Module V· Deferred Taxes in M&ABasic
Question
What are DTLs and DTAs, and why are they relevant in M&A?
Answer
A deferred tax liability (DTL) reflects future tax payable from temporary differences where accounting value exceeds tax basis. A deferred tax asset (DTA) reflects future tax benefit, such as NOLs or deductible temporary differences. In M&A, deferred taxes affect PPA, goodwill, effective tax rate, cash taxes, and equity value.