M&A & Merger ModelsMedium

Why does writing up the target's assets in a stock acquisition create a deferred tax liability?

Model answer

Because the write-up exists only for book purposes. In a stock deal, book basis steps up to fair value but the target's TAX basis carries over, so the extra book depreciation and amortization on the…

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Why does writing up the target's assets in a stock acquisition create a deferred tax liability?

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