Financial Services M&A: Possible Tax Changes and Approval Process May Affect Transaction Planning

Sullivan & Cromwell LLP - May 14, 2012

Financial services clients considering strategic transactions in the U.S. should take into account the combined impact of two factors.  First, the “Bush tax cuts” will expire at the end of this year and some of the Obamacare tax increases will take effect on January 1, and absent Congressional action, the combined Federal tax rate on capital gains recognized by individuals will increase from 15% to 23.8% (including the increase in the Medicare tax).  Second, there appears to be an increased length of time required to obtain regulatory approval for M&A transactions in the financial services sector.