Acquisitions, divestments and restructuring during a pandemic – Exploiting tax opportunities
This article was published in The Guardian Newspaper on 26 August 2020. Below is an excerpt from the article.
The economic effect of the COVID-19 pandemic (the Pandemic) has been described by the World Bank in its Global Economic Outlook1 , as the largest economic shock the world has experienced in decades.
Many companies, particularly those in the airline, oil and gas, hospitality and entertainment business, have witnessed a massive decline in forecasted revenue, unpredictable foreign exchange, hugereduction in customers’ patronage, uncertainties in the economic framework, amongst other issues. Given the new realities, which have been predicted might be the new norm, many companies are reevaluating their business models to ensure they remain viable and profitable.
Some companies are considering undergoing a restructuring either by divesting their business operations or disposing of non-core assets. While some companies are considering investing in new businesses to guarantee survival.
This may also include backward integration to curb foreign exchange uncertainties and ensure better operational efficiency. Whichever choice a company or investor makes, it is worthy to note that there are tax opportunities that can be harnessed.
This article examines some of the tax considerations and opportunities that investors should be aware of whendeciding to acquire new businesses, restructure existing businesses or divest underperforming businesses.