Unlocking cash from prior acquisitions

Cash is King. Perhaps this powerful mantra has never rung more true for many than in the current environment. Most households and businesses are keenly adopting measures to improve cash conversion (increasing and bringing forward incoming cash whilst limiting and deferring outgoing cash).

If you’ve acquired businesses in the past five years, there may be compelling reasons to revisit the way in which you allocated your purchase price for tax purposes.  The Australian taxation regime allows for previously lodged tax returns to be amended.  This means that businesses can revisit the valuation analysis that supports their purchase price allocation, and if appropriate, amend their allocations to generate positive cash returns.

In recent months we have revisited the purchase price allocations of several clients, and with their tax advisors, identified significant cash benefits that were previously overlooked.  Some examples:

  • Industrial parts$15.2 million cash benefit over 4 years
  • Health service – $7.3 million cash benefit over 5 years
  • Food manufacturing – $3.6 million cash benefit upfront

Questions?

If you’ve acquired businesses in the past, or are considering acquisitions going forward, feel free to contact us for an obligation free discussion.