Transfer pricing plays an increasingly important role throughout the private equity lifecycle. From due diligence and acquisitions to value creation, governance, and exit planning, transfer pricing can directly influence transaction value, tax risk, and operational decision-making.
At the same time, tax authorities are placing greater scrutiny on areas such as intercompany financing, management fees, transfer pricing documentation, and the impact of Pillar Two. As a result, transfer pricing is no longer solely a compliance matter for private equity funds and portfolio companies, but an important component of risk management and value creation.
Transfer pricing throughout the investment lifecycle
During due diligence, historic transfer pricing positions, documentation requirements, and tax exposures can affect valuations and transaction outcomes. Following an acquisition, the focus typically shifts towards integration, growth, and governance, requiring transfer pricing arrangements to align with the operating model and strategic objectives of the business.
Transfer pricing is also receiving increasing attention during exit processes. Investors, buyers, and advisers frequently assess transfer pricing risks, documentation, and governance as part of their due diligence procedures. A robust transfer pricing framework can enhance transparency, reduce tax uncertainty, and contribute to a more efficient transaction process.
Private Equity and Pillar Two
The introduction of Pillar Two and the GloBE Rules creates new challenges for private equity structures and portfolio companies. The impact may be reflected in the effective tax rate, compliance obligations, governance requirements, and group structures. As a result, organizations increasingly require an integrated approach that combines transfer pricing, Pillar Two, and broader tax strategy considerations.
How can we help?
Meijburg supports private equity funds and portfolio companies throughout the investment lifecycle. Our services include transfer pricing due diligence, policy design and implementation, governance and compliance, intercompany financing, Pillar Two impact assessments, and exit readiness reviews. We combine deep transfer pricing expertise with extensive experience in the private equity sector.
Private equity requires a pragmatic approach that balances speed, risk management, and value creation. Drawing on our experience with private equity funds, portfolio companies, and cross-border structures, we support organizations throughout the entire investment lifecycle, from acquisition to exit.
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FAQ
How does transfer pricing affect private equity due diligence?
Transfer pricing plays an important role in tax due diligence. Historic transfer pricing positions, documentation requirements, intercompany financing arrangements, and potential tax exposures can affect the valuation of a business, transaction structuring, and future investment decisions.
What does Pillar Two mean for private equity funds and portfolio companies?
Pillar Two and the GloBE Rules may impact the effective tax rate, compliance requirements, and group structures of multinational portfolio companies. The extent of the impact depends on factors such as the group's structure, geographic footprint, and existing tax profile.
How can transfer pricing support value creation in portfolio companies?
A transfer pricing framework that is aligned with the company’s operating model helps manage tax risk, strengthen governance, and support international growth. As a result, transfer pricing becomes not only a compliance requirement, but also an important driver of value creation throughout the investment lifecycle.
