Insights on Trends in U.S. Cross-Border M&A Transactions After the Tax Cuts and Jobs Act

Abstract

Cross-border mergers and acquisitions data show that for the first time since 2013, the dollar share of outbound transactions — that is, acquisitions by U.S. companies of foreign assets and companies — exceeded inbound transactions — that is, acquisitions by foreign companies of U.S. assets and companies — in 2018 and in 2019. The average annual dollar value of outbound transactions in 2018 and 2019 was 50 percent greater than the average in the two preceding years, before enactment of the Tax Cuts and Jobs Act. Over the same period, the dollar value of inbound transactions declined by 25 percent.

Although a range of factors likely affects the volume of outbound and inbound M&A in any year, the data are consistent with a view that the 2017 tax reform legislation improved the attractiveness of the United States as the tax domicile for multinational companies.

Keywords: corporate tax reform, mergers, repatriation, tax domicile

JEL Classification: H25, G34, F23