The Rapid Fusion After an LBO Comparative Tax Law
The Rapid Fusion After an LBO Comparative Tax Law

Summary/Abstract: Practitioners refer to "fast fusion" as the action, of acquisition of controlling interest with leverage effect, which results in the fusion of the acquired company with the mother company. The aim of such a merger may be financial as the buyer captures not only the outcome of the takeover company but directly its liquidity, the repayment of the loan would be made not only by way of a divided but by direct use of the entire cash flow of the target via the merged firm. Moreover, such a transaction will enable the banker, as last lender to the holding, to directly take a guarantee over the assets of the target. However, the fusion is essentially driven by a desire for tax optimization; it will impute the expenses of the holding on the taxable profits of the acquired company. This process of rapid fusion is very interesting from a tax point of view, but its admission was controversial by the jurisprudence, which by hypothesis is important because this holding was indebted so as to obtain a maximum leverage. This company was chosen in particular because of its ability to pay dividends to the holding regularly to enable it to meet the deadlines of the loan.

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