Corporate M&A activity could be boosted by the
provisions of the Republican Party’s Tax Cuts and
Jobs Act. Measures included in the bill, which was signed into
law on December 22, such as the reduction of the corporate tax
rate and the introduction of rates for the repatriation of
overseas funds and earnings, will free up much needed liquidity
allowing for more acquisitions and reducing the need for
spinoffs and reverse Morris trust (RMT) strategies.
"The tax bill is going to definitely have a positive impact
on M&A if for no greater reason than a lot of cash will
become available," said Davis Wang, partner at
Sullivan & Cromwell. "The other reason is that the tax
rate is lower, so synergies are going to be valued more highly
and the after-tax pay-out is going to be greater."
The US tax reform bill...