structuring the acquisition for Capital and fiscal requirements structuring and acquisition or buyout is a complex process.

a variety of considerations including selecting jurisdictions where funds flow from or to taxation issues funding issues and seniority and costs associated with fun flows are needed to form an optimal legal structure.

Capital used for an acquisition needs to flow from many sources such as investors or Banks through the PE fund and finally to the vendor that sells its Equity holding.

Upon exiting the same investment the capital needs to flow back up through the structure to the various individual parties such as the investors Banks private Equity managers and management teams.

Not all parties will be in the same country or fiscal jurisdiction and not all parties will have the same seniority in the capital structure which becomes important if the structure doesn't return all the invested capital.

This leads to the need for detailed preparation of legal structures in order to place senior capital in a preferential position to be paid back first in case of bankruptcy.

As well as to minimize tax exposure.

For example by setting up the structure in countries where tax rates are low and where interest is deductible from taxable income.

Advisors that specialize in setting up such legal structures are used at every step of this process. However, it is important for the private Equity professional to know and oversee commercial reasons for structuring decisions.

In this way, the private Equity professional will help speed up the structuring exercise in often time sensitive deals and improves the chances of the deal closing. Thereby giving the private Equity Firm a competitive advantage.

Typically during the course of evaluating an acquisition private Equity firms will mandate tax accountants structuring Specialists and Banks to prepare what is known as a straw man structure.

Which will be used if and when the deal closes.