BarbriSFCourseDetails

Course Details

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

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, a purchaser may wish to take advantage of expensing purchased assets and 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

I. Choice of entity

A. C corporations

B. Pass-through entities (i.e., partnerships and S corporations)

C. Hybrid structures

D. Pros and cons

II. Asset vs. entity sales

III. Transaction structures and considerations

IV. Issues relating to financing and rollover

V. Incentive equity and self-employment matters

VI. Corporate conversions: pros and cons

Benefits

The panel will review these and other key issues:

  • dvantages 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