Tax reform’s impact on private equity and M&A markets

When the Tax Cuts and Jobs Act (TCJA) was enacted last December, it marked the largest change to tax policy in recent decades. The new law is still being reviewed and additional IRS guidance has been provided – with more anticipated – throughout 2018. At this time, the law’s influence on the merger and acquisition (M&A) and private equity markets is expected to be positive.

There are five key changes brought about by the TCJA that will significantly affect the private equity and M&A markets:

• Tax rates
• Bonus depreciation
• Net operating loss limitations
• Carried interest holding period
• Business interest expense limitation

In the following article, we recap each of these key areas and provide our initial observations on how they impact M&A market activity, buyers, sellers and the private equity industry as a whole.

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The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.