United States

Business valuation post-Tax Cuts and Jobs Act

What business owners and investors need to understand

WHITE PAPER  | 

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On Dec. 22, 2017, the Tax Cuts and Jobs Act (TCJA) was signed into law. In our white paper, we introduce the direct and indirect valuation impacts resulting from the provisions of the TCJA that affect businesses and provide a framework for professional service providers, business owners and investors to understand how to incorporate the new provisions into valuations.

We address the valuation impact of the new provisions specifically with regard to valuation methodologies under the market approach and the income approach. The following is a quick summary of the provisions that will have a valuation impact and what that impact looks like.

These valuation impacts are expected to have significant effects on how business owners and investors assess their ownership interests and set strategic plans in light of the additional cash flow that might be available to them.

Accordingly, the long-term valuation impact of the TCJA is uncertain, and it will take time for business owners and investors to fully process the complexity of the new provisions. While we certainly expect to see values continue to rise, no one can predict if the bump in market values will normalize or if increased values are here to stay.

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