US tax bill to boost M&A activity

Author: John Crabb | Published: 10 Jan 2018

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."  

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