Scaling SaaS videos: M&A tax due diligence for SaaS
For many technology and SaaS businesses, rapid growth is both a strength and a source of complexity. As CFOs, you are often balancing speed and agility with an increasingly demanding tax and regulatory environment. It is this tension that most often comes to the fore during an investment or exit process.
From a tax due diligence perspective, there are recurring themes that buyers and investors consistently focus on. Understanding these early – and addressing them proactively – can materially improve deal outcomes and reduce execution risk.
In this short video, David Coates, M&A Tax Partner at Moore Kingston Smith, explains the key tax considerations for growing SaaS businesses.
Employment-related securities and EMI schemes
Employment-related securities, including share option arrangements and EMI schemes, remain one of the most sensitive areas in any M&A process. Where these schemes have not been implemented or administered correctly, the financial exposure can be significant and, in some cases, derail a transaction altogether.
Good governance, clear documentation and ongoing compliance are critical. This is particularly important for SaaS businesses that have scaled quickly and may have made early equity promises without fully considering the long-term tax implications for both the company and its employees.
Recent changes to the EMI regime have also widened eligibility for many fast-growth businesses. These changes came into effect on 6 April 2026, following advance notice from HMRC, giving businesses time to assess whether they now qualify and plan accordingly. For CFOs, this presents both an opportunity and a risk: attractive incentives are available, but only if implemented correctly and with a clear understanding of how they will be viewed in a future transaction.
International expansion and structural complexity
International growth is a natural step for many SaaS businesses, but it brings additional tax complexity that buyers will scrutinise closely. Issues around global mobility, transfer pricing and the creation of permanent establishments frequently emerge during tax due diligence, particularly where expansion has outpaced the supporting tax framework.
Group structures can also become misaligned with what a buyer actually wants to acquire. We regularly see businesses with multiple products, IP streams or overseas entities where an acquirer is only interested in a specific part of the group. In these situations, early consideration of pre-transaction restructuring – such as de-mergers or asset sales – can be crucial to achieving a clean and efficient deal.
R&D tax relief and compliance discipline
R&D tax relief remains an important source of funding for many technology businesses, but the compliance landscape has become more demanding. HMRC has introduced additional requirements, such as advance notification of claims, and is taking a firmer approach to policing the basics of compliance.
For CFOs, the message is clear: if there are uncertainties around historic claims or processes, it is far better to address them proactively. Unresolved issues will either be challenged by HMRC or surface during a future investment or exit, often at the most inconvenient time.
Thinking like a buyer: exit readiness
One of the most valuable disciplines for a CFO in a fast-growth SaaS business is to view the business through a buyer’s lens. Some structures or arrangements may appear tax-efficient in isolation, but if they add complexity or uncertainty for an acquirer, they can ultimately reduce value.
Revisiting historic decisions, undertaking a tax health check or even carrying out a form of vendor due diligence helps identify and resolve issues before they are discovered in a live transaction. In many cases, early intervention allows problems to be managed, rather than negotiated under pressure.
How we support SaaS businesses
At Moore Kingston Smith, our M&A tax team works closely with our corporate finance, transaction services and legal colleagues to support technology and SaaS businesses at every stage of the deal lifecycle. Whether advising sellers on exit readiness or supporting buyers through tax due diligence, our focus is on helping CFOs navigate complexity and protect value.
Next steps
If you are a CFO of a technology or SaaS business and would like to understand how investor-ready your tax position is, or how recent changes such as EMI reform could affect your growth or exit plans, get in touch.
