Preliminary Considerations With Fiduciary, Corporate, Securities And Regulatory Law

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Preliminary Considerations With Respect To Tax, Corporate, Securities and Regulatory Law [Level 3 Practice Note] When planning a divestiture, the parent [and its advisors] must tailor the structure of the transaction to meet the strategic objectives of parent. It is imperative that such objectives be clearly articulated so that the parent and its advisors are able to develop a structure that (a) achieves the business and financial goals, including tax treatment, parent intends, and (b) may be executed (i) in the time frame parent anticipates and (ii) most efficiently taking into consideration (A) corporate and securities laws at the state level, (B) securities laws, anti-trust laws, and laws governing foreign ownership of US assets, at the federal level, and (C) overall transaction cost. Following are key tax, corporate law, securities law and antitrust and other regulatory issues typically considered in selecting and developing the structure for a divestiture transaction. For more detailed analyses of such issues, see the practice notes for Sales of a Division or Subsidiary, Equity Carveouts, and Spin-Offs . Tax Considerations. Note that tax treatment is often a primary driver in selecting and tailoring a transaction structure for a divestiture. Following are key tax considerations: • Corporate Level Sale of Assets or Stock: Sales of assets or stock to a third party are generally taxable to the parent to the extent the purchase price exceeds the parent’s basis in the

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