Tech M&A advisory in the United States.

The first negotiation in most US deals is not the price but the form. In a stock sale, the buyer acquires the shares, the company's contracts and liabilities stay in place, and a shareholder in a C corporation usually pays tax once, at long-term capital gains rates, which top out at 20% federally plus the 3.8% net investment income tax.

In an asset sale, the buyer picks the assets it wants and gets a tax basis equal to the price it paid. For a software business, most of that value is goodwill and intangibles, which the buyer can amortise over 15 years under Section 197. That deduction has real present value, which is why buyers will often pay more for an asset deal. For a C corporation seller, however, an asset sale can mean tax at the corporate level and again on distribution.

US tax law offers ways to transfer shares legally while treating the deal as an asset sale for tax. A Section 338(h)(10) election is available when the target is an S corporation or a subsidiary of a consolidated group, and it must be made jointly by buyer and seller. Section 336(e) works in similar situations without requiring a corporate buyer.

For S corporations, many buyers now prefer a pre-closing F reorganisation: the shareholders form a new holding company, the old corporation converts to an LLC, and the buyer acquires the LLC interests. The buyer gets the step-up, the S election is protected, and the seller's risk that an invalid S election unwinds the tax treatment is reduced. We model the value of the step-up for both sides so that it is priced, not given away.

Section 1202 can exclude federal capital gains on qualified small business stock: original-issue stock in a domestic C corporation running an active qualifying business, including most software. For stock issued before 5 July 2025, the exclusion is generally the greater of $10 million or ten times basis per issuer, after a five-year holding period.

The One Big Beautiful Bill Act changed the rules for stock issued after 4 July 2025: the cap rises to $15 million, the corporation's gross-asset limit rises from $50 million to $75 million, and holders can exclude 50% of gain after three years, 75% after four and 100% after five. Because QSBS generally requires a stock sale of a C corporation, it can decide the structure on its own, so we identify it before the first buyer conversation.

US private deals are usually priced on a cash-free, debt-free basis with a net working capital peg and a post-closing true-up. The peg is set against a trailing average, and where it lands can move the price by more than a full turn of EBITDA in a seasonal or deferred-revenue-heavy SaaS business. See our working capital peg definition (opens in a new tab).

Representations and warranties insurance is now standard in mid-market US deals. With a policy in place, the seller's indemnity escrow can fall from around 10% of the price to a fraction of that, and more of the proceeds arrive at closing. We negotiate the retention, the exclusions and which known issues are carved out of the policy.

Buyers look closely at sales tax nexus (since the Supreme Court's 2018 Wayfair decision, SaaS revenue can create collection obligations in states where the seller has no physical presence), revenue recognition under ASC 606, open-source licence compliance, contractor classification, and data privacy under state laws such as the California Consumer Privacy Act. Unremediated exposure usually becomes a special indemnity or a price reduction, so we run a sell-side readiness review before launch.

Transactions above the Hart-Scott-Rodino threshold, which the FTC adjusts every year, require notification and a waiting period before closing. The expanded HSR form introduced in February 2025 asks for materially more information, so filings take longer to prepare.

Foreign buyers acquiring US businesses in critical technology, critical infrastructure or sensitive personal data should assess CFIUS early; some filings are mandatory. We regularly advise UK, European, Australian and Asian buyers acquiring into the US, and US buyers acquiring abroad, where currency, withholding tax and the choice of acquisition vehicle all affect the return. For market context, see our SaaS EBITDA multiples (opens in a new tab).