R&D Tax Credits impact on biz valuation
June 09, 2022
by a searcher from Gustavus Adolphus College in Minneapolis, MN, USA
Does anyone have resources, insight or experience with R&D Tax Credits and the impact on business valuation?
Seller (manufacturer) includes the credits as an increase in SDE. Obv not an EBITDA add back but dollars do flow.
any help greatly appreciated.
from The University of Chicago in Chicago, IL, USA
1) As Matt Foreman said, the risk of audit is high
2) If there is unused credit you may not be able to use it in an Asset sale
3) R&D tax credit reduces "effective" tax rate.
So I ran my software (It uses DCF+, a very advanced DCF. It has no market data). In 5 minutes I was able to calculate impact on value at various effective tax rates and deal structures. One table shows EV, the other shows EBITDA multiple. Hope this helps. Happy to dicuss more.
Sales: 5,000, EBITDA: 750 Tax Rate 40% 35% 30% S-Corp Asset 3,251 3,299 3,344 S-Corp Stock 2,995 3,073 3,148 Tax Rate 21% 18% 15% C-Corp Asset 3,204 3,259 3,311 C-Corp Stock 3,119 3,184 3,247
Tax Rate 40% 35% 30% S-Corp Asset###-###-#### S-Corp Stock###-###-#### Tax Rate 21% 18% 15% C-Corp Asset###-###-#### C-Corp Stock###-###-####
from Rice University in Houston, TX, USA
I hope your search is going well - looks like you may have found a solid target!
This is a group that I've worked with in the past (while I was at a manufacturer): https://www.taxcredithero.com/
They're out of Houston and specialize in R&D Tax Credits. Excellent team; very transparent and knowledgeable.
Stephen Tsai is the owner/founder. He's a genuinely nice and honest guy. Here's their number: ###-###-####
Good luck!
Best!
Adam