Tax Implications of an LBO
Just to recap/confirm, the tax implications of an LBO are as follows:
- Capitalization of transaction fees - amortized over 5-7 years, offer tax shield
- Fixed asset and intangible asset write-up - higher asset base for D&A schedule, offer tax shield
- Goodwill can no longer be amortized (correct?)
- Goodwill impairment charge will not serve as a tax shield (correct?)
Additional NOL considerations:
- Can someone clarify the limit on NOLs that can be transferred in an acquisition... also how is the annual NOL utilization cap determined?
Any additional potential to realize a tax benefit from an LBO? What are some tax benefits sponsors look for/look to realize in an LBO?