Leveraging LLCs in Structuring M&A Transactions

LLCs are increasingly used as vehicles for mergers and acquisitions. When structuring a deal, counsel should consider the pros and cons of using the LLC as an option to simplify the transaction and resolve tax obstacles.

M&A counsel should understand the principles associated with capital accounts and the implications of tax allocations when using LLCs to ensure that operating agreements properly reflect the economic bargain of the parties.

Simply relying on tax “boilerplate” language without a clear understanding of underlying principles and the practical impact of language changes to the transaction can only lead to costly mistakes.

Listen as our panel of experienced M&A and tax attorneys unpacks the complexities of a form LLC agreement and lays out basic building blocks for better advocacy.

1. Conceptual framework
2. LLC: pros and cons
3. Understanding capital accounts
4. Working together—contributions, distributions, allocations and capital accounts
5. Implications
6. Best practice strategies and pitfalls to avoid

The panel will review these and other key issues:

• The important differences between using an LLC versus a corporation when structuring a merger or acquisition
• The conceptual framework for drafting provisions related to capital account and income allocations
• How provisions related to contributions and distributions interact with each other and the allocation and capital account language