TRANSACTION STRUCTURING

Transaction Structuring

Renmere specialises in the development, design and implementation of transaction structures within the broader context of mergers and acquisitions. Our deliverables are tailored to ensure that commercially viable structure alternatives are identified at the outset of the process and that the best option is selected with due consideration to the related risks and benefits.

We provide a comprehensive range of tax structuring advisory services, including the design of transaction alternatives, detailed step-by-step transaction structure memoranda, supporting transaction calculations, formal tax opinions, ruling applications and implementation support (including transaction cashflows and review of transaction agreements, resolutions and supporting documentation).

Mergers, Acquisition and Divestments
Renmere specialises in the structuring of third party merger, acquisition and divestment transactions, including leveraged buy-out transactions, management buy-out transactions, share buy-backs, sale of shares, sale of business and related transactions.

Every M&A transaction presents a number of alternative courses of action, each of which may yield a different tax result. The optimal M&A transaction structure should ensure that the commercial objectives of the parties are achieved in a tax optimal manner. Due consideration should be given to the potential risks and opportunities which may arise in relation to each transacting party and it is important to ensure that both the immediate and future implications of the transaction are taken into account.

Inbound and Outbound investment
A broad range of factors should be considered before selecting an appropriate cross-border investment structure. In this regard, the immediate and future South African and foreign tax attributes of the investment structure is of crucial importance. Given that the legal, capital, management and operational structure of the investment will have a significant impact on the total taxes to be suffered, each aspect should be planned and implemented with great care.

Renmere’s approach to cross-border investment structuring ensures that the ultimate investment structure is suited to the practical and commercial realities of the investor and achieves an optimal multi-jurisdictional tax result in relation to immediate and future cashflows.

Investment into Africa
There are skilled subject matter and industry experts in most of the major African jurisdictions, however, very few in-country practices have managed to recruit the full spectrum of expertise required in order to successfully advise on and implement third party M&A transactions.

As a consequence, it is often difficult to ensure a consistent level of quality and responsiveness across jurisdictions. Where left uncoordinated, turnaround times can be slow, advice may lack proper context and pragmatic solutions may not be forthcoming.

Renmere’s specialised approach ensures successful multi-jurisdictional transaction tax work in Africa. Our methodologies include the following:

  • Providing a centralised project management and structuring function which involves a clear and disciplined work program.
  • A hands-on approach which may include performing work in-country.
  • Instruction methodology which favours the confirmation of assumptions rather than open-ended queries.
  • The use of tailored templates which culminate in a single consolidated deliverable.
  • Employing the best tax professionals in each jurisdiction.
Fund, Co-investment and Investment holding structures
The selection of an appropriate investment vehicle and holding structure may have a material impact on the after-tax returns realised by investors in relation to an underlying asset. The process can often be complicated by factors such as a requirement for open-ended investment structures or co-investments with different classes of investors. Specialised considerations often apply depending on the commercial objectives of the parties, the jurisdictions involved, the funding structure, the nature of the investment and the tax profile of the investors.

Renmere advises on investment holding and co-investment structures, including private equity fund structures, renewable energy investments, joint ventures, partnerships, trusts and special purpose vehicles.

Black Economic Empowerment
Black Economic Empowerment transactions require a specialised application of fundamental M&A transaction structuring principles. It is important to ensure that no unnecessary implementation costs arise, that a tax efficient funding mechanism is employed and that all future tax implications, including in relation to any unwind or divestment scenario are properly considered and addressed.

Renmere advises on the design and implementation of Black Economic Empowerment transactions.

Employee Incentive Schemes
The successful implementation of an employee incentive structure may yield significant commercial benefits for the parties involved. Whether these arrangements are implemented as part of a broader M&A transaction or as a stand-alone arrangement, due consideration should be given to the overall tax efficiency of the incentive mechanism, both from a company and employee perspective.

Renmere advises on the design and implementation of employee incentive structures, including the broad spectrum of share incentive arrangements.

Group Reorganisations
Although internal reorganisations are usually less challenging than third party M&A transactions from a commercial perspective, the tax structuring considerations can be equal in complexity.

Internal group restructuring and rationalisation transactions can present significant risks from a tax perspective and it is important to ensure that these arrangements are implemented in terms of an appropriate transaction structure. Internal reorganisations can furthermore provide a commercial precursor for significant planning opportunities.

Renmere specialises in group reorganisation transactions, including company formations, mergers, unbundling transactions, liquidations, intra-group sale and exchange transactions.

Funding transactions and capital reorganisations
In recent years, in line with international developments in the field, extensive legislative changes were introduced in South Africa to govern the tax treatment of corporate funding arrangements. A variety of highly complex rules determine the tax treatment of debt and equity instruments and may impact the nature of the yield, the timing of the yield, funding related costs, the tax base of the instrument, withholding taxes, the tax deductibility of expenditure and implications on settlement or redemption. An equally complex set of principles apply to any related hedging arrangements which may be implemented in conjunction with such funding arrangements.

Renmere specialises in corporate funding structures, including acquisition funding, operational funding, debt refinancing, debt capitalisations, debt waivers, securitisation transactions, funding related hedging transactions and security arrangements.

Tax Due Diligence services

We provide a comprehensive tax due diligence review service, including South African Income Tax, Withholding Taxes, Value Added Tax, Transfer Duty, Security Transfer Tax, Payroll Taxes, Customs and Excise and Mineral Resource Royalty.

In addition to the above, Renmere provides a multi-jurisdictional tax due diligence project management service which includes the scoping, negotiation, work programme design, oversight and reporting in respect of multi-jurisdictional tax due diligence review assignments.

Every due diligence assignment is scoped by Renmere to take account of the transaction size, timing, target industry, nature of activities, complexity of key target risk areas and the transaction parameters agreed between the parties. Renmere’s due diligence work programme is designed to identify all material historical risks, opportunities and target attributes relevant to the acquisition structure. Key risks are identified and communicated at pre-agreed intervals and a detailed tax due diligence report is issued upon conclusion of the review. All historical tax risks are contextualised and quantified, an appropriate course of action is recommended and the acquisition agreements are reviewed to ensure that the appropriate protection mechanisms are incorporated.

Solutions ——

Renmere offers specialised tax related savings solutions to selected corporate clients. Engagements of this nature are concluded on a contingency fee basis and may depend on the existence of specific factual circumstances.

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