How a Potential Capital Gains Hike is Affecting Deal Making

The potential tax law changes have been and will continue to drive M&A activity.  The bank where I am employed is in the process of being acquired (press release).  I think many people or organizations sitting on large capital gain positions will take action before tax law changes.  Based on the amount of spending associated with the stimulus, infrastructure, etc. combined with the country's current debt burden, we are going to have funding such commitments is inevitable.

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Matt Johnson
CFO
Premier Bank
Omaha, NE
Posts reflect my personal opinion and do not represent any organization in which I am affiliated.
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Original Message:
Sent: 06-23-2021 14:39
From: Barb Rehm
Subject: How a Potential Capital Gains Hike is Affecting Deal Making

The prospect of higher capital gains taxes is accelerating timelines for some banks looking to sell and could push sellers to command higher prices, according to this week's complimentary story from S&P Global Market Intelligence.

The Biden Administration's proposal to raise the tax would raise the top tax rate on capital gains to 43.4% from 23.8% for households with income over $1 million. In addition to affecting deal timing and pricing, the plan could lead more merger partners to choose stock swabs over cash or cash-and-stock deals. It's still unclear if the plan will become law, and if it does, when it would take effect. But the Biden Administration's budget assumes it would be retroactive to April 2021. If you're thinking of buying or selling, read this story.

 

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Barb Rehm
Senior Managing Director
IntraFi Network
Arlington VA
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