In response to evolving market and business conditions, multinational groups may adjust their geographic operational footprint across various countries and regions. Groups regularly carry out mergers, acquisitions, and corporate restructurings to adapt to shifting market conditions, regulatory updates, competitive pressure and internal strategic priorities.
M&A usually describes transactions that change direct ownership: one company acquiring another, two companies combining, or an investor purchasing shares or assets. Corporate restructuring is broader: it covers any major reorganization of a company’s legal structure, assets, business lines, capital, operations, or ownership.
M&A and restructuring projects, especially those involving cross-border entities, require close coordination across multiple jurisdictions, covering corporate law, contract assignment, labour transfer, tax compliance, foreign exchange rules and local regulatory filing requirements. These transactions can be time-consuming, costly and carry material risks if poorly planned.
This article outlines the most prevalent transaction structures deployed by multinational groups, exploring the commercial, regulatory and financial drivers that prompt those groups to reshape their corporate structure.
Common forms of M&A and corporate restructuring
Merger
A merger is a transaction where two or more separate legal entities combine into a single surviving legal entity. In a merger by absorption, one company may absorb one or more other entities; the absorbed companies cease to exist, and all their assets, liabilities, contracts, employees and permits are transferred to the surviving entity. Under a merger by consolidation, all participating entities are dissolved, and an entirely new company is formed to take over the combined business.
Mergers can take place between independent third‑party companies or as an intra‑group transaction between entities under common group control. In the first scenario, two entities pool their businesses to create a combined organization with a stronger market position, greater operational scale or complementary product lines. For intra‑group mergers, typical objectives include simplifying the holding structure, eliminating intermediate legal entities, or reducing administrative and compliance costs.
A key characteristic of a merger transaction is that all assets, liabilities, and contractual obligations of the participating entities pass to the surviving entity, which necessitates carefully planned due diligence over the book liabilities and contingent liabilities of the dissolved companies.
Equity deal or acquisition
An equity deal refers to the acquisition of a partial or 100 % equity interest in a target legal entity. By acquiring equity, the buyer obtains direct control over the target company, and indirectly takes ownership of all its underlying assets, including real‑estate property, IP rights, and its customer portfolio, together with the target’s liabilities, such as known debts, ongoing commercial disputes, labour‑related obligations, tax arrears, and hidden liabilities that may surface after transaction completion. For this reason, comprehensive financial, tax and legal due diligence is a necessary pre‑acquisition step.
For multinationals entering a new market or consolidating existing local operations, an equity deal remains the primary transaction model. It enables investors to take over an existing company, avoiding the lengthy timeline of establishing a newco and building operations from zero.
Asset acquisition
In an asset‑acquisition transaction, the buyer does not acquire the corporate entity itself but may selectively purchase certain operating assets or rights from the seller. Transferred assets may include production machinery, inventory, IP rights, customer contracts, and similar items. The original selling entity continues to exist and remains liable for its historical debts and liabilities that are not explicitly transferred under the purchase agreement. This constitutes the main advantage of this model, as the buyer can leave unwanted historical risks behind with the seller.
Split and division
A company split or division (often called a demerger) is an internal reorganization where a single existing entity is split into two or more newly incorporated companies. Under an approved demerger plan, the original entity’s assets, liabilities, contractual and employment relationships are allocated among the newly established entities. The shareholders of the original company retain ownership interests across the resulting entities in line with predefined allocation rules.
A formal division is often the preferred mechanism to carve out a specific business line for a future separate divestment without impacting the remaining operations.
Drivers for multinational groups to implement M&A and restructuring
M&A and corporate restructuring are complex transactions, and multinational groups accept such complexity to meet concrete strategic and operational objectives. Below are the main reasons for pursuing an M&A or restructuring transaction:
1. Accelerate market entry and business scale‑up. Multinational groups can gain immediate access to market channels, existing customer relationships, operational infrastructure and talent, enabling faster market penetration and revenue generation.
2. Acquire technology, IP rights and talent. A merger or acquisition may be carried out to obtain proprietary technology, patents, industrial know‑how or highly‑specialized technical teams held by target companies, avoiding lengthy and uncertain in‑house R&D cycles.
3. Optimize focus on strategic assets and business lines. Over decades of expansion, multinationals frequently accumulate a broad mix of business assets and business lines that may gradually become peripheral, with lower margins or misalignment with long‑term strategy. A restructuring can carve out non‑strategic segments and redirect financial and human resources toward higher‑return business activities.
4. Isolate risks across business segments. When high‑risk operations run alongside stable, mature businesses within the same entity, financial distress or compliance violations originating in one division can threaten the entire business. Through splits and carve‑outs, multinationals can place distinct business lines into separate legal vehicles, so difficulties affecting one unit do not contaminate other group entities.
5. Align group structure for tax, financing and regulatory compliance. Multinational groups often reorganize their structures to adapt to evolving local regulatory requirements and streamline intra‑group lending, dividend distributions and fund flows.
6. Prepare for future exit, capital raising or public listing. A restructuring can carve out high‑growth business units from within a legal entity into an independent new entity for potential future scenarios: divestment to external buyers, capital raising from other investors, or preparation for a public listing.
Mergers, equity deals, asset acquisitions, splits and divisions each feature specific, distinct legal, tax and procedural considerations. For multinational groups, they are practical instruments to improve operational efficiency, manage risks, reshape portfolios and position the group for longer‑term opportunities across global markets. There is no single “best” deal, only the most suitable structure following thorough due diligence and regulatory planning.
M&A and corporate restructuring carry substantial complexity; poor structuring may trigger unexpected tax costs, regulatory delays or the assumption of hidden liabilities. PHC Advisory assists multinational groups at every project stage: we assess available transaction options based on the client’s long‑term strategy, run feasibility and tax impact analysis, support due diligence work, advise on practical execution steps and filings, and oversee post deal compliance. Combining local market knowledge with sensitivity to multinational group strategies, our team helps clients implement risk-controlled reorganization solutions aligned with their business targets.
At PHC AHC Advisory, we can offer you full support on matters regarding doing business in China, or any other issues your business may face. If you would like to know more about policies relevant to your business in Italy or Asia, please contact us at info@phcadvisory.com.
PHC Advisory is a company of DP Group: an international professional services conglomerate of companies with approximately 100 experienced professionals worldwide. We offer comprehensive services in tax, accounting, and financial consulting, including financial supervision, financial audit, internal audit, internal control over financial reporting, and support for audited financial statements and annual audits, ensuring clients’ financial transparency and compliance.
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