Importance of Post‐Merger Integration

by Aki Mitsunaga on July 17, 2014

“Going global” is one of the key focuses for many companies nowadays. Accordingly, cross-border mergers and acquisitions (M&A) has been on the rise, and the trend is expected to continue. Considering post‐merger integration (PMI) plans during the M&A process is as important as considering purchase pricing and financial risks.

PMI encompasses everything from financial reporting integration, which includes the integration of the accounting system and internal controls, to cultural integration. Every organization has its own culture – the set of norms, values, and assumptions that govern how people act and interact every day. Needless to say, the cultural difference would be much larger when the target company is in a different country.

Laying out a specific implementation plan for PMI is a crucial piece of the M&A’s success. There have been instances where a failure of PMI has resulted in losing key employees from conflicting culture, weakening the merged company’s strengths. For successful integration, it is key to set a realistic time frame and implement it accordingly.

Have you thought about how to implement a succession plan? Have you thought about the realistic time frame to make the integration go smoothly from Day 1? Hiring outside consultants to assist with the PMI can significantly ease the burden and shorten the transition period.

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Oops! The IRS Did It Again! OVDP-2014 Announced

The IRS does not seem to be able to leave well enough alone for more than a year or two at a time.  While the last change, in 2012, is only a couple of years old, the IRS announced new revisions that took effect on July 1, 2014.  The difference with this change is the IRS may have actually improved the program for taxpayers, after having made the rules more difficult and the penalties harsher in the last three sets of revisions.

Key improvements in OVDP-2014 include:

  • It applies to everyone – U.S. persons both in the United States and living outside of the United States
  • The $1,500-per-year limit for underpaid taxes has been lifted
  • Penalties have been reduced to 5 percent for residents and waived for nonresidents
  • The risk questionnaire has been eliminated

In exchange for these benefits, taxpayers must:

  • Submit a statement that certifies their noncompliance was not willful
  • Pay the penalty with the OVDP submission
  • Submit all supporting documents with the OVDP submission (though it can be done electronically)

In addition to these changes. the IRS has also, apparently, removed the ability to file information returns (like Forms 5471, 5472, 8865, and 926) late with no penalties.  Taxpayers may now be subject to $10,000 (or more) in penalties for information returns filed late.

For more information, please see - http://www.plantemoran.com/perspectives/articles/2014/Pages/irs-announces-revisions-to-its-offshore-voluntary-disclosure-program.aspx

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2014 Double Eagle Awards Dinner

May 22, 2014

Each year the U.S.-Mexico Chamber of Commerce hosts a Double Eagle Awards Dinner. The purpose of this dinner is to honor a group of private sector companies and a public sector individual with its Double Eagle Awards. The award criteria are based on a company’s commitment and initiatives to build a stronger relationship between the […]

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Pushing Down Expenses: Are you Minimizing Your Worldwide Effective Tax Rate?

February 24, 2014

There are many strategies that internationally active U.S. companies can exercise to minimize their worldwide effective tax rates. One such strategy is to be diligent about charging out expenses to your foreign branches and foreign flow-through entities. For illustration purposes, think of the very popular business structure of a U.S. company that has a “check […]

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Tax Benefits for Exporters

February 13, 2014

The U.S. tax code contains a number of incentives for desirable activities that U.S. taxpayers can engage in.  Some of the incentives can come and go at the whim of Congress, like the research & development credit, but the one incentive that has remained relatively unchanged since 1971 is a benefit for U.S. exporters.  That […]

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Are There Hidden Costs Within Your Global Structure?

January 24, 2014

There are a variety of concerns when considering an international structure, from regulatory requirements and income tax efficiency to ease of moving capital or even employee benefit impacts. However, one that rarely seems to enter into the decision-making process is statutory audit and financial statement requirements. A previous blog post on September 30, 2013, discussed […]

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What do Apple and Amazon have in common?

January 7, 2014

a. They’re both headquartered on the West coast. b. They both started in garages. c. Their stocks have both seen incredible growth over the years. d. They’ve both been scrutinized by the government for their international tax strategies. Although all four statements are true, it’s “D” that we’d like to direct your attention toward today. […]

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FATCA Withholding Begins in July 2014 – What does that mean and what should be done to prepare?

December 23, 2013

One of the hottest topics of discussion among international tax practitioners and multinational business as we enter 2014 is the continued implementation of the Foreign Account Tax Compliance Act, or FATCA.  We have already seen some of the aspects of FATCA with the introduction of Form 8938 for individuals, the issuance of new draft W-8’s […]

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Simplified Repatriation Procedure in China

November 25, 2013

One consistent topic of frustration for U.S. investors into China is the process required to repatriate cash back to the U.S.  However, reforms issued by China’s State Administration of Foreign Exchange (SAFE) should help simplify the process.  As of September 1, 2013, the new process for repatriation is in place, covering payments other than amounts […]

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Mexican Tax Reform – Are you prepared?

November 11, 2013

On October 31, the Mexican Congress approved a tax reform package that will take effect in 2014.  Although the new tax on junk food should not affect most U.S. business in Mexico, many other provisions will.  First, the Mexican minimum tax commonly called IETU, has been repealed.  This should be a benefit for most U.S. […]

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