The Tax Cuts and Jobs Act of 2017 will impact the timing and amount of free cash flow to businesses, and ultimately business value for companies that pay U.S. tax. The impact on value is immediate given that business valuation is forward looking. It is important for investors who report the fair value of equity and/or debt positions to identify and consider the specific components of the Act to determine how their investments are affected by the new legislation. These impacts should be analyzed from a market participant’s perspective – i.e., how the price to sell an asset would be affected as a result of Tax Reform.
The key changes impacting a market or an income valuation approach are discussed in this document. The effect of the Act on portfolio companies will be based on their specific facts and circumstances. Investors need to evaluate whether future after-tax cash flows will be positively or negatively affected by the revised tax law.
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Partner, Financial Markets, PwC US
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Partner - Assurance, Financial Markets, PwC US