In regards to mergers and acquisitions (M&A) in Australia, understanding the intricate interplay of tax, workforce, and legal considerations is crucial for professionals across finance, HR, and legal sectors. PwC Australia's September Tax Briefing delved into these complexities, offering valuable insights for stakeholders navigating the Australian M&A environment.
M&A market trends
PwC M&A tax partner Adam Pascoe provided an overview of the current M&A market, noting a slowdown in transaction volumes due to economic uncertainties and regulatory scrutiny. Despite this, there remains a significant amount of capital ready to be deployed, particularly in private markets. The focus on infrastructure and real estate investments continues to grow, driven by megatrends such as energy transition and digital transformation.
Tax, workforce and legal considerations
PwC partners Sally Woodward (employment law and legal leader), Adam Nicholas (employment tax) and Christina Sahyoun (infrastructure tax) joined Adam Pascoe for a discussion on the tax, workforce and legal risks that catching the attention of buyers and sellers in M&A transaction. These issues are not, however, limited to M&A transactions - they should be considered by all businesses in the context of their risk and governance framework.
Sally Woodward and Adam Nicholas discussed the importance of wage compliance and associated employment tax issues in the context of M&A transactions. Missteps in these areas can lead to significant financial and reputational risks. The complexity of payroll tax and superannuation guarantee obligations, especially for businesses using contractors, requires meticulous attention to detail and proactive risk management.
Adam Pascoe and Christina Sahyoun highlighted a range of broader tax issues that are relevant to M&A transactions including the treatment of transaction costs, thin capitalisation, capital gains tax for foreign residents and stamp duty. These issues are relevant for both buyers and sellers, and recent or proposed law changes have added complexity in some areas. Adam also briefly touched on dealing with risks relating to Pillar Two Global and Domestic Minimum Taxes in the context of due diligence.
Throughout this session, the role of Warranty and Indemnity (W&I) insurance in M&A transactions was also discussed. Whilst this is an increasingly popular way to manage risks, there are many tax, workforce and legal areas where W&I insurance may not be available due to the nature and potential scope of the unidentified risks.
You can watch this virtual event on demand now.