Ican 2025 Advanced Taxation Question 4

A clarion call for mergers and acquisitions as a business strategy for corporate entities in Nigeria was canvassed by various speakers at a workshop organised for small and medium-sized business operators. The guest speaker was emphatic about this issue when he submitted that over 90% of Nigeria’s small and medium-sized enterprises (SMEs) will not be able to survive the expected “economic hurricane” that comes with the full implementation of the African Continental Free Trade Agreement. According to him, only highly capitalised entities will be able to compete favourably with companies from South Africa, Kenya, Egypt, Morocco and others, within the continent. A professional accountant and one of the speakers at the event opined that whatever arrangement of mergers, acquisitions or takeover to be chosen to improve capital base, has its tax implications, hence professional accounting or tax consulting firms should be engaged for advice and guidance. The founder and majority shareholder of a hitherto thriving clothing and fabric company was one of the participants at the workshop. Due to intense competition from the Asian market, the company’s fortunes had dwindled in the last five years. The shareholders have been contemplating a complete re-organisation and restructuring of the business. The workshop has given the founder another option (merger or acquisition), which the company may explore. Your tax consulting firm has just been engaged to provide advice on specific issues concerning mergers and acquisition as well as re-organisation and restructuring.