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Chapter 1 - Getting Started –
Overview
I. The Scope of the Task
A. Legal and Tax Issues
B. The Team of Advisors
C. Due Diligence Considerations
D. The Form of the Transaction
II. Preliminary Documentation
A. Confidentiality Agreements
B. Letter of Intent
Chapter 2 - Non-Tax Considerations in Business Acquisitions
I. Introduction
II. Environmental Considerations
A. General Concerns
B. Federal Environmental Laws
C. State Environmental Laws
III. ERISA and Retirement Plan Considerations
A. General Requirements
B. Negotiation Considerations
IV. Additional Employment and Labor Issues
A. General Considerations
B. Plant Closing Laws
C. COBRA Responsibilities
D. Family and Medical Leave Act
E. Other State Employment Law Issues
F. Additional Due Diligence in Labor and Employment
Matters
V. Antitrust Issues
A. Hart-Scott-Rodino
B. State Law Issues
VI. Federal and State Security Laws
A. General Considerations
B. Antifraud Provisions
VII. Additional Specific Due Diligence Considerations
A. The Overriding Theme; Timing Issues
B. Specific Areas of Investigation
Chapter 3 - Tax Considerations in Buying and Selling a Business
I. Introductory Considerations – Overview
A. Basic Structuring Choices
B. Buyer and Seller Preferences
C. Tax Classifications of Business Acquisitions
1. Taxable Asset
Acquisitions - Basic Rules
2. Taxable Stock
Acquisitions - Basic Rules
3. Nontaxable Asset
Acquisitions - Basic Rules
4. Nontaxable Stock
Acquisitions - Basic Rules
II. Analyzing Taxable Acquisitions
A. Why a Taxable Transaction
B. Taxable Acquisitions -Tax Consequences to the Target
Corporation
C. Taxable Acquisitions -Tax Consequences to the
Selling Shareholders
D. Taxable Acquisitions Tax Consequences to the Buyer
E. Allocation of the Purchase Price Among the Acquired
Assets –
General Rules
F. Code Section 1060: Specific Rules for Allocation of
the Purchase Price –
Taxable Asset Acquisitions
III. Analyzing Tax-Free Reorganizations
A. Overview
B. Treatment of the Parties to a Non-Taxable
Reorganization: The Target
Corporation's Shareholders
C. Treatment of the Parties to a Non-Taxable
Reorganization: The Target
Corporation
D. Treatment of the Parties to a Non-Taxable
Reorganization: The
Acquiring Corporation
E. Judicial Requirements for Tax-Free Reorganizations
1. Overview
2. Business Purpose
3. Continuity of
Proprietary Interest
4. Continuity of Business
Enterprise
F. Forms of Tax-Free Reorganizations
1. Type A Reorganization:
Mergers or Consolidations
2. Type B Reorganization:
Stock for Voting Stock
3. The Reverse Triangular
Merger: An Alternative to a B
Reorganization
4. Type C Reorganization:
Voting Stock for Assets
IV. The Role of Liquidations in Corporate Acquisitions
A. Overview: The Liquidation Context
B. Taxation of Liquidations: Non-Subsidiary
Liquidations
C. Taxation of Liquidations: Subsidiary Liquidations
D. Section 338 Liquidations: Deemed Asset Sales
V. Tax Attributes in Corporate Acquisitions: Carryover and Limitations
A. General Considerations
B. Tax Attributes Describe
C. Rules Permitting Carryover of Attributes
D. Code Section 382 and the Limitations on Loss
Carryforwards
1. General Rules
2. Ownership Change
3. The Limitation Amount
4. Other Applicable
Limitations on the Use of Tax Attributes
VI. Special Considerations Involving S Corporation Acquisitions
A. Eligibility Issues
B. Debt vs. Equity Issues
C. Built-In Gains Tax Issues
D. Survival of S Elections and Attributes in Tax-Free
Acquisitions
VII. Special Considerations Involving Acquisitions of Partnership
Interests
A. General Rules - Realization by Selling Partners
B. General Rules - Basis of Acquiring Partner's
Interest
C. Redemptions of Partnership Interests
D. Terminations of Partnerships
Chapter 4 - Purchase Agreements, Representations, Warranties and Opinion
Letters
A. The Purchase Agreement
B. Representations and Warranties – Generally
C. Representations and Warranties Desired by the Buyer
D. Representations and Warranties Desired by the Seller
E. Opinion Letters
Chapter 5 - Pre-Closing Consideration of Post-Closing Operations:
Consulting,
Employment, Non-Competition Agreements
A. Restrictive Covenants
B. Consulting Agreements
C. Employment Agreements
D. Employee Stock Option Issues
Chapter 6 - Closing the Deal
A. Documentation
B. Corporate Formalities
C. Delivery of Consideration
D. Post-Closing Matters
Chapter 7 – Considerations for Buyers and Sellers in Buy-Sell Agreements
for Closely-
Held Businesses
A. Definition.
B. Objectives of a Buy-Sell Agreement
1. For the Entity
2. For the Deceased
Owner's Estat
3. For the Retired or
Disabled Owner.
4. For the Remaining
Owners
C. Checklist of Planning Considerations – Factors to
Consider
D. Types of Buy-Sell Agreements
1. Cross-Purchase
2. Entity Buy-Out
3. Hybrid Agreement
E. Choosing the Right Type of Agreement
1. Number of Owners
2. Premium Payments on
Life Insurance Policies
3. Transfer for Value
Problems
4. Alternative Minimum
Tax Problems
5. Accumulated Earnings
Tax
6. Credit Considerations.
7. Capital Gain Treatment
8. State Law issues
9. Basis for Income Tax
Purposes
10. Deductibility of
Interest
11. Other Issues.
F. Suggested Terms of a Buy-Sell Agreement
1. Triggering Events.
2. Setting the Purchase
Price
3. Payment Terms
4. Should the Buy-Sell Be
Mandatory or Optional
5. Restrictions
Appendix I - IRS Forms
IRS Form 8023: Elections Under Section 338 for Corporations Making
Qualified Stock
Purchases
Instructions for Form 8023
IRS Form 8308: Report of a Sale or Exchange of Certain Partnership
Interests
IRS Form 8594: Asset Acquisition Statement
Instructions for Form 8594
Appendix II – Asset Purchase Agreement Form
Appendix III – Stock Purchase And Sale Agreement Form
Appendix IV – Cross Purchase Buy-Sell Agreement Form
Appendix V – Entity Purchase Buy-Sell Form
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