Keiter’s Tax Practice Leader, Gary Wallace, shared insights on the impact of the recent tax reform on mergers and acquisitions in the article, “New Tax Law Will Affect Mergers and Acquisitions”, featured in Inside Business.
The Tax Cuts and Jobs Act Congress enacted at the end of 2017 is the most significant change to the U.S. tax code in over 30 years. Republicans tout that the bill will increase corporate investment, spur job growth and drive wages higher. While it is too soon to tell whether these goals will occur, the legislation does contain several provisions that will have a profound impact on deal flow.
For businesses in Hampton Roads and the U.S. considering a merger or acquisition in 2018, it is important to realize the changes that have occurred will need to be considered.
Historically, most acquirers have preferred asset acquisitions over stock acquisitions because of the additional tax benefits of depreciation/amortization of stepped-up asset basis. In other words, merger activity in the U.S. was more advantageous from a tax perspective when the buyer could step up the basis in tangible and intangible assets and get an additional tax deduction through depreciation or amortization.
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Additional Mergers & Acquisitions Informational Resources
- “How tax reform will boost middle-market M&A”
- Tax Cuts and Jobs Act adds new considerations for M&A transactions
- Managing Relationships During a Merger or Acquisition
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.