Accounting Question
Why do analysts consider the value of NOLs when valuing potential takeover candidates?
Asked by daj224 in
Accounting
8 months ago
Answers
653 points
DaveDiggz answered 8 months ago …
A Net Operating Loss can be carried forward and used as a tax benefit for the acquiring company. So if a company is about to acquire another company, which might now be profitable but at one time was losing money, they'll look to see what their potential tax deductions might be and incorporate that into their valuation of the company...the whole "a penny saved is a penny earned" type of deal.
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