How U.S. tax reform is affecting the deal market

By Bob Nihen

More than 60 percent of top tax and finance executives recently surveyed by KPMG say sweeping U.S. tax reform has affected the deal market and dealmakers. Survey results indicate that while the Tax Cuts and Jobs Act of 2017 (TCJA) is having a positive impact on deal flows (74 percent), it is also making mergers, acquisitions, divestitures and other transactions more complex, uncertain and riskier for many companies.

“Survey respondents are telling us that U.S. tax reform is clearly having a significant impact on buyers, sellers, investors and lenders involved in the deal market,” says Howard Steinberg, national leader for KPMG LLP’s Mergers & Acquisitions Tax practice. “We believe that there are some key steps corporate dealmakers can take to improve the odds of success, including focusing more from the very beginning on the tax implications of potential transactions.”

 

Key Findings

KPMG’s M&A outlook survey polled more than 100 top tax and finance executives at large and small companies across 18 industries. Key findings include: 

74% of survey respondents say the TCJA has helped, rather than inhibited, the deal market.

  • 63% say the potential tax considerations of deals are growing in complexity.
  • 39% say tax issues for deals have increased in importance since passage of the TCJA, while 56% say the importance of tax has remained the same.
  • Of those respondents, 46% indicate this complexity has created more potential tax traps for the unwary, while 17% feel it has created more planning opportunities.

Key Takeaways

  • Key takeaways for corporate dealmakers include:
  • U.S. tax reform is helping drive the U.S. deal market, which has seen four consecutive years of near-record activity.
  • Under tax reform, many deals are more complex and, therefore, more risky.
  • To manage added complexity, deal success demands a greater focus on tax issues throughout the deal cycle.

For more information, or to arrange an interview with Howard Steinberg, please contact Bob Nihen.

 

Download the report

Transactions in the age of tax reform
KPMG’s new thought leadership report draws on the experiences and insights of over 100 tax and finance leaders to uncover ways dealmakers can improve the odds of M&A success in the post-tax reform era.

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Robert Nihen

Robert Nihen

Director, Corporate Communications, KPMG US

+1 201-307-8296


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Howard Steinberg

Howard Steinberg

Partner, M&A Tax, KPMG US

+1 212-872-6562