Finance News by Mazars Romania - March 2022

Mon | 21.03.2022

Accounting/audit/tax

Finance News by Mazars Romania - March 2022

M&A deals in 2022: analysing the tax risks and identifying the challenges of a business can define the success of a deal, by Mazars

Despite concerns about COVID-19, resurgent inflation, and rising energy prices, 2021 saw robust dealmaking across the CEE region. As Mazars has noted in a recent article regarding the maturity of the M&A market, in 2021 there were 49 disclosed deals among Romanian companies, which means an increase of 17% compared to the previous year. Thus, after 2 years since the global economy was affected, the interest of strategic investors and investment funds remains relevant at the local level as well.

In 2022, the investors or financial companies, that are planning transactions for this year, need to consider several tax issues, regardless of how the deal is intended to be performed or its stage. Thus, a process of due diligence, carried out prior to the deal signing, is more than recommended. This kind of analysis facilitates the investment decision-making process and, at the same time, provides the latter with future protection against potential identified risks.

„First of all, we consider it important for the investor to know how the company in which it intends to invest has operated up until the time of the acquisition, from a legal, commercial, financial, tax, and human resources perspective. Secondly, in relation to tax issues, a tax due diligence exercise carried out before the transaction, will enable the investor to know the tax status of the company in which it intends to invest (for example, whether or not it has been subject to tax inspections during the statute of limitation period), to identify the areas with potential tax risk, so that in the end, these areas are quantifiable and adjustable through the mechanism for setting and paying the price related to the transaction.”, mentioned Lucian Dumitru, Tax Director, Mazars Romania.