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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

  • work Practice Area

    Commercial Law

Date & Time
  • event Date

    Thursday, August 18, 2022

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE course will examine entity structuring alternatives when acquiring or selling a pass-through entity, emphasizing their differing impacts on sellers and purchasers such as the impact on tax basis step-up, financing considerations, rollover, and tax deferral issues, and incentive equity and self-employment matters. The panel will also discuss conversions of pass-through entities into C corporations, hybrid structures, and the treatment of asset vs. equity purchases.

Faculty

Peter T. Wynacht
Partner
Troutman Pepper Locke LLP

Mr. Wynacht focuses his practice on federal income tax matters, including corporate mergers and acquisitions. He regularly represents private equity and venture capital firms and entrepreneurs on dispositions and acquisitions of portfolio companies. Mr. Wynacht represents domestic and foreign individuals and business entities in day-to-day operational matters and complex business transactions, including business startups, mergers and acquisitions, business and capital restructurings, and U.S. inbound and outbound investment matters.

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Andrew Falevich
Shareholder
Vedder Price

Mr. Falevich focuses his practice on domestic and cross-border mergers and acquisitions, corporate and partnership reorganizations, and real estate, partnership, limited liability and joint venture transactions.

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Description

Purchasers and sellers in M&A deals seeking to improve the deal value and maximize income tax savings through flow-through structures need to consider various alternatives and impacts on both sellers and purchasers, such as maximizing tax basis step-up, allowing for tax deferral of a rollover, determining best acquisition financing methods and considering self-employment constraints on rollover and incentive equity holders.

Pass-through entities (i.e., partnerships and S corporations) are still often preferred for M&A transactions due to, among other attributes, their single level of taxation. Still, whether buying into a flow-through structure or trying to fit a target into a purchaser's current flow-through structure, parties on both the buy-side and sell-side of a deal have to consider structuring to achieve various objectives of both the sellers and purchasers. A proper structuring determination requires analyzing the tax burdens on operating income, distributions, and exit transactions and reviewing legal and practical business considerations.

In planning a transaction, the 2017 tax reform enabled full expensing of purchased assets, which may cause a purchaser to seek an acquisition that provides for a tax basis step-up in the assets. However, the chosen transaction structure may influence whether expensing is available.

Listen as our authoritative panel discusses the pros and cons of corporate and pass-through entity structures in M&A transactions.

Outline

  1. Choice of entity
    1. C corporations
    2. Pass-through entities (i.e., partnerships and S corporations)
    3. Hybrid structures
    4. Pros and cons
  2. Asset vs. entity sales
  3. Transaction structures and considerations
  4. Issues relating to financing and rollover
  5. Incentive equity and self-employment matters
  6. Corporate conversions: pros and cons

Benefits

The panel will review these and other key issues:

  • Advantages and disadvantages of using partnerships and S corporations as compared to C corporations
  • Factors to consider in asset vs. entity sales
  • Various considerations with different types of transaction structures
  • Financing considerations to maximize tax benefits for buyers and sellers