Calvetti Ferguson

WEST Engineering Services

Multidisciplinary Approach Optimizes Tax Position, Preserves Valuation during the Acquisition Process

Houston-based WEST Engineering Services provides consulting, training and services for drilling equipment on rigs of all types, from ultra-deepwater to land rigs. Predominantly experts in subsea systems, WEST specializes in the assessment of blowout preventers and other well-control equipment. Following the Deepwater Horizon oil spill, which was spurred by a wellhead blowout, demand for blowout preventers reached a pinnacle. After serving as a consultant on the Macondo well process, WEST found itself at the center of escalating industry and regulatory demand for improved engineering solutions.

In turn, the company attracted the attention of Lloyd’s Register, who sought to acquire WEST to further expand its global portfolio of technical services for the drilling industry.

As the company experienced accelerated growth and reached a critical turning point, the owners began seeking a public accounting firm that could help them navigate complex domestic and international tax issues and guide them through a pivotal transaction.

WEST owners, Michael and Janet Montgomery, enlisted CF&W to initially provide counsel on domestic and international tax issues, and then later to work with the deal team to complete the sale to Lloyd’s Register.

After coming onboard, CF&W quickly identified several domestic and international tax compliance areas requiring immediate attention by the company, as well as strategies that could be put in place immediately. The CF&W team assisted management in quickly addressing issues.

Once the due diligence process with Lloyd’s Register began, CF&W addressed concerns raised as Lloyd Register’s Big 4 firm in the transaction. Facing complicated tax structures, involving a mixture of foreign corporations and pass-through companies, CF&W identified a litany of tax issues that needed to be addressed. Expertly handling these complex issues, CF&W was able to assist in substantially preserving the negotiated value of the sale of WEST to Lloyd’s Register, which was successfully completed in April 2012.

Throughout the process, CF&W faced its share of challenges – most of which were due to distant time zones. Lloyd’s Register and its accounting firm were both located in London, with teams on the U.S. West Coast as well. With key contacts either six hours ahead or two hours behind CF&W’s Houston-based team, early conference calls and late-night meetings were the norm.
“We cannot say enough about the CF&W team’s level of service and commitment,” said Michael Montgomery, former owner of WEST. “Their round-the-clock availability, responsiveness and quick work surpassed our expectations and enabled us to swiftly meet the deal’s tight closing date requirements.”

Throughout its transactional work, CF&W also served as tax advisors for WEST’s owners. CF&W advised the Montgomery’s on handling the acquisition from a tax standpoint, guiding them on complex tax structures, including family trusts, and explaining the impacts to their personal tax returns. To this day, CF&W still advises the family on tax matters.

Montgomery continued, “CF&W’s involvement in the acquisition was absolutely crucial to securing the valuation we were seeking. Looking forward, our family considers them to be a true long-term partner for the future.”