Senior Teaching Fellow Pete Clarke has been discussing the impact of President Trump’s tax-cuts on the mergers and acquisitions industry with MarketWatch.
President Trump looks set to cut a tax on repatriated earnings, which is currently set at 35% in the U.S.
History from 2004 shows that during a repatriation holiday in October 2004 saw U.S firms bring home $362 billion - approx 45% of their foreign cash holdings.
It’s hoped that a similar tax break now could encourage similar activity.
Pete Clarke, however, thinks that the pace of deal activity over the remainder of the year might have less to do with Trump’s tax proposals, and more to do with the potential for further policy ‘shocks’ generated by the administration.
“The potential for geopolitical crises or even homegrown political turmoil is incentive for bankers and potential deal makers to pursue blockbuster deals sooner rather than later,” he said.
“If I’m a banker, I’m thinking I want to do my deals right now. I’m going to swing for the fences right now.”
You can read the full article on the MarketWatch website.