01 · Research
Executive Summary
Cross-border M&A introduces significant complexity around legal structure, tax treatment, and employment law. Understanding regional norms is critical to pricing a deal correctly and avoiding post-close liabilities. These notes provide a high-level overview of key considerations for digital asset transactions in Australia, the United States, the United Kingdom, Singapore, and the European Union.
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Australia
| Topic | Note |
|---|---|
| Structure | Asset sales are common for smaller deals to allow buyers to cherry-pick assets and avoid assuming liabilities. Share sales are typical for larger, more established businesses. |
| Employment | Employee entitlements (annual leave, long service leave) typically transfer to the buyer in a share sale. In an asset sale, employees are terminated and re-hired, crystallizing entitlements. |
| Tax | Stamp duty can apply to share sales in some states, though it has been abolished for non-land assets in most. GST (Goods and Services Tax) is a key consideration in asset sales. |
| Working Capital | A normalized working capital target is standard, with a post-closing adjustment mechanism. Disputes often arise over the definition of "cash-like" and "debt-like" items. |
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United States
| Topic | Note |
|---|---|
| Structure | Asset sales are often preferred by buyers for the tax step-up in basis, allowing for higher depreciation deductions post-close. Sellers often prefer stock sales for preferential capital gains tax treatment. The choice is a key negotiation point. |
| RWI | Representations & Warranties Insurance (RWI) is common in deals over $20M, reducing the need for large seller escrows. |
| Employment | "At-will" employment is the norm in most states, simplifying employee transfers compared to other jurisdictions. However, state-specific labor laws are complex. |
| Escrow | Escrows for indemnity claims are standard, typically 10-15% of the enterprise value for a period of 12-18 months. |
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United Kingdom
| Topic | Note |
|---|---|
| Employment (TUPE) | The Transfer of Undertakings (Protection of Employment) regulations automatically transfer employees on their existing terms in a business sale. Failure to consult properly can lead to significant penalties. |
| Structure | Share sales are overwhelmingly the most common structure for profitable businesses. Asset sales are more complex due to TUPE and VAT (Value Added Tax) considerations. |
| Escrow | Escrow / retention accounts are standard practice to cover warranty and indemnity claims, with amounts and duration similar to US norms. |
| Tax | Entrepreneurs' Relief can significantly reduce the capital gains tax for qualifying sellers in a share sale. |
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Singapore
| Topic | Note |
|---|---|
| Tax | Singapore is a low-tax jurisdiction with no general capital gains tax, making it an attractive location for both buyers and sellers. Share transfer stamp duty is low (0.2%). |
| Structure | Share sales are the standard for established companies. The legal framework is based on English common law, making it familiar to international parties. |
| Employment | Employment law is relatively straightforward. In a share sale, employment contracts continue uninterrupted. In an asset sale, employees must be terminated and re-offered employment. |
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EU (General)
| Topic | Note |
|---|---|
| Employment | Similar to the UK's TUPE, the Acquired Rights Directive provides strong employee protections across the EU during business transfers. Country-specific implementation varies. |
| IP | Intellectual property assignment formalities can be complex. Ensuring a clean chain of title for IP is a critical diligence stream. |
| VAT | Value Added Tax rules for asset sales are complex and vary by country. Structuring the deal as a "transfer of a going concern" (TOGC) can mitigate VAT liabilities. |
| Data Privacy | GDPR compliance is a major diligence item. Fines for non-compliance can be substantial, and buyers will scrutinize data handling practices. |
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About the analyst
Joash Boyton
Founder and Managing Director, Acquiry · Melbourne, Australia · Global coverage
Joash Boyton is the Founder and Managing Director of Acquiry, a specialist M&A advisory firm focused on the acquisition and sale of businesses. He executes buy-side and sell-side mandates from USD $1M to $500M across technology, SaaS, fintech, payments, gaming, blockchain and emerging verticals, and is not limited to them. Any sector, any market.