To help you understand your entitlement to input tax credits, we will discuss M&A activity as comprising three broad phases. However, every transaction is different, and will not necessarily follow a sequential pattern from phase one to phase two, then phase three, nor will it always include all identified phases.
Phase one – preliminary phase/exploration of possibilities
Phase one encompasses preliminary activities that occur at different levels within an organisation looking at new business opportunities, restructuring and expansion plans, internal review of strategic objectives and divestment opportunities.
Phase two – project established but form of transaction not yet determined
Relevant activities during this phase may include due diligence, transaction planning, financial modelling and preparing an information memorandum for potential bidders.
Phase three (final phase) – form of transaction known and completion of transaction
The final phase commences when the proposed manner in which the M&A will occur has been decided and extends through to the conclusion of the transaction.
This phase includes:
- activities where the form of the transaction has been determined, but the deal has not yet been struck – for example, continuing due diligence, drafting of legal agreements, establishing necessary legal and regulatory approvals, and the timing and negotiation of terms
- activities between the signing of the agreement and settlement – for example, regulatory approvals, shareholder approval, financing arrangements and preparation of settlement accounts
- post-completion activities relating to the M&A transaction – for example, updating the share registry, debriefing and further regulatory compliance.
M&A activity may not necessarily include all phases
Not all phases will occur in each transaction – for example, in some instances an entity may establish a preferred option (phase three) but the other party may reject this option, or a more preferable option may emerge. In some instances, the transaction may revert to phase one.
Next steps
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