Complex Like-Kind Exchange of Real Estate

Summary: Our clients closed the sale of a valuable tract of undeveloped land late in the year. The income tax liability on their profit from the sale would have been in the millions of dollars. The clients approached us early in the New Year, seeking our review of new investment possibilities, analysis of tax issues and assistance with reinvestment, all in accordance with the strict timing rules for tax-qualified like-kind exchanges. We did a preliminary review of the tax compliance issues involved and met with the client.  We then negotiated modifications of the investment documents and terms to address both tax compliance and economic issues to protect the client’s overall financial situation.

Result: The clients were able to identify and quickly analyze a replacement property and close on the reinvestment within the timelines specified in the Internal Revenue Code, qualifying them for tax deferred treatment. The new productive property was expected to yield immediate operating cash flow.

Attorneys: Thomas A. Maier, Jamie L. Dupree


Sale of Business

Summary: Our client, an on-line provider of database and support for tracking pharmaceutical and biotech product development, entered into a letter of intent for the sale of its business. We worked with the client’s in-house corporate counsel to prepare a tax structure and associated price allocations that would permit the client to maximize its after-tax return on the transaction. The purchase involved an acquiring company with offices in New York and headquarters in London. We conducted due diligence, detailed representations and negotiations over a period of several weeks to determine the fitness of our client’s company. The negotiations also extended to employment contracts and non-compete covenants, which affected the company’s principal shareholders.  

Result: The integration proceeded smoothly, and the client’s former shareholders received a multi-million dollar payout at closing and additional earn-out fees after a successful stock sale and achievement of post-closing performance milestones. Our client’s management continued to furnish services following the stock sale to integrate the business with the new multi-national corporate group, and the client company has become one of the most solid contributors to its new owners’ overall operations. 

Thomas A. Maier