Given the potential consequences of newly imposed tariffs, many companies and advisors are utilizing transfer pricing tools to help mitigate the tariff risk and burden for multinationals. Similarly, those multinational companies that may be considering consolidation of intellectual property (“IP”), acquisitions, or post-acquisition IP planning will need to pay close attention to the impact that existing and prospective tariffs may have on the valuation of any IP, or other assets, being moved intercompany.
Since the announcement of sweeping U.S. tariffs on April 2, the outlook for global economic growth for the rest of the year has become cloudy and subject to widespread conjecture. Until public market investors find clarity and some of this uncertainty subsides, significant price volatility is likely to continue. Such volatility raises significant questions on the impacts on cost of capital, the value of public and private investments, capital spending and M&A activity and the potential impairment of goodwill and other assets.
Ongoing market volatility and uncertainty can result in a material impact on the outlook and valuation of businesses and whether any associated goodwill recorded on the books is still supportable. Kroll advises companies to consider performing an assessment of whether the current environment constitutes a triggering event to their business that would require goodwill impairment testing.
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