Transfer Pricing and Value Creation in M&A Deals


Hands up if you knew there was nearly $6 trillion in M&A deal flow value in 2021?

Tax gurus have always played a role in M&A whether it be through assisting investors in protecting themselves against potential future tax exposures or generating value once deals are completed (or more likely, both).

Transfer Pricing is one of the main tax risks to consider in any M&A deal, but it is also one of the main areas of opportunity in any deal. One could say that it has taken more than enough time to give Transfer Pricing the attention it deserves in a deal context, but we now really see a laser focus on assessing the steps that investors and Multinational Corporations should take to maximise value creation within any deal.

In recent times, the tax landscape has seen significant changes: the BEPS initiative, Country-by-Country Reporting, Global Minimum Tax and new rules and regulations across the world. Business operating models have evolved quicker than the rules and regulations and there are now many more things that need considering when structuring a business and Tansfer PRicingpractices will also need to evolve more quickly.

Also, from the beginning of the pandemic, Tax Authorities have come under further pressure to generate additional tax revenues to pay for bailouts and fiscal stimulus packages whilst companies have been focused on staying in business while continuing to maximise shareholder value. These factors mean that managing any transfer pricing risks most effectively is incredibly important as it not only goes to the heart of the business operating model, but also is important when preserving value in a deal.

The additional scrutiny now attached to international tax and Transfer Pricing (these issues are no longer confined to the business pages of newspapers), makes considering their importance more and more prominent. Multinationals need the right skills and advice at all stages of a deal to minimise tax exposure but to also ensure upside opportunities are considered and crystallised. As such, many businesses are realising the importance of Transfer Pricing being part of broader strategic and operational discussion in M&A transactions as a key driver of the overall tax rate and a critical component in creating value.

What does this have to do with recruitment ? Well, in the past 5 years, we have witnessed the growth of M&A deal skills become a distinct specialisation for Transfer Pricing professionals in international markets at the concentrated end on deal flow activity. In the UK in particular, entire teams of M&A Transfer Pricing specialist have been formed to handle the tremendous influx of deal related TP advisory expertise demanded by MNCs.

Thankfully, the team at TP International has been trusted by these advisory firms to help source and secure the best M&A TP talent around.

If this is an area you would like to specialise in or have pre-existing deal experience, contact Aaron at:

TP International