Corporate Deal-Makers Rethinking Debt as Tax Break Shrinks

Highly leveraged companies are taking a hard look at potential deals and financing strategies in an effort to soften the blow from restrictions on a popular tax deduction.

In one of the tax law’s few big revenue raisers, Congress curbed a break for debt financing that had helped fuel a spate of buyouts. Now bankers and tax professionals are surely using a different calculus when they pick acquisition targets, or talking up preferred equity and pursuing sale-leaseback arrangements as likely avenues to avoid the 2017 tax act provision, which effectively raises the cost of debt, including bonds that corporations already ...