Streamlined IPT: The Unspoken Benefit of M&As

Andrew Hocking
August 25, 2020

Whilst M&A activity may have slowed down slightly, deals are still taking place and the future of many insurers could depend on a buy-out. Continued volatility in share prices could make a once expensive acquisition target more appealing than it once was.

For sectors such as travel and events insurance, now could be the time to strategically join a larger insurer or to consider a merger to benefit from being able to offer a broader range of products to weather the storm.

Insurers will also be looking to bolster their offerings to stay ahead of competition in these challenging times. Smaller, agile insurers who have been quick to adopt new practices and technologies could see their appeal rise as established cross-border firms search for fresh ideas and perspectives to appeal to a wider audience.

M&A activity has a certain reputation due to past high-profile examples but there are a wealth of benefits from bringing two organisations together, including from a tax management perspective.

Even in the early stages of due diligence, a digital first approach to tax can help accelerate the deal. Corporate buying teams would rather review accurate, digitally validated tax remediation records than wade through mountains of past returns. The risk for error or missing filings is also much greater with a paper filing approach, which could also undermine confidence in the target organisation. Digital filing makes it much easier to audit taxes on both sides of the deal.

Once completed, a coming together of two companies is a time to review and reassess operations – what works and what could be improved. It can be a great opportunity to push forward with digital transformation and the move towards a digitised approach to compliance.

One side of the business might have a bigger tax team with years of expertise but they’re still filing taxes manually. For the acquired company, the digital approach the organisation has taken may have been the deciding factor for prospective buyers. The smaller team could introduce their digital tax approach to the business and demonstrate the benefits first-hand of using software to manage tax compliance.

Even if both sides have been reluctant to digitise operations, now could be the right time to sit down and assess the benefits objectively. Greater accuracy, improved efficiency, compliance with the latest regulatory updates – it really transforms operations and can allow the compliance team to unlock further value.

Cross border firms should see ample benefits too. Having a solution capable of applying the relevant tax rates to each region will substantially improve monthly filing, especially for more complex territories, such as Spain, and those leading the way in electronic tax.

Speak to Sovos about how our solution can help you navigate the complex process of M&A and ensure tax compliance and efficiency.

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Andrew Hocking

Director of Managed Services. Andrew is the Director of Sovos’ Managed Services group in Europe. Based in London, he leads teams specialising in IPT and VAT compliance and fiscal representation in over 30 countries. Andrew holds qualifications in Finance and Business Law, and is a qualified Chartered Accountant with over 10 years experience in indirect tax and technology.
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