BUSINESS FINANCE II (İŞLETME FİNANSI II) - (İNGİLİZCE) Dersi Mergers and Acquisitions soru detayı:
SORU:
What effects do tax considerations have as motivation for M&AS?
CEVAP: Tax may be one of the motivations for engaging in M&A activity. Depending on whether the payment for M&A is in the form of cash or in the form of shares, an acquisition may be taxable, or tax-free for shareholders. The M&A activity has effects on the merged firm’s taxes after the deal is closed. The merged firm is taxed as if the merged firms had always been together when the payment for M&A is in the form of shares. However, the assets of the selling firm are revalued, the result is treated as a taxable gain or loss, and tax depreciation is recalculated on the basis of the restated asset values when the payment for M&A is in the form of cash (Brealey et al., 2014). If depreciation tax shield will be larger than the cash amount to be paid, a firm may seek such an alternative firm to acquire in a taxable way.
Tax may be one of the motivations for engaging in M&A activity. Depending on whether the payment for M&A is in the form of cash or in the form of shares, an acquisition may be taxable, or tax-free for shareholders. The M&A activity has effects on the merged firm’s taxes after the deal is closed. The merged firm is taxed as if the merged firms had always been together when the payment for M&A is in the form of shares. However, the assets of the selling firm are revalued, the result is treated as a taxable gain or loss, and tax depreciation is recalculated on the basis of the restated asset values when the payment for M&A is in the form of cash (Brealey et al., 2014). If depreciation tax shield will be larger than the cash amount to be paid, a firm may seek such an alternative firm to acquire in a taxable way.