Luxembourg: All Your Eggs In One Basket: An Easter Thought?

Last Updated: 13 December 2018
Article by Jeremie Schaeffer
Most Read Contributor in Luxembourg, December 2018

Conventional wisdom warns us against putting all our eggs in one basket: portfolios must be diversified, risk spread as thin as possible...

However, in our line of work, putting all your eggs in one basket has proven advantages whether it be when structuring investment funds, large group of companies, or dealing with complex transactions. Over the years, we have built an integrated approach of tax advice and corporate implementation services that is designed to bring value in many different ways, where and when it counts most to you.

During the structuring phrase, I definitely view a cross-cultural approach as the ground for a solid foundation. I also like to think that a good adviser is not the one with the right answers (even if these do help at some point!), but the one asking the right questions. In that sense, advice should not be given in small isolated bits, but put into a larger business context and thought of as a turnkey solution. Because our team of tax and corporate experts work together and as business partners with our clients, they have a thorough understanding of fund mechanics and are fully aware of the value creation process. This translates into being able to provide solutions that are aligned to the investment strategy and which have a positive impact on IRR and on carried interest. Also, often overlooked at the structuring phase is the need to ensure fluid cash movements. Clients may be surprised when we ask for their cash flow model. But they tend to be even more surprised when cash trap issues arise. Our combined approach allows us to fully integrate their model into our advice, thus ensuring cash availability as per needs, or preventing cash trap issues when distributing investment proceeds.

During the implementation phrase, the value of using integrated services is gains in efficiency. Because we work together in the same office at mere steps from each other, the flow of communication is greatly enhanced and we avoid traditional communication gaps between tax and corporate advisers. This ends up as a win-win situation: projects run smoother and clients benefit from reduced time to market, with no hiatus between initial design and actual structure implementation.

When the structure is up and running, you may think that there is little value in dealing with recurring tasks or handling direct and indirect tax compliance. However, this is precisely the moment where the benefits of the structuring and implementation phases may vanish. How many well thought out structures with no or poor follow up, sound policies that have never been carried out, or even undocumented cash flows? How many reporting documents and returns have turned into a nightmarish process? We believe that we can bring value there and allow you to benefit from our flatter learning curve. This is why we stay committed through this process, and also why in our model, the advisory and compliance work is led by the same Partners. In an environment of increased transparency, we believe compliance to be as important as advisory, not just a cost to the company but another link in the value chain. And we pride ourselves on being held accountable for the structures we set up.

Finally, the exit phase of a project which has been designed, implemented and followed by the same team from the very beginning can only be swift and streamlined. This is not a time you want to spend on unknown issues that pop up from nowhere. This is your last chance to create value, and this requires your utmost attention. Here again, having taken care of the compliance work ensures a full knowledge of the project's history and updated filings, while our integrated approach of tax advice and corporate implementation services allows us to provide business-oriented solutions. Even under time pressure, we implement successful exit strategies, thus closing the virtuous loop of a privileged, trusting and long-lasting business relationship.

I think the above gives a pretty fair idea of why you might want to put all your eggs in one basket. Be it Easter season or not, you may wish to rely on conventional wisdom... or you could let us bring significant added value to your investments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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