Baker Botts has one of the preeminent spin-off/split-off practices in the country, involving industries as diverse as cable TV and broadcasting, e-commerce and internet retailing, airlines, energy and energy-related services, newspaper publishing, real estate and financial services. In the great majority of these transactions, the firm has played a leading role as the principal tax, corporate/securities, finance and employee benefits/executive compensation counsel to the company initiating the transaction. Consequently, our lawyers have deep substantive experience in each of these critical areas.
Spin-offs are complex, tax intensive transactions, and we have the in-depth knowledge of the tax rules needed to guide our clients to an optimal tax result. Our tax lawyers have extensive knowledge in rendering the tax opinions required in connection with tax-free spin-offs by publicly traded companies. This tax opinion experience is especially important in light of the 2013 pronouncement by the Internal Revenue Service that it will no longer issue private letter rulings on the overall tax-free qualification of spin-offs. This development means that public company clients are now far more reliant on the tax advice and tax opinions of their tax advisors, and our firm is qualified to provide both.
Our tax lawyers routinely solve complex issues that arise in connection with tax-free spin-offs and have a wealth of experience in:
- Monetization strategies/opportunities presented by spin-offs (i.e., IPOs, leveraged spin-offs, etc.)
- Spin-off related restructuring transactions (both pre- and post-spin-off) to aggregate the relevant assets and businesses into the Spinco entity and to achieve an optimal tax structure going forward
- M&A solutions, particularly relating to Reverse Morris Trust transactions and other pre and post-spinoff transactions that are permissible under the tax-free spin-off rules
- Cross-border tax considerations in spin-offs
- Utilization or recognition of tax benefits in connection with spin-offs
- Working with investment bankers and other financial advisors to effectively align business and tax objectives
- Optimizing and allocating tax liabilities and tax attributes among the relevant parties to a spin-off
- Counseling clients on the nature, volume and scope of post-spin-off continuing relationships that are permissible under the tax-free spin-off rules
- Counseling clients on the reporting and compliance issues (including consolidated return issues) that arise in connection with spin-offs
- Preparing tax sharing and tax matters agreements, and reviewing and advising on tax related aspects of separation agreements, transition services agreements, intercompany agreements, and other spin-off related documentation
- Preparing the tax disclosures in public filings
- Counseling clients on maintaining the tax-free treatment of spin-offs after completion
Corporate/Securities and Finance:
Our corporate lawyers work hand-in-glove with our tax consultants to provide a comprehensive and integrated approach to the multitude of tasks that must be accomplished in connection with spin-off transactions. As in the M&A arena, one or more of our corporate partners typically serves as overall transaction “quarterback,” with responsibility for managing and coordinating our entire team and the various workflows, as well as providing our client with a single point of contact on major issues or concerns.
Our corporate lawyers have extensive experience in all aspects of spin-off transactions, including the following:
- Performing diligence, advising clients on, and executing pre-spin asset, subsidiary and employee transfers, mergers and distributions that are frequently necessary to identify and aggregate the relevant assets, businesses and employees into Spinco
- Advising clients on fiduciary duties, solvency and fraudulent transfer matters and other creditors’ rights relating to pre-spin transfers and the spin-off itself
- Performing diligence and advising clients on required third-party consents, including public debt-holder and lender consents and restructuring/modification of relevant debt facilities
- Preparing relevant agreements, including separation agreements, transition services agreements and various inter-company agreements governing matters such as intellectual property, employees, real estate, international distribution rights, manufacturing and supply agreements and cross-indemnification
- Organizing and preparing appropriate governance documents for Spinco, including public-company charter and bylaws containing appropriate defensive measures, board committee charters, code of conduct, insider trading and other public company policies, etc.
- Advising clients on compliance with securities regulation and disclosure requirements both pre- and post-spin
- Preparation of required SEC and stock exchange filings in connection with the spin-off as well as Spinco compliance and disclosure documents post-spin, including offering and underwriting documents relating to equity and/or debt offerings by Spinco