When a company acquire another company, do we count the tax shield as part of the value creation besides growth and cost synergies. I am doing a valuation of hostile takeover, but I am not sure if I should add tax shield into my offer premium. Can anyone help me on this? Many thanks!

Question

dean.shyy · Answer

In the same country or you involving two separate countries?

anonymous · Answer

They operate in the same country and same industry

anonymous · Answer

probabaly yes becuase many mergers happen to reduce the tax liability by taking over a firm suffering from huge losses

dean.shyy · Answer

It really depends on which valuation you are approaching. Some types of valuation require the tax shield to be considered. Other types of valuation do not. While valuation is the rating of a company, there are different types of valuation.