Brattle principals Michael Cragg and Evan Cohen, associate Jehan deFonseka, and research analyst Ryan Tholanikunnel recently authored the article, “Corporate Inversion Transactions: Valuation Considerations,” featured in the July edition of Tax Notes International.
The authors discuss various considerations that will arise when U.S. tax authorities scrutinize whether corporate inversions meet federal requirements. They provide a framework for valuing hook stock, and discuss various other valuation considerations, including book values versus market values, merger valuation, intercompany debt, and guarantees.
They conclude that, given the scrutiny on inversions, it is vital to keep these valuation considerations in mind throughout the corporate inversion process in order to verify compliance with IRS requirements.
The full article can be downloaded below.