Impact of Tax Reform on Financial Models

The Impact of Tax Reform on Financial Models

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Understand How to Modify Pitchbook and Deal Models to Reflect Tax Reform

TCJA impacts far more than the headline tax rate reduction. This course shows investment bankers and private equity professionals how the financial models they use to support M&A and LBO transactions need to be revised to reflect new limits on interest expense deductions, bonus depreciation and changes to NOL rules.

Excel Model Template Included: Includes a complete and reusable TCJA-Adjusted Financial Statement Model, DCF and LBO Model Template.

What You'll Learn

Part 1: Financial Statement Model Impacts

Overview of the Changes in TCJA
Modeling Bonus Depreciation
Modeling Interest Carryforward Limits
Modeling EBIT and EBITDA Tests
Modeling NOL Limits

Part 2: Valuation Model Impact

Overview of Tax Reform Impact on Valuation
Adjusting Free Cash Flows, WACC and Terminal Value Calculations for TCJA
How to Deal with NOLs and Carryforwards

Part 3: M&A and Private Equity

Impact on LBO Models
Impact on M&A Deal Structures

Course Samples

Tax Reform Headlines

Headline 1: Lower Tax Rate

Headline 3: Limit on Interest Deduction

Wall Street Prep’s "The Impact of TCJA on Financial Models" is used at top financial institutions and business schools.

Course Extras

Taught by Bankers

Our instructors are former investment bankers who give lessons real-world context by connecting it to their experience on the desk.

Used on the Street

This is the same comprehensive course our corporate clients use to prepare their analysts and associates.

Free Unlimited Access to the WSP Support Center

Receive answers to questions, free downloads, and more from our staff of experienced investment bankers

Prerequisites

This course assumes basic familiarity with financial modeling, LBO and DCF analysis. Students with no prior background in financial modeling should enroll in the Premium Package prior to taking this course.

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Course TOC

Tax Reform Overview

1. TCJA Introduction 1:14

2. Course Downloads Files

3. Tax Reform Headlines 4:22

Impact on Financial Statement Models

4. Headline 1: Lower Tax Rate 3:12

5. Headline 2: Bonus Depreciation 6:26

6. Bonus Depreciation: Model Impact 12:56

7. Headline 3: Limit on Interest Deduction, Part 1 4:02

8. Calculating EBITDA and EBIT 1:41

9. Limit on Interest Deduction: Model Impact 5:51

10. Interest Carryforward 3:55

11. Connecting the Carryover Schedule to the Model 4:35

12. Headline 3: Limit on Interest Deduction, Part 2 1:20

13. Headline 4: NOL Limits 1:58

14. NOL Limits: Model Impact 8:40

15. Putting it Together: Tax Savings vs Pre-TCJA 6:26

Impact on Valuation Models

16. Tax Reform's Impact on Valuation 4:11

17. Tax Reform's Impact on the Stage 1 DCF 3:50

18. Tax Reform's Impact on WACC 1:32

19. Tax Reform's Impact on Terminal Value 3:53

20. Normalizing Terminal Year Cash Flows 3:59

21. Exit Multiple Requires No Change 0:24

22. Dealing with NOLs and Carryforwards 2:00

23. How to deal with NOLs 5:08

24. How to Deal with Carryforwards 13:14

25. Putting it Together: NOLs and Carryforwards 1:43

26. Summary: Tax Reform's Impact on the DCF Model 2:08

Impact on LBO and M&A Models and Deal Structure

27. Tax Reform's Impact on the LBO 5:33

28. Tax Reform's Impact on the LBO: Getting into the Model 8:55

29. Tax Reform's Impact on Deal Structuring 10:50

30. Tax Reform's Impact on M&A 16:55

31. Putting it Together: Tax Reform's Impact on M&A 3:18

Appendix: Q&A

32. Q&A: TCJA Impact on Valuation 6:46

33. Q&A: Handling the Remainder of Bonus Depreciation 0:38

34. Q&A: EBITDA/EBIT Toggle 0:44

35. Q&A: What Happens to Carryover if Tax Expires? 1:04

36. Q&A: Tax Reform's Impact on Merger Modeling 1:56

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