DUE DILIGENCE AND SUCCESSOR LIABILITY
Prepare for the future starting now
Buying or selling a business is an exciting, albeit stressful, time for all involved. With so many other considerations, sales and use tax often falls to the wayside. Unfortunately for some, this oversight can lead to costly fixes as well as legal battles down the road. If liabilities are uncovered by the taxing jurisdictions, the buyers are typically stuck with the bill. After years of helping the buyers dig themselves out of sales tax holes, we wanted to do something about this. We started reaching out to venture capitalists and CPA firms specializing in mergers and acquisitions to gauge interest. Needless to say, the consensus was that there is tremendous value in knowing the exposure prior to the sale.
There is value in understanding where the liabilities sit, but there is arguably more value in developing a plan to address the liabilities. Our due diligence team is skilled in reviewing the revenue and expenditure data to accurately calculate exposure. We review all aspects of the business to see if there is outstanding debts to taxing jurisdictions, unrealized nexus (collection and filing requirements), tax, and possible penalty and interest calculations. Our goal is to deliver accurate figures to help pave the way for a successful transition during the sale or merger.