When most entrepreneurs envision mergers and acquisitions, they envision lawyers, investors, and upper-level negotiations. What is most likely forgotten is the crucial role that a tax accountant performs behind the scenes—quietly protecting financial interests and steering the deal away from costly pitfalls. Without the help of tax accountants in Los Angeles, even the best business deal becomes a long-term liability.
Evaluating Tax Burdens Prior to Signing
Before any deal is reached, a tax accountant performs comprehensive due diligence to uncover hidden tax liabilities. This is more than superficially skimming the books. It entails a full review of previous-year returns, accrued payroll taxes, erroneous deductions, outstanding audits, or unresolved IRS matters. These hidden liabilities, if left unresolved, could become enormous issues for the buyer after the acquisition has been completed. Identification of these risks ahead of time can affect the purchase price—or even derail the deal. A full tax review can save delays, dollars, and legal headaches.
Making the Deal Tax Efficient
The way a transaction is structured has long-term tax consequences. A quality tax accountant will review whether or not the transaction should be structured as an asset purchase or a stock purchase. The decision affects the treatment of capital gains, depreciation potential, and exposure to liabilities. In most cases, a tax accountant will work with attorneys and financial advisors to experiment with different scenarios and help both sides of a deal with a mutually beneficial structure. The result is usually an even more tax-beneficial transaction with more value left on the table.
Handling Sales Tax and Nexus Concerns
With the current e-commerce economy, nexus laws have grown more complicated. If the target business is in multiple states—or even overseas—codes regarding sales tax, income tax, and use tax can vary significantly. Tax accountants in Los Angeles assist in estimating compliance in all regions so that the acquiring business does not unknowingly assume liabilities. They look for whether sales tax collection processes were in place and if there were missed filings. Correcting these problems in advance can prevent audits and fines after the acquisition.
Reviewing Tax Attributes and Carryforwards
Target firms usually possess positive tax features such as net operating losses (NOLs), tax credits, or depreciation patterns. A tax accountant checks if these features can be carried over or transferred to the target firm. These assets can be of significant tax savings in the future—if properly managed. But their misuse or mismanagement can lead to their loss, which will be an expensive mistake. Knowledge of the complexities of Section 382 limitations or built-in gains is required here.
Post-Transaction Support and Integration
The tax accountant's job is not complete when the transaction is executed. Post-acquisition, they assist in consolidating accounting systems, aligning tax strategies, and staying in compliance with the acquired or newly created entity. Such proactive involvement prevents regulatory issues and ensures the company's financial stability in the future. They also assist in putting in place standard procedures to avoid duplication of liabilities or missing deadlines for filing.
Final Words
Tax accountants in Los Angeles are not just back-office support—on every M&A transaction, they are strategic counsel. From exposing hidden risk to structuring transactions to drive value and helping with post-close integration, their expertise is critical to making a deal work. Disregarding their counsel can lead to hidden costs, legal headaches, or missed financial opportunities.
