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VideoSuccess Story: How Transfer Pricing Support Helped Preserve Millions in Transaction Value
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The Client
A U.S.-based middle-market technology company with operations in Australia and the United Kingdom was preparing for acquisition by a private equity buyer in a transaction valued at approximately $25 million. The company developed proprietary software, platform technology and data-driven intellectual property used to analyze energy and market data for customers operating in complex, information-driven industries. As the business expanded internationally, its U.S.-developed technology and know-how became an increasingly important component of its global operations.
The Challenge
During tax diligence, the buyer’s advisors identified a potential transfer pricing exposure of $2 million to $4 million related to the company’s cross-border operations. They argued that the U.S. entity had not been adequately compensated for the value provided to foreign affiliates, creating concerns that threatened to impact the economics of the transaction.
The buyer’s diligence team asserted that substantial royalties should have been charged for access to software, platform technology and know-how developed in the United States. By assigning a high value to the intellectual property and applying an aggressive methodology, the diligence team concluded that the company faced significant potential tax exposure.
The proposed exposure represented a meaningful portion of the transaction value and raised questions about who would bear the cost. Without support for its transfer pricing positions, the seller faced the possibility of a purchase price reduction, expanded indemnification obligations and uncertainty around closing. The company’s legal advisors engaged Weaver to independently assess the diligence findings and evaluate the underlying transfer pricing assumptions.
The Process
Weaver analyzed the buyer’s diligence position and evaluated the facts supporting the proposed transfer pricing exposure. The team reviewed the company’s operating structure, intellectual property, intercompany arrangements and the value contributed by the U.S. entity.
Based on that analysis, Weaver prepared a comprehensive transfer pricing report to establish an appropriate methodology for valuing the company’s U.S.-developed assets and intercompany activities. The report challenged key assumptions used in the buyer’s analysis and presented a transfer pricing position grounded in the company’s actual facts and circumstances.
Working alongside legal counsel, Weaver helped stakeholders better understand the potential exposure and supported negotiations throughout the transaction process.
The Deliverables
Weaver delivered a detailed transfer pricing analysis and report that provided an independent assessment of the buyer’s diligence findings and established a supportable transfer pricing methodology.
The engagement helped reduce the proposed exposure and provided technical support during transaction negotiations. As a result, the parties were able to resolve the transfer pricing concerns without reducing the agreed-upon purchase price.
By performing a detailed transfer pricing analysis, we assisted the seller with reducing exposure to an immaterial amount, avoiding any purchase price adjustment and successfully closing the transaction.
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