Tax Receivable Agreements
also referred to as: tax receivable agreement · tra
16 statements across 1 episodes · 5 bullish · 3 bearish · 1 people on the record · first statement Mar 30, 2023 by Andy Lee · across every show →
Everything said about Tax Receivable Agreements, oldest first
Mar 30, 2023 positive
TRA issuers average $400M+ in EBITDA with under 2x leverage
“I think the item across the industry that is not well understood is that they are oftentimes IG or near IG names, and they oftentimes are large scale and with access to public markets. And so on average, we see the industry being approximately 400 plus of EBIT…”
Mar 30, 2023 neutral
Mar 30, 2023 neutral
Mar 30, 2023 negative
Mar 30, 2023 neutral
Domain complexity prevents intermediaries from operating in the TRA market
“I would say there are no intermediaries in the space that we deal in as a function of a number of things. Domain expertise as well as the size of each underlying opportunity prevents many intermediaries from engaging in earnest on this space.”
Mar 30, 2023 bullish
Mar 30, 2023 neutral
Mar 30, 2023 bullish
Mar 30, 2023 neutral
Mar 30, 2023 negative
NOL TRAs are highly correlated to underlying company economic performance
“Net operating losses are incredibly challenging for us to underwrite because our entire value prop to many of our investments were endowments and foundations is that we seek to deliver an uncorrelated return. A net operating loss TRA is incredibly correlated t…”
Mar 30, 2023 neutral
TRA profitability requires underwriting 15-year corporate survivability
“For us, seven years is oftentimes the window through which we receive the majority of our cash flows. But in order for us to make not just a return of capital, but a return on capital, we really need the year eight through 15 cash flows to have a profit. And s…”
Mar 30, 2023 negative
VCs underappreciate tax assets by prioritizing growth over profitability
“Venture capitalists who back these companies oftentimes don't fully appreciate the value of tax assets because many of the corporations are not oriented to being profitable. They're more oriented towards growth. And as such, the adoption in the venture capital…”
Mar 30, 2023 positive
Regulatory tax changes would harm major asset classes before impacting TRAs
“All we are is a factoring items that have existed in tax code for almost a hundred years and are protected by lobbies, including the real estate lobby. We fundamentally follow the same principles that many of these that have been well Honed in tax code, and so…”
Mar 30, 2023 neutral
Companies typically pay 85% of realized TRA tax savings to holders
“The company would file its corporate tax filing if and when they filed that taxes and they are able to utilize the deductions that a TRA assets are able to deliver them, they would then pay 85% of those savings to the holder of the TRA.”
Mar 30, 2023 positive
Mar 30, 2023 neutral
The issuing company itself is the primary competitor for its tax assets
“Our biggest competition that has always been there It's not a third party. It's really the company itself. They have not only the lowest cost of capital, they also have asymmetric information even relative to us as it pertains to what they view their tax asset…”