniel, Managing Director, M&A Tax Services
July 7, 2015
An integrated approach and a detailed plan are
critical to accomplishing all the tax-related tasks that
need to occur in the months after an M&A
transaction closes. Such a transaction stretches
internal resources and is incredibly disruptive to the
companies involved, so it’s imperative to stay focused
and map a timeline of what needs to happen to meet
all deadlines.
Why preclose involvement helps
The tax function’s involvement should begin during
due diligence — the fact-finding time to ask
questions related to integration and to plug in to be
able to boost the benefits for your company. For
example, who gets the benefit of transaction costs,
whether investment banking fees, attorney fees,
bonuses, stock option payouts, etc.? The transaction
costs language can be detailed and pages long —
telling you exactly when someone gets paid and how
to calculate it — or a five-line paragraph that says
little. Be involved early to avoid a scramble to
interpret the language.
Any contractual deadlines also must be met — for
example, if you commit to providing a tax return for
review 30 days before it’s due and a net operating
loss (NOL) carryback plan two months after closing,
you must follow through. Being connected up front
allows you to know the timing obligations and plan
for meeting them.
100-day plan
Your 100-day plan for managing the tax process
should include five key steps — each with several
components:
Document deadlines for tax and financial
reporting, and contractual deadlines.
1.
Prioritize tasks and projects.2.
Assign responsibility.3.
Budget time and costs.4.
Organize workflow.5.
1. Document the deadlines
Documenting the deadlines is your first step to
prioritize tasks and assign responsibility — whether
internally or with outside help — and should address
appropriate time requirements and costs. You don’t
want to overwhelm your team, but you also have to
get things done on a limited budget. If you come
into a transaction two weeks after it’s closed, for
example, and explain why someone needs a Section
382 study no one was planning on, you are throwing
a wrench into someone else’s budget.
You need to conduct a thorough read-through of the
documents, including credit agreements and
disclosures. Coordinate with the financial reporting
team to document reporting deadlines. Document
tax deadlines for filings, elections and payments. Tax
is also one of the biggest areas for deal provisions
such as indemnification provisions where certain
items have to be filed to get indemnified from
liability.
2. Prioritize tasks and projects
Establish a critical path for projects and fill in all the
blanks for each one. For example, if you are required
to file an NOL carryback claim for the target within
three months of closing, you have to finalize the stub
period filing. To do that, you need to figure out
transaction costs; and to do that, you must have
allowed the time. If you need to have it done three to
four months from today, you should have started last
week, and you are already behind.
Set calendar-critical deadlines and work backward
from them to establish the necessary timing.
3. Assign responsibilities
Assess the time required to meet deadlines. Chances
are you have not stacked up enough staff to account
for all the acquisition needs, and you are piling work
onto people who are already short on time. You need
to know what you can outsource, what you can skip

2. for now, who else in the organization can help and
whether you need outside consultants. Budget your
team’s time and skill sets and ascertain gaps, then be
sure to plan for the gaps:
Get resources from within the organization.
Get temporary help.
Use outside consultants.
Increase staffing permanently.
Use technology options.
4. Budget your time and costs
No one wants to go to the CFO with a significant
budget expense that went overlooked. Know your
outside consultant expenses, technology and
licensing needs for software, and hiring and any
other requirements, so those can be budgeted up
front. Surprise costs may still arise, but they should
not be overwhelming.
5. Manage the workflow
This may seem obvious, but it is crucial for managing
the workflow to keep tasks and costs from escalating.
Designate a project manager from the tax team who
is responsible for the process but also coordinates
with the broader integration team across the
organization. This person doesn’t have to be in
charge of every project but does require the authority
to press people to get things done. If you get behind,
you need to flag that and deal with it quickly. The
project manager should report to the tax director
and integration team regularly, and also coordinate
periodic (probably weekly) check-in calls or meetings.
It’s great to have a plan, but essential for someone to
make sure the team is working on that plan and
hitting critical deadlines.
Moving on
Once the initial integration wave has passed and you
have accomplished crucial tasks associated with the
first months after closing, you can move on to be
effective as the combined company moves forward.
A simple parent company with a few operations may
have acquired a new company with 15 or 20 smaller
entities within it, and the corporate structure is much
more complex than it once was. The tax department
must stay vibrant and involved as it handles the next
steps of the integration process.
This article was developed from the Grant Thornton
LLP webcast After the acquisition: Critical actions
for tax departments, which covers a number of
matters related to tax department involvement after
an acquisition. View the archived webcast.
Contact
Russ Daniel
+1 704 632 6809
russ.daniel@us.gt.com
Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is
not written tax advice directed at the particular facts and circumstances of any person. If
you are interested in the topics presented herein, we encourage you to contact us or an
independent tax professional to discuss their potential application to your particular
situation. Nothing herein shall be construed as imposing a limitation on any person from
disclosing the tax treatment or tax structure of any matter addressed herein. To the
extent this content may be considered to contain written tax advice, any written advice
contained in, forwarded with or attached to this content is not intended by Grant
Thornton LLP to be used, and cannot be used, by any person for the purpose of
avoiding penalties that may be imposed under the Internal Revenue Code.
The information contained herein is general in nature and is based on authorities that
are subject to change. It is not, and should not be construed as, accounting, legal or tax
advice provided by Grant Thornton LLP to the reader. This material may not be
applicable to, or suitable for, the reader’s specific circumstances or needs and may
require consideration of tax and nontax factors not described herein. Contact Grant
Thornton LLP or other tax professionals prior to taking any action based upon this
information. Changes in tax laws or other factors could affect, on a prospective or
retroactive basis, the information contained herein; Grant Thornton LLP assumes no
obligation to inform the reader of any such changes. All references to “Section,” “Sec.,”
or “§” refer to the Internal Revenue Code of 1986, as amended.
See more at: http://www.grantthornton.com/issues/library/articles/tax/2015/After-acquisition-5-steps
About Grant Thornton LLP
The people in the independent firms of Grant Thornton International Ltd provide personalized attention and the highest-quality service to public and private clients
in more than 100 countries. Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd, one of the world’s leading organizations of
independent audit, tax and advisory firms. Grant Thornton International Ltd and its member firms are not a worldwide partnership, as each member firm is a
separate and distinct legal entity
In the United States, visit Grant Thornton LLP at www.GrantThornton.com.
Content in this publication is not intended to answer specific questions or suggest suitability of action in a particular case. For additional information on the issues
discussed, consult a Grant Thornton client service partner or another qualified professional.
© 2015 Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd.