Tax reform and impact on portfolio valuation: Key considerations

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Valuation considerations under Tax Reform

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.

How PwC can help

Our Financial Markets Practice brings you:

  • A unique combination of financial reporting, advisory, tax, finance, operational readiness, process and technology, and regulatory expertise, coordinated with specialized transaction and valuation services for securitizations, structured products, derivatives and real estate assets.
  • In-depth knowledge and valuation expertise on virtually all asset classes, including debt and equity securities, derivatives, structured notes, residential and commercial mortgages, mortgage servicing rights, commercial loans and bonds, automobile loans and leases, trade receivables, credit cards, home equity loans, equipment loans and leases, student loans, manufactured housing loans, franchise loans, hospitality and leisure real estate, timeshare receivables, and mutual fund fees.
  • A group of subject matter specialists who provide insights into developments in the capital, credit, derivatives and real estate markets, including but not limited to consumer and corporate credit, investment banking, transaction structures, investor reporting, technology, real estate asset monitoring and management, reorganization and insolvency, forensic accounting and hospitability and leisure services.
  • Expertise in model development and risk analysis to assess your processes for valuing financial instruments, determine robustness of financial models and perform risk analysis, including evaluating sensitivity measures and stress testing methodologies for portfolio risk.

Our team is multi-disciplined and diverse. We bring a unique approach to blending and managing services in today’s dynamic and fast changing markets.

Contact us

Frank Serravalli

Partner, Financial Markets, PwC US

Tel: +1 (646) 742 7510

Shaan Elbaum

Partner - Assurance, Financial Markets, PwC US

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