At closing, does my LLC and Target company begin a new entity

by a searcher from Emory University - Goizueta Business School

1 year ago

Hello SF family,
I'm conferring with my law team and making sure that I understand the 'rules' about who my acquiring entity is before and after closing.  For example, I'm now a Service Disabled Veteran Owned Small Business (SDVOSB).  I have an acquisition target, and we are starting post LOI negotiations.  Is my organization the same day after closing, or is it a new (DUNS number) organization? Will I have the "20 Years of experience" or will I be a 'new' company? Will I have to get re-verified as a Veteran Owned Organization?

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searcher from Emory University - Goizueta Business School

Wow, ^Searchfunder member‌! There seems to be an infinite number of ways to do this. I thought that I keep my current LLC, which is already certified as SDVOSB, and combine the LLCs, or make an asset purchase, then a DBA as the target LLC, since the acquisition has more history than my current LLC has.

1 year ago | like reply | 0 likes

searcher from Binghamton University, State University of New York - School of Management

Really depends on your objectives, If the target is an LLC, then it can be acquired and held as a pass-thru subsidiary. Alternatively, the target LLC can be merged with the LLC acquirer with the acquirer as the surviving entity. Best to get good legal and CPA advice. Another approach has already been mentioned, form a newco and the members contribute their interests for a pro-rata interest in the holdco. members of LLC then own the same amount of equity in the holdco as they did in the LLC. Holdco now owns LLC 100% as a pass-thru entity. Then holdco then acquires target and target becomes a 2nd pass-thru entity owned by holdco. Short version - there's options - just need to figure which structure suits your particular needs.

1 year ago | like reply | 1 like

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