Facilitating a Strategic $45M Transfer for a Fortune 500 Investment Grade Seller
Overview
Reunion facilitated a $45M tax credit transfer in 2024 for a Fortune 500 investment grade (IG) seller at $0.96 gross pricing -- one cent above the highest ITC prices observed in 2023-2024.
Reunion’s market intelligence contained two key insights about IG premium pricing that partly drove this successful outcome:
- An increasing number of buyers - approximately 30% of total dollarized demand across Reunion's vetted buyer pool - require an investment grade counterparty
- Nearly 60% of transaction-ready buyers are willing to pay upwards of a $0.02 premium for investment grade tax credits irrespective of credit type, technology, or volume
$45M
Credit Volume
$0.96
Gross Price
3 Days
To Agree on Key Terms
Executing a $45M Tax Credit Deal
The investment grade seller reached key terms with a strategic buyer in just 3 days, enabling a closing in under 45 days.
Tax Credit Portfolio
Credit: §48 ITCs
Volume: $40M - $50M
Technology: Utility-scale battery storage
Year: 2024
PWA: Compliant
Bonus adders: None
The Seller
Profile: Fortune 500 energy company with over $100B in annual revenue
Ownership: Publicly traded
Experience: First tax credit transfer
Tax year-end: December
Deal lead: Director, Treasury & Capital Markets
The Buyer
Profile: Storied American company with 130-year history and over $2B revenue
Ownership: Private equity-backed
Experience: Executed one term sheet, none closed yet
Tax year-end: March
Deal lead: VP, Tax
Identifying a Buyer Who Can Deliver a Premium Price...
Reunion targeted fiscal-year filers, who were often “out of market” relative to their calendar-year peers, and/or buyers who limited transactions to IG counterparties.
The Seller Wanted to...
Maximize cash proceeds by accessing Reunion's pool of over 50 vetted, transaction-ready buyers
Minimize execution time by agreeing to high-level commercial terms prior to executing a term sheet
Sell to a single counterparty capable of purchasing a minimum of $40M of 2024 tax credits
The Buyer Wanted to...
Source credits that aligned with their March fiscal year end
Partner with an investment grade tax credit seller with transfer experience
Purchase from a single counterparty who can deliver $40M to $50M of tax credits in 2024 (and potentially 2025)
Internal Stakeholders
Signer: CFO had already agreed to high-level terms and delegated signing authority to VP of Tax
Treasury: Had $60M of cash on standby
Tax: Led the transferable tax credit program
Legal: Relied on outside legal counsel
Accounting: Rolled into tax in this organization
External Advisors
Legal: Proactively identified primary and secondary law firms in the event one was conflicted out
Due diligence: Formally engaged two of the big 4 audit firms to provide due diligence support in the event one was conflicted out and/or not readily available
..without compromising certainty and speed of execution
At a price of $0.96, the risk of attracting unserious buyers was real. To ensure that the buyer was transaction-ready, Reunion facilitated a tax credit workshop with key internal stakeholders in the buyer team and ensured it had third-party advisors lined up.
Negotiating High-Level Commercial Terms Early
To meet both parties’ shared goal of closing within 45 days, key commercial terms were agreed prior to executing a term sheet.
Price
High-level agreement: The seller asked Reunion to “test the market” at a $0.96 gross price, positioned as a “market-clearing” price not subject to a protracted bidding process.
Timing
High-level agreement: Both parties targeted a 45-day close, with the buyer requesting early confirmation of the seller’s IRS pre-filing registration.
Credit Volume
High-level agreement: With the buyer targeting at least $40M in 2024 credits, the parties agreed to “top-up” from a separate smaller project if the final volume came in below target.
Tax Credit Insurance
High-level agreement: The seller asked Reunion to identify a buyer willing to forego tax credit insurance. The buyer agreed given indemnification from the seller’s IG-rated parent company.
Structuring for Variability
Reunion designed three deal structures that accounted for variability in final §48 ITC volume because the $0.96 gross price “penciled out” for the buyer only if the transaction was in the $40M-$50M range.
Structure A: Too few §48 ITCs
If the cost segregation report showed a volume below $40M, the seller would lower the price to $0.9575.
Structure B: Goldilocks
If the final volume was within the target range, the buyer would purchase all credits at $0.960.
Structure C: Too many §48 ITCs
If the report showed a volume above $50M, the buyer would purchase the extra credits at $0.950.
Due Diligence Process
Reunion delivered a due diligence memo to the buyer, seller, and their respective advisors within 7 business days of term sheet execution to keep transacting parties focused on the most salient items.
Key due diligence considerations for this transaction:
- Seller/sponsor diligence
- Structure diligence
- Credit qualification
- Recapture
- Prevailing wage and apprenticeship (PWA) compliance
Market Insight
Price Premium For Credits With Investment-Grade Indemnity
Tax credits sold by investment grade (“IG”) sellers generally trade at a premium relative to unrated credits that carry tax credit insurance. This chart is based on data from a survey of senior buyers in large organizations conducted by Reunion in January 2025.
This data and more can be viewed in Reunion’s Market Monitor, a live dashboard that offers a real-time view of transferable tax credit pricing, terms, and market dynamics.
Additional Resources
Get your deal done with the industry-leading team that has facilitated >$5B in tax credits transfers since 2024
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