Morrison & Foerster partner Jackie Liu forecasts the effect President Trump’s potential “tax holiday” will have on M&A deals and activist campaigns in The Deal article, “Trump Tax Policy and the $2T Repatriation Question.” “In many ways companies view offshore cash as restricted, not in the accounting sense but because it’s very expensive to repatriate in our current system,” she said.
“A lot of PE funds use cash on the balance sheet of the target to fund acquisitions.” Liu continued. “If the cash is offshore and there are costs and restrictions to bring it back to the U.S., they discount target's cash by 30%. If less cash is restricted it opens the door for PE firms to look at those companies, which is good for activists who want sales of their companies and divestitures of lagging divisions.”
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