Analyzing Tax Reform’s Potential to Influence Dealmaking

Sweeping changes to the taxation of U.S. corporations simultaneously create both tailwinds and headwinds for M&A activity.

Tuesday, February 27, 2018

After the Republican-controlled U.S. Congress passed the Tax Cuts and Jobs Act in mid-December 2017, media commentators scrambled to boil the impact of the most significant tax reform in more than 30 years down to simple headlines. When it comes to how the reforms will influence M&A activity, we believe that the overall impact will be positive. However, the new law creates several changes that could have a meaningful impact on strategic and financial buyers' acquisition strategies; some of these changes will encourage increased M&A activity and higher valuations, while some changes will hinder dealmaking.

We analyze the elements of the new tax law that should have the greatest impact on M&A activity. We also examine several macro trends that gained momentum in 2017 and should continue shaping deal processes in 2018.

Highlights include:

  • Tailwinds: lower rates on corporate income and repatriated profits
  • Headwinds: deduction limits and carried-interest changes
  • Macro trends to watch in 2018

U.S. M&A Activity



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