Taxation of public to private transactions

New Skyline of London at sunset.New Skyline of London at sunset.

Taxation of public to private transactions

Published in Taxation magazine

January 22, 2024

United Kingdom
United Kingdom
United Kingdom
Colin Askew and Matt Cummings consider some of the key UK tax issues in relation to a typical public to private transaction backed by a private equity fund.

Key points

  • There are many reasons why a public quoted company may want to become a private company. P2P transactions are increasingly being used by private equity funds to take ownership of listed entities.
  • There are two approaches to facilitate a P2P transaction: (a) the offer document approach; or (b) the scheme of arrangement approach. Although mechanically different, the tax implications of each approach are similar.
  • The tax consequences for shareholders disposing of their holdings in the target will be determined by the nature of the consideration, which is most often a mixture of cash, shares and/or loan notes.
  • The listed company’s core tax concern is ensuring that the disposal of its shares does not result in substantive tax charges.
  • The offeror’s core tax concern on acquiring the shares in the target is whether stamp tax on shares is payable on the consideration given for the shares.

 

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Key contacts

colinaskew@eversheds-sutherland.com

Colin Askew

Partner

United Kingdom

matthewcummings@eversheds-sutherland.com

Matthew Cummings

Principal Associate

United Kingdom

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