The tax holiday for repatriation creates one of the most active M&A environments of the past ten years. The repatriation holiday is part of the new tax plan. It permit companies to bring US dollars held abroad (from software sales in other countries) back to the US at a lower tax rate than before. The scale is enormous. Apple could repatriate $252B, Cisco $65B, Google $55B. That cash could be used for dividends, share buy backs and acquisitions. Several landscape altering SaaS acquisitions will come to fruition because of cash availability from repatriation and because there are enough public SaaS companies at scale to add material revenue and market cap to buyers. Some ideas: Google buys Salesforce. Microsoft buys Workday. Oracle buys ServiceNow. There are now 5 publicly traded software companies worth more than $10B, and 19 companies worth between $2.5B and $10B.
Will be interesting to track his list this year but right at the top is the most interesting thing – the new tax stuff and it’s effect on the M & A market.
I wonder what this will mean for Asia – since some of the money parked overseas is in Asia and it wasn’t getting used to by Asian companies. Will it be used to by companies on their home turf?
What will this mean to the M & A market in Asia?
I personally think M & A activity will increase across the board in 2018 but we shall see.