SiNtx Technologies Inc (SINT)

[dp60]

Valuing a Net Operating Loss Carry forward
Excerpt p.25, The Value of Synergy, Aswath Damodaran, 2005

"Assume that a firm with expected operating income of $ 1 billion next year
acquires a firm with a net operating loss carry forward of $ 1 billion. The computation of
the synergy from this acquisition is the savings in taxes that accrue to the acquiring firm
For instance, with a marginal tax rate of 40%, the savings in taxes this year (assuming
that the tax authorities will allow offsetting the target firm’s operating loss against the
acquiring firm’s gain) is $ 400 million. This is the value of the tax savings synergy, if we
assume that the target firm could never have used the net operating loss."

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