International tax structuring drives growth for start-up life sciences venture

Client background

A start-up life sciences company was preparing to enter an important new stage of its development. To advance research, scale operations and bring innovative products to market, leadership recognized that outside capital would be critical. Investors in both the United States and abroad had shown interest, but the company needed to create the right foundation to manage these relationships effectively.

Unlike more established organizations, start-ups often operate with limited resources and lean teams. For this life sciences company, building the right structure was about more than securing funding, it was about demonstrating credibility, protecting intellectual property and ensuring investors had confidence in the company’s ability to manage complex tax and governance considerations across multiple jurisdictions.

Client challenge

To facilitate the capital infusion, the company planned to set up a joint venture. This joint venture needed to be designed in a way that created tax efficiencies not only for the company but also for its diverse group of investors, some based in the U.S. and others internationally.

The challenge was multifaceted. Any structure had to balance short-term needs, such as attracting capital quickly, with long-term goals, such as sustaining growth and minimizing tax exposure. Intellectual property was another central factor. Because the company’s most valuable assets were tied to research and development, it was critical to evaluate how “rest of the world” intellectual property would be managed and how ownership would affect the distribution of returns.

The complexity of balancing U.S. and international tax considerations posed a significant challenge. Without the right international tax structuring, the company risked losing investor confidence or creating future inefficiencies that could increase costs and limit growth opportunities.

Baker Tilly solution

The company worked with Baker Tilly’s international tax structuring specialists to design and evaluate potential structures. The process included developing multiple scenarios that addressed key questions about intellectual property, investor entry points and cash flow.

One of the scenarios modeled a dual holding company structure. This design created two clear entry points; one for U.S. direct investment and another for international direct investment. By doing so, the company could accommodate investors in different jurisdictions without forcing them into a single, rigid path. This flexibility was important for giving investors confidence and for providing the company with options as the joint venture evolved.

Each scenario was reviewed in detail with the company’s leadership team. Rather than delivering a single recommendation, Baker Tilly engaged in ongoing discussions to weigh the advantages and tradeoffs of each approach. This collaborative process allowed the team to refine alternatives, incorporate feedback and adapt the structure to better reflect the company’s priorities and investor considerations.

Through this iterative approach, the company was able to see how different structures would play out not only at the time of formation but also over the lifecycle of the joint venture. That forward-looking perspective was central to helping leadership choose an optimal path.

Results

The final structure recommended by Baker Tilly delivered several benefits:

• It enabled an efficient tax deferral option for both the company and its investors.
• It allowed cash to be directed to jurisdictions that provided maximum flexibility on when and how funds would be returned.
• It gave investors confidence that the company was proactively managing complex cross-border considerations with discipline and foresight.

Beyond the technical outcomes, the process delivered added value. Through collaborative reviews and open discussions, Baker Tilly demonstrated its role as more than a tax advisor by contributing to the company’s broader strategic planning. The client came to view the team as a trusted business advisor, providing guidance through complex decisions at a pivotal stage in its growth.

The case demonstrates how even early-stage companies can benefit from international tax structuring, attracting cross-border investment with confidence, protecting intellectual property and laying the foundation for scalable, sustainable growth.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely.  The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.