M&A-focused professionals within Riveron’s Tax Advisory team have been looking at 2025 M&A market conditions, and we’ve seen an uptick in sell-side due diligence from our private equity clients preparing portfolio companies for sale processes. 

It’s essential for those participating on the sell side to remember the key role of sell-side tax diligence and related advice in a deal team’s considerations. While tax diligence sometimes occurs the week of closing (as a last-minute aspect of the diligence process), savvy sellers should anticipate tax-related matters sooner. This work can be staged and should start early in order to allow time for the sell-side team to properly respond to issues, size the potential financial impact on exit, and proactively decide the appropriate ways to handle issues. Actions could include remediation, proper “storytelling” in the diligence process, or some other mitigation plan.

During a sale, issues will always arise, and they will affect value. It is a question of whether a team wishes to be prepared and deal with these issues on their terms, or wait for a last-minute value trade based on a worst-case, buyer-driven scenario. 

Sellers should take control of the tax diligence narrative by engaging sell-side tax advisers months before going to market or longer, depending on tax planning needs.... (and identify areas of risk and material tax exposures). There are often ways to mitigate potential tax issues and/or minimize risk exposure once a problem is brought to the forefront. ... The critical takeaway for timing of sell-side diligence is that management can preemptively control the facts and material tax exposures before going to market.

https://www.thetaxadviser.com/issues/2023/aug/m-a-transactions-the-value-of-sell-side-tax-diligence.html