In many private M&A deals, tax is treated as a due diligence hurdle, something to be dealt with once the heads of terms are signed. But in reality, tax exposures can surface late in the process, introducing delays, price chips or even jeopardising the deal altogether. And while the headline numbers may look strong, underlying tax complexity can quietly erode value, create friction or shake investor confidence.
As a CFO, you are already navigating commercial negotiations, financial modelling and operational readiness. The last thing you need is a tax surprise undermining months of preparation.
That’s why we developed My Tax Partner, a senior, partner-led service from HaysMac that provides you with clear insight and confidence about your tax situation through regular, agenda-driven meetings before any deal goes ahead. This document outlines the topics we’d be likely to highlight in our meetings, enabling CFOs and finance leaders to proactively identify and manage common tax challenges. The objective is to ensure that you are thoroughly prepared, well-informed, and able to navigate the transaction process with confidence and control.
With the right preparation, tax becomes a lever, not a liability. Read on…
Why tax is too often the deal-breaker no one saw coming
Many businesses approach transactions focused on headline valuation, commercial terms and legal structuring. But tax exposures – often historic, technical or buried in legacy group structures – can emerge late in the process and create major problems at a critical moment.
Sellers may be caught off-guard by issues like undocumented share schemes, VAT liabilities, or incorrect assumptions about Capital Gains Tax (CGT) relief. Buyers may inherit tax risks they didn’t fully model. In both cases, the fallout is the same: uncertainty, delay, or a reduced sale price.
A proactive tax review well before diligence starts can surface these issues early, allowing time to resolve them, or adjust expectations, before the pressure is on.
The top tax risks that surface too late
When a transaction gathers momentum, tax issues often emerge at exactly the wrong time. These are rarely new problems. More often, they are historic issues that were deprioritised during growth, or assumptions that have never been tested until external advisors begin their review. CFOs should be alert to these common issues that we see emerge mid-deal.
For sellers
Group structure: Over time, holding companies, legacy subsidiaries or intercompany loans can complicate a disposal and limit flexibility around deal structure. What once worked operationally may no longer be tax-efficient and can quickly become a point of concern for buyers.
Historic share schemes: Poor documentation, incorrect valuations or schemes that no longer meet qualifying conditions can raise employment tax and compliance risks during diligence. Similarly, founders often assume Business Asset Disposal Relief (BADR) will apply, only to discover late in the process that one or more conditions are not met, materially reducing post-tax proceeds.
Indirect taxes: Uncrystallised VAT liabilities can arise from past restructures, international activity or changes in business model. PAYE and NIC exposures linked to employment status or incentives may have gone unnoticed internally but can become deal-critical issues under scrutiny.
Missed tax reliefs: R&D claims, capital allowances or losses that were never identified could have strengthened cash flows or EBITDA. Once a deal is live, there is often little time to address them.
For buyers
For buyers, the risks are different but equally material.
Acquisition structure: Poorly structured deals can lock in higher tax costs. Under time pressure, buyers often miss opportunities to optimise debt funding, access reliefs or structure for long-term efficiency.
Earn-outs, roll-overs and deferred payments: The tax treatment of these elements can vary significantly depending on how they are structured, when value crystallises and how performance conditions are drafted. Without early planning, both buyers and sellers may be surprised by the eventual tax outcome.
Property-related exposure: In asset-heavy deals, Stamp Duty Land Tax, Annual Tax on Enveloped Dwellings and capital allowances are frequently underestimated. When property is held via Special Purpose Vehicles, risks increase and can directly affect cash flow and deal value.
Distorted valuations: Items like dilapidations, lease incentives and capital allowances are often overlooked in financial models, yet they can distort net working capital or net asset value assessments. These issues rarely derail a deal on their own, but collectively they can weaken negotiating positions and reduce confidence at a critical stage.
The common thread across all of these risks is timing. None of them arise overnight. But without proactive review and preparation, they tend to surface when there is least flexibility to address them.
What CFOs should do before the deal moves forward
To avoid these issues, CFOs should take action well before the deal reaches diligence stage. A pre-deal tax review is the best way to reduce surprises and strengthen your negotiating position.
Here’s a checklist of steps to take:
- Review your current group structure
Spot inefficiencies, legacy entities or intra-group loans that could complicate the transaction. - Assess BADR eligibility and personal shareholder positions
Check that founders and key shareholders qualify, and if not, explore options while there’s still time. - Clarify the treatment of share options and Long Term Incentive Plans
Ensure that schemes are well documented and appropriately valued. - Model the deal under current tax rules
Especially relevant following Autumn Budget changes to CGT, dividend tax and property-related income. - Identify and document any unclaimed reliefs
R&D claims, capital allowances or historic losses can make a real difference to valuations. - Review employment and contractor classifications
IR35, PAYE and NIC exposures can surface during due diligence and may impact working capital adjustments. - Sanity-check the proposed deal structure
Consider what form of sale will deliver the most tax-efficient outcome, e.g. share sale vs asset sale, cash vs earn-out, UK vs cross-border structuring.
Ready to protect value and stay one step ahead of the deal?
A well-prepared tax position won’t just reduce risk. It can increase value, strengthen your negotiating hand, and give investors or buyers greater confidence in your business.
But in many fast-growing businesses, finance teams are lean, time is tight, and there’s often no in-house tax specialist to take the lead. As tax complexity increases and transaction timelines tighten it’s easy for strategic tax planning to slip down the list, until it starts holding the deal back.
My Tax Partner is designed for CFOs and finance leaders who want to get ahead of the process. We act as your outsourced, strategic Head of Tax, bringing senior-level insight into the tax issues that matter most in a transaction. Avoiding the cost of a full time hire, we help you anticipate challenges, unlock efficiencies, and present a clean, credible position before any diligence begins.
Crucially, My Tax Partner gives you the space to prepare strategically, away from the time pressure and scrutiny of a live deal process.
We work with you well in advance of any transaction to help you:
- Identify hidden risks and tax exposures before buyers or advisors do
- Model the impact of different deal structures on valuation and post-tax outcomes
- Optimise group structure and shareholder positions to support tax efficiency
- Clarify and document your tax position, making due diligence smoother and buyer conversations more confident
- Strengthen your investor narrative, particularly when fundraising, seeking a premium valuation, or preparing for Private Equity involvement
This is not formal tax due diligence. It is strategic pre-deal preparation, delivered by a partner-led team with deep tax and transaction experience across multiple sectors. Whether you’re months away from signing or just starting to shape the opportunity, addressing tax early can protect and even enhance deal value.
Now is the time to lay the groundwork.
Book an exploratory My Tax Partner session with one of our senior tax advisors. We’ll stress-test your tax position, surface potential risks or opportunities, and build a practical, deal-ready tax strategy that supports smoother execution, stronger valuations, and fewer surprises.
Let’s start with a conversation, before the deal gathers pace.
Contact Dougie Todd to book your session.
