In Conversation: Three Venable Tax Attorneys Discuss the Rise in Demand for Corporate Restructuring Services

6 min

Over the past few years, amid rising instability, more and more organizations are opting to restructure their businesses. In this Q&A, key members of Venable’s San Francisco-based Tax Group—Becca Chappell, Susan Keeler, and Friedemann Thomma—discuss some of the reasons for this increased demand and how their team draws on their substantial experience as both legal and business advisors to help clients undergoing restructuring to minimize their tax burden.

Q: The corporate restructuring aspect of your practice has grown significantly over the past year. What were some of the factors that led to this increased demand?

Friedemann: I think the main reasons our practice has exploded are geopolitical: the world has become very unstable, and money has become very expensive. As a result of that, M&A activities and capital market activities have really slowed down, which means many companies have had to shift their focus from external to internal factors. So, we’ve assisted many companies that have been looking to reorganize or in some instances to liquidate their business or a portion of their business. Any type of restructuring always has a huge tax component to it. So, whether our clients are looking to issue equity to new principals, or to simplify, or outsource aspects of their business, they come to us for help in lowering their tax liability.

Q: Are the team’s restructuring clients typically U.S.-based companies, or do they tend to have an international component?

Becca: One unique aspect of our team is that we don't just close transactions, we really deliver solutions. And that can happen in an international context or a domestic context, but most of our clients are global companies. We typically work with organizations that have people, or operations, or customers all over the world. That could be a U.S.-parented group with international subsidiaries or international business operations. Or it could be a non-U.S.-parented group that’s looking to expand into or do more business in the U.S.

Q: How are you seeing businesses adapt amid the ongoing global uncertainty?

Susan: I think companies are starting to position themselves to be resilient to whatever may come their way, be that supply chain disruption or other shock effects. We’re seeing this already in the ongoing restructuring tax work that comes out of that. Companies aren’t aiming for a “set it and forget it” structure that will last forever; they’re understanding that whatever structure is deployed will have to be adjustable as needed.

Friedemann: What really impacts the work we do is fiscal policy and decisions made by the Treasury. If interest rates come down or if the market turns, our focus will be back to how we take companies global again or how we position a company to go public. Either way, these internal reorganization projects we’ve been working on will last well into 2024 and maybe long after. Because these types of projects sometimes take years to see through.

Q: What is the most important service your team can offer clients that are about to undergo a reorganization?

Susan: The ability to give practical advice is essential. We had a call recently about how to advise a client on intercompany restructuring and how to effectively communicate about it. Because how customers or employees interpret the restructuring may be just as important to the business as whatever the most ideal tax structure would be. A lot of tax lawyers will say this is the best tax structure, and the business just has to deal with it. So, being part of a team that understands that the business comes first, and that tax doesn’t exist without the business, is really refreshing.

Q: You seem to really gel as a team. What do you each bring to the table, and how does the group work together? 

Susan: I come from quite a varied background, having worked as in-house tax counsel for a major multinational company, and at large firms doing international tax as well as standard mergers and acquisitions. Now that we’re in a bit of a down cycle, where money is more expensive, many companies are having to reorganize and integrate their acquisitions. So having the ability to support clients throughout the ups and downs of the business life cycle, whether it’s an acquisition, divestiture, or a reorganization, is very fulfilling.

Becca: I come from a Big Four background, so I balance technical tax knowledge with project management and execution. We are all buttressed by deep technical tax capabilities, but our combined understanding of commercial realities allows us to contextualize tax within all the other demands on a business. We don’t just offer legal counsel; we also act quite effectively as business advisors who help clients get things done. 

Friedemann: I think that one of the things that makes our group unique is that we have a lot of flexibility. We regularly work closely with client teams in human resources, production, marketing, and other groups on the operational side of things, which really informs our understanding of their needs from a business perspective.

Q: Aside from the corporate restructuring work, are there other areas that your team is focused on?

Becca: Corporate restructuring projects tend to spur additional needs, such as expansions into new jurisdictions, setting up new arms to the business, assisting with transfer pricing, reducing headcount, evaluating portfolio investments, or monetizing intellectual property, and so on. The type of work that we do is very diverse, and our client relationships tend to be long-lived. So, our restructuring engagements often become a series of mini-projects as the clients’ needs evolve.

Q: What would you say is the biggest “value add” your team brings to each client engagement?

Friedemann: An interesting component of our practice is that we really get involved with our clients’ businesses and work closely with them to help them realize their objectives. To do so means that we have to learn the ins and outs of their business very quickly, so we can speak their language. A recent example would be a U.S.-based client that came to us looking to enter the cryptocurrency trading space. Because you cannot trade in crypto inside the U.S., we called in regulatory counsel to advise them on what they would need to do to trade outside the U.S. Once that’s established, our team then figures out how to make that work from a tax perspective.  So, we really have to dive in and learn the intricacies of our clients’ industries in order to help get them where they want to go.

Becca: Understanding those intricacies really informs the counsel we provide. Clients often come to us with a question, and we do a good job of figuring out what the underlying problem is that needs to be addressed. So, getting up to speed with a client and realizing where the tension is for them really helps us to come up with a solution that goes beyond addressing the immediate issue at hand.

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