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Powered by Young IFA Network (YIN)
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By Itzik Amiel, adv. (LL.B., LL.M.) |
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Introduction
Fresh, Green and interesting thoughts are the path of this column. The Young IFA Network (YIN) assumes that finding knowledge in the international tax profession is always possible; that it is a matter of "seek and ye shall find," rather than "trick or treat." Many of our colleagues, tax professionals, never gave up faith that a life in the international tax arena would serve some of their deepest needs and aspirations. Their work of counseling and sharing knowledge as tax professionals allows them, also, to keep the faith.
In this column YIN expects to be candid about both interesting thoughts besetting the international tax profession and sharing interesting thoughts of young tax professionals. We hope that participants in the column will be equally frank and share interesting knowledge. We hope to be a magnet for empowering discussions of professional satisfaction and the means by which it can be achieved.
Your participation is needed to succeed in this endeavor. The columns will try to respond to your concerns and solicit thoughts of young tax professionals. Often, however, we will circle back to topics which arise from our encounters with your own thoughts and experiences by retaining the quality of a joint experiment and dialogue. Beginning in this column, we will employ hypotheses based on real experiences to bring these dialogues to life. Suggestions will be given about resources to explore the topics covered.
What about your own life in the international tax world? How would you gauge your own professional satisfaction? By what standards? It might help to know that about 25% of tax professionals are "neutral to dissatisfied" with their work, while the remaining 75% say they are satisfied; or that the single most frequently cited cause of satisfaction is "intellectual challenge." Yet, what does intellectual challenge mean to a tax professional, and why do many "satisfied" tax professionals nevertheless contemplate changing jobs? Although instructive, statistics are as descriptive as the coefficient of friction for an elephant sliding down Mount Everest; they don't quite capture what it's all about.
You are invited to let everyone know your thoughts and experiences in finding satisfaction in the international tax arena. What have been your own professional highs and lows? What do you see in the tax professionals around you? What tax professional do you know with whom you would trade places in a heartbeat? What does it mean if you don't know one? What match exists between the values inherent in the profession and your own priorities? And please, let us know what you think of this whole endeavor and what topics you feel are important to be included in future columns and discussions. YIN looks forward to your reactions with great interest and a little trepidation: these web ventures only magnify the old axiom, "beware of what you want, for surely you will get it!"
Itzik Amiel |
Column
"A professional is someone who can do his best work when he doesn't feel like it." - Alistair Cooke, Journalist
Let everybody feel important
Every tax professional, even a young one, has critical skills and knowledge that are important to many other people in the international tax arena.
Be a consumer of knowledge
Your job in your company also requires that you know a lot about what is going on everywhere else, as well as being thoroughly conversant with what you do. And the fastest and most accurate way of keeping current with what is going on is to develop and maintain a network of contacts, an informal team of people within your workplace who keep you informed and who you keep informed in turn.
Encourage participation and involvement
The old methods of command and control now exist only at the old-line professional firms and companies, many of which are fighting for their very survival. Today, men and women, young tax professionals, want a high degree of participation and involvement in their work. They want an opportunity to discuss and thoroughly understand what they are doing and why they are doing it. Young professionals want to have an integral role in achieving goals that they participated in setting in the first place.
Become a team player
Being a team player is no longer something that is optional for the young tax professional. Today, it is mandatory. If you want to achieve anything of consequence, you will need the help and cooperation of lots of people! Your main objective is to structure everything you do in such a way that, because you are constantly cooperating and working well with others, they are continually open to helping you achieve your goals!
 Introduction of a young tax professional
Let me introduce you to Bart H.C.M. le Blanc. Bart studied for MSc Fiscal economics at Tilburg University, and his MBA, from Nyenrode University, in the Netherlands. Bart works as senior associate in the International Tax Department of Loyens & Loeff N.V. in Rotterdam, the Netherlands, and focuses on structuring
M&A transactions with specific interest in M&A contracting. In case you want to contact Bart, he can be reached on bart.le.blanc@loyensloeff.com. Tax trends in M&A transactions: the pitfalls of specialisation
Buying and selling businesses once used to be the exclusive playing field of large corporations. Businesses were bought only to expand the buyer's existing business, other than by way of organic growth, and divestments were done to increase a seller's core business focus. In the last decades, however, the M&A landscape has changed. Reasons can be found in expected economic growth, low cost of financing, the rise of financial buyers and increased international focus. The changes have also led to a shift in the goals of potential buyers, i.e. from 'strategic fit' and 'operational integration' to 'return on investment' and other financial targets.
This shift also seems in line with a simultaneous increasing focus on shareholder value. As a result, buyers are now more and more considering issues like cash flow management (excess cash needs to be distributed if the target has no investment opportunities with sufficient return), leveraging (as a means of risk allocation and in most cases the cost of external capital is less than the return required by the buyer's shareholders) and also taxation issues.
The increased focus on taxation issues and opportunities in M&A transactions (among others deal and exit structuring) has not changed the principal rules of the game. Main focus is still on managing capital gains taxation, lowering withholding taxes on all types of cash flows and allocating debt to jurisdictions with sufficient taxable profits taxed at relatively high tax rates. However, the range of tax planning solutions that are at the disposal of buyers and sellers has increased tremendously under pressure of the industry and investors are no longer reluctant to get off the beaten track.
One of the reasons is that costs (whether operational or tax-related) have a direct impact on the return generated by the target and if costs can be avoided the net return will increase. At the same time, the expectations of buyers and sellers have changed. Once the aim was to reduce tax leakage as much as possible but nowadays the existence of tax leakage is not acceptable, as presumably this can be avoided through tax planning. Meeting clients' expectations in this respect is possible by making use of multiple jurisdictions, different types of entities (where bodies corporate are replaced by transparent or hybrid entities) and/or specific financial instruments.
Another tax-related topic that in my view is upcoming revolves around M&A contracting, i.e. an increasing focus on contractual comfort through warranties and indemnities. Buyers and sellers are more and more realising that most claims under warranties and indemnities are tax-related issues and this explains the increasing focus. Warranty and indemnity cover are simply seen as good practice from the buyer's perspective. However, this practice is also changing under pressure, among others from an increasing number of transactions being set up as controlled auctions and more financial parties acting as seller. In most of these cases sellers are no longer willing to provide comprehensive cover.
The drafting and negotiating skills of parties are thus becoming increasingly important and requires an integrated approach combining tax, legal and financial experts. This means that potential issues identified during a due diligence should be carefully considered as this is no longer possible to obtain a warranty or indemnification for each item. Ultimately, purchase price adjustments in respect of anticipating risks or obtaining warranty insurance can be the solution although in practice they are not (yet) considered a workable alternative.
The trends described above inevitably lead to more specialisation amongst tax advisers and lawyers. On the one hand specialisation is good: it allows to focus on specific items and enables to broaden our knowledge of our specific industry focus. As such tax advisers and lawyers should be able to advise their clients in depth on relevant pitfalls of the industry. On the other hand, however, another pitfall is that they might get carried away in too much focus and detail. It is important to always make sure that the overall goal of the transaction is kept in clear sight: completion. And there is a need to keep in mind that, although the world around us changes, the aforementioned principles do not.
Copyright: Bart le Blanc
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