IPO and Tax Planning

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Tax planning forms an important part of almost every business transaction or investment decision. When an IPO is considering how to structure a transaction involving securities, or is undertaking a major financial strategy, tax advice may considerably impact the final decision. Both from the point of view of the investors and issuing companies IPO and Tax Planning is of great significance as it implies the profit of the issuers, investors as well as underwriters. There are a number of investment banking firms who offer a number of services to IPOs which are related to tax planning. This article discusses important points regarding IPO and Tax Planning. Compared to other sources of financing IPOs provide a number of advantages and with proper tax planning both investor and the company can reap many tax benefits.
Most investment banking firms have a tax department who are engaged in ongoing research, planning and consulting services for several IPOs across the world. With the combination of technical skills and creativity the various tax professionals hired by an IPO helps clients to survive and prosper in an increasingly competitive environment. When a company plans an IPO it employs tax planners and lead managers to help it in making the right decision about the price at which the shares should be issued. The price of an IPO can be determined in two ways. Firstly either the company with the assistance of its tax planners fixes a price or secondly the price is determined through the process of book building. Tax planning in IPOs involves project assessment, project planning and preparation, pricing, project documentation and settlement.
IPO and Tax Planning is an important subject from the view point of reducing the risk factors involved in small companies planning an IPO. The decision of a company to go public through an Initial Public Offering involves a complicated and time-consuming process which is full of risks and hurdles. The innumerable issues and problems that must be addressed to accomplish a successful offering require the expertise of an experienced advisor in matters of tax planning and taking other important decisions. The number of IPOs across the globe includes 3i Infotech, ABG Shipyard, Accel Frontline, Action Const, Advanta, AIA Engineering, Allcargo Global, Allied Computer, Allied Digital, ALLSEC Tech, Alpa Laboratori and several others. All these IPOs have attained success through meticulous tax planning which have helped them to reap maximum profits.
Take time to consider the points presented above. What you learn may help you overcome your hesitation to take action.