LBO Model - Goodwill under Asset Deal
Hi guys, I recently came across a modelling problem and really hope someone here can help.
If a transaction is conducted under an asset deal (as opposed to a stock deal), I understand that PPE and Intangibles are stepped-up from both an accounting and tax perspective and thus no DTL is created at closing.
However, I also noticed that goodwill is never amortized (subject to impairment tests) for accounting purposes, while amortized over 15 years for tax purposes. This amortization causes taxable income to be lower than EBT, and thus lower cash tax in the future periods.
Will this difference create deferred tax asset though? I've tried to search for answers on google, but couldn't find anything that specifically addresses the problem.
Hope some modelling guru on WSO can help!
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