Tax Shield

Return to List of Terms

What It Means

A Tax Shield is a deduction that reduces a person or company’s taxable income.

Why It’s Important

Tax Shields are a common part of Acquisition strategy. Buyers pursuing an Asset Purchase are likely counting on the Tax Shield provided by the depreciation and Amortization from the stepped-up asset values. Those expected tax savings provide ongoing value to Buyers and should be factored into the Enterprise Value of the company being purchased.

Related Terms

Return to List of Terms

Related Posts