Both US and non-US executives do see some potential boost to mergers and acquisitions dealmaking from the US corporate tax code reforms. However, a similar number of non-US executives are downbeat about the potential impact. The majority do not expect a material impact either way.
Taxation levels, in and of themselves, generally do not drive dealmaking. Tax is part of the calculations on valuations and future growth potential, but deals are driven by strategic objectives. Also, in today’s environment of relatively loose monetary policy, strong corporate earnings and elevated stock prices, the ability to fund deals has not been an impediment to M&A.
The majority of US executives plan to invest tax reform gains in existing operations. The provisions in the reforms that are more favorable to investing in short-lived assets may help companies that are still unsure about what technology assets to acquire. This may help US companies retain their lead in the technology sector, as well as turbocharging growth in others.