Tax Advantaged Structuring
Entity Structure Impacting Returns
While uncertainty still exists with the overall U.S. tax code and rates, one thing that is not expected to change is the tax advantages of structuring a business as a flow through entity to avoid the double taxation of a C-Corp. By utilizing an LLC structure, we have the ability to structure the ultimate exit of a portfolio company as either an asset or stock sale with only a slight difference in the overall tax liability. This creates significant flexibility and advantages.
During an acquisition, we are generally willing to pay more when we can acquire the assets of the business. Not only can we benefit from the tax benefits of amortizing purchased goodwill but we believe we can limit our overall liability exposure that can arise from the contingent liabilities of the seller.… Read this article