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COVER STORY

Around every corner: tackling transactional risk

Transactional risks are not simply commercial, financial or political in nature, but include a plethora of other inherent risks – technical, environmental, developmental and sociocultural.

FEATURES

US regulatory regime change – outbound investment and China

The goal of the regulations is to ensure better oversight and control of investments that may contribute to national security risks. Thus far, the only country which has been identified as a country of concern is China.

Suspicion and surety: submitting a high-quality SAR

It is essential that a suspicious activity report (SAR) filing is of the highest quality, with all the key information included to make them as useful as possible to law enforcement authorities.

Promising tool: the UK’s new DSS

The Digital Securities Sandbox (DSS) will facilitate the testing and adoption of digital securities across financial markets. Through the DSS, industry will be able to set up financial market infrastructures that utilise digital asset technology.

Enforcement escalation: SEC eyes ESG compliance

With the SEC and other regulatory bodies increasing their focus on environmental, social and governance (ESG), organisations will need to review and update their policies and procedures with respect to investor-facing disclosures.

IP in Italy: major changes to Intellectual Property Code unveiled

Changes have been implemented to further harmonise Italy’s laws with the rest of Europe and to simplify the process for businesses of registering IP and enforcing it in the country.

ROUNDTABLE

Distressed M&A

High interest rates, persistent inflation and the prospect of recession has continued to drive debt defaults and bankruptcy filings, creating opportunistic and distressed acquisition opportunities. FW moderates a discussion between Joseph L. Robinson II at Birch Lake Associates, LLC, Darren S. Klein at Davis Polk & Wardwell LLP, Spencer A. Winters at Kirkland & Ellis LLP, Finella Fogarty at Reynolds Porter Chamberlain, and James J. Mazza, Jr. at Skadden, Arps, Slate, Meagher & Flom LLP.

SPECIAL REPORT

Corporate tax

Q&A: Tax technology strategy: transformation and enhancement

There are many risks that can stem from companies not making the right investment into enhancing their tax technology, which are all likely to translate into a single overarching one: loss of competitive edge. FW discusses how to transform and enhance tax technology strategy with Romain Tiffon at ATOZ Tax Advisers.

Tax challenges in the digital economy – Amount B of Pillar One

BDO Tax Services (Pty) Ltd Amount B is a component of Pillar One introduced to aid, simplify and streamline the transfer pricing process of pricing baseline marketing and wholesale distribution activities.

The shifting sands of transfer pricing

Charles River Associates From a practical perspective, the Amount B framework does not reduce complexities for multinational corporations, such as aligning transfer pricing and customs requirements and making year-end adjustments.

Implementation of Pillar Two: new tax planning strategies for multinationals in a changing regulatory landscape

Herbert Smith Freehills (Paris) LLP The Pillar Two tax regime aims to discourage shifting of profits by establishing a global minimum level of taxation in relation to each country where a multinational enterprise group operates.

Further attempts to harmonise and simplify direct taxation in the EU

Ashurst The Business in Europe: Framework for Income Taxation proposal introduces a common framework for calculating the corporate income taxable base at EU level.

Simplification of the tax system – UK focus with international context

Deloitte LLP Simplifying a tax system is not a quick or easy process. It depends on many factors – economic, political, the age of the tax system and others.

Taxation of carried interest: a view from the UK

Simmons & Simmons LLP The question that has been hotly debated in recent months is whether the memorandum of understanding is a statement of law or a ‘sweetheart deal’ for the industry; and if it is a statement of law, whether it is correct or incorrect.

Corporate tax: the dawn of a new tax era in the UAE

FAME Advisory DMCC The new corporate tax regime will bring increased transparency in terms of tax compliance and accountability and provide investors with greater confidence in the UAE’s regulatory framework.

Expanding scope of the Australian general anti-avoidance rule

Johnson Winter Slattery There is an increasing risk that the Australian Taxation Office will seek to apply the Australian general anti-avoidance rule to arrangements otherwise considered conventional.

Q&A: Tax insurance in real estate

Once it is determined that a risk is insurable, clear and concise presentation of the risk to the insurance markets can favourably impact both the willingness to insure and the cost of coverage. FW discusses tax insurance in real estate with Devorah I. Pomerantz at Great American Insurance Group.

TALKINGpoint

Transactional risk claims

Insurers must consistently refine their claims process and explore ways to make that process even more efficient. An open line of communication and a cooperative, collaborative spirit are incredibly effective. FW discusses transactional risk claims with Brittany Zimmer, Christopher Ziemba, Justin Giles, Carl Christian Rösiö and Daniella Smith at Euclid Transactional.

ESG and technology in the supply chain

Technology can assist with more valuable due diligence and data gathering outcomes, including utilising compliance data for uses beyond compliance. There is a lot of focus on environmental metrics, however social and governance metrics are areas where organisations can drive significant value. FW discusses ESG in the supply chain with Joost Vreeswijk, Michelle Davies, Alenka Turnsek and Jon Scott at EY.

DEALfront

mergers & acquisitions

JM Smucker to acquire Hostess Brands for $5.6bn

In a deal that unites two major American snack makers, J.M. Smucker Co. has acquired Hostess Brands, Inc. for approximately $5.6bn, which includes around $900m of net debt.

Orora agrees $1.4bn Saverglass acquisition

Australian glass manufacturer Orora has agreed to acquire private equity backed French high-end glassmaker Saverglass in a deal worth $1.4bn or A$2.2bn.

private equity & venture capital

Thoma Bravo to acquire NextGen Healthcare

In a move designed to accelerate its growth and innovation as a trusted adviser to healthcare providers, healthcare software provider NextGen Healthcare, Inc. is to be acquired by private equity firm Thoma Bravo for $1.8bn, including debt.

CVC agrees to DIF Capital deal

In a deal which will see the firm boost its position in the infrastructure space, private equity group CVC has acquired a majority stake in Dutch infrastructure investor DIF Capital Partners in a deal worth about €1bn in cash and shares.

bankruptcy & corporate restructuring

Evergrande files for Chapter 15 bankruptcy in the US

China Evergrande, the heavily indebted Chinese property developer, filed for Chapter 15 bankruptcy protection in the US.

iAero Group files for Chapter 11 bankruptcy

In a move designed to reorganise its operations and pave the way for a return to profitability, iAero Group and a number of its subsidiaries including iAero Airways (the largest B2B passenger charter and cargo air carrier in the US) filed for voluntary Chapter 11 bankruptcy protection.

SPOTlight

M&A deal financing: risks and recommendations

Capital Expert Services, LLC Companies spending, promising or borrowing money to engage in M&A this past year were taking financial risks, and the deal prices they paid showed that these risks were calculated with optimism.

2023: the year that failed to deliver for UK M&A

Accuracy Several factors contributed to the decline in M&A activity in 2023. These included the continuation of the war in Ukraine, rising inflation and regular interest rate hikes by central banks, all of which made dealmaking more challenging.

Key megatrends impacting business and policy decisions around the globe

Dentons Megatrends will continue to impact business risk in increasing scale and intensity. Business leaders need to factor these trends into their strategies in order to survive and thrive amid growing disruption.

R&D spend increases the value of trade secrets – are you protecting them?

Crown Jewel Insurance Trade secrets, particularly the ones furthest along the development chain in R&D or already in use, can be more valuable than any other assets a company has.

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CONTRIBUTORS

Accuracy

Ashurst

ATOZ Tax Advisers

BDO Tax Services (Pty) Ltd

Birch Lake Associates

Capital Expert Services, LLC

Charles River Associates

Crown Jewel Insurance

Davis Polk & Wardwell LLP

Deloitte LLP

Dentons

Euclid Transactional

EY

FAME Advisory DMCC

Great American Insurance Group

Herbert Smith Freehills (Paris) LLP

Johnson Winter Slattery

Kirkland & Ellis LLP

Reynolds Porter Chamberlain

Simmons & Simmons LLP

Skadden, Arps, Slate, Meagher & Flom LLP