The current state of the deals market and the tax and legal challenges arising during deals were the focus of our September 2025 Tax Briefing. Hosts Christina Sahyoun and Patricia Muscat, alongside experts Alistair Anderson, Jenson Li, and Rosie Muirden, dive deep into the complexities of the deal lifecycle, covering key tax strategies, challenges, and market dynamics that influence every stage from initial investment through to the final exit.
Local and global factors affecting the 2025 deals market were highlighted, referencing the turbulence stemming from the U.S. tax reforms and tariffs. While M&A deals have declined, there is an increase in deal values, underscoring the essential nature of M&A as the lifeblood of the corporate and private equity industries.
A theme of constant uncertainty was explored, as well as the impact of high interest rates and growing government debt. Our panelists emphasised the impact of AI on deals, seeing it both as an opportunity for competitive advantage and a risk concerning business disruptions.
Legalities at the start of a deal are discussed, stressing the need for a robust confidentiality agreement (NDA) before sharing any sensitive information. A systematic approach follows, sending out information memorandums and receiving non-binding indicative offers (NBIOs), setting the stage for exclusive negotiations with an attractive bidder.
Shifting the focus to tax due diligence, crucial considerations include scoping the review and understanding historical tax risks. The increasing importance of W&I insurance and the need for thorough tax due diligence to ensure proper substantiation of material tax positions were emphasised. The panelists underscored the growing emphasis on employment taxes, citing active regulation and evolving judgments that affect employer obligations, making employment compliance a crucial part of due diligence.
Differences between share and asset sales, the involvement of the Foreign Investment Review Board (FIRB) in deal approval, and the structural and compliance considerations critical to transactions are discussed. Early tax involvement is crucial due to its potential to add value or pose challenges to a deal’s viability.
The panel also examined the impact of Australia’s updated thin capitalisation rules, re-gearing during the holding phase, and the delicate nature of managing employee equity schemes to incentivise key personnel. Finally, the panel discussed exit readiness and evaluating the tax implications of exits, with a keen awareness of potential conditions imposed by FIRB and the evolving rules around taxable Australian property for non-resident sellers.
