Has anyone acquired a business that used subcontractors rather than employees?

by a searcher from INSEAD

1 month ago

(meaning their core work is done by subcontractors rather than employees)

What are things to look out for if considering such a deal or ways to protect yourself from inherent risks when acquiring?

1 like
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16 comments

searcher from The University of North Carolina at Chapel Hill - Kenan-Flagler Business School

While lots of industries leverage a contractor model very well, there are generally two big concerns 1) that the workers can easily defect after the acquisition (this matters more in some industries than others) and 2) the workers are not legally working. Point 2) can impact value when you go to exit.

1 month ago | like reply | 1 like

professional from Walsh College of Accountancy and Business Administration

Don't forget about the tax implications of employee vs independent contractor. The IRS, DOL, and states have rules on whether someone is an employee vs an independent contractor and they should be applied. California's rules are more restrictive than the IRS.

1 month ago | like reply | 1 like

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