Tuck-In Acquisition Legal Structure

by a searcher

3 weeks ago

We are in the process of acquiring a smaller competitor that will tuck-in to our existing operations. Should we create a new legal structure to acquire the target business or use our existing legal structure given that it will be tucked in? 

All insight is welcomed but would love to hear from anyone that has done a tuck in before and/or lawyers in the space. 

Thanks

0 likes
26 views
4 comments

professional from Dartmouth College

Of course it's deal specific, but it's a true tuck-in, meaning the smaller company's name goes away etc., then absorbing it into your legal structure makes more sense. Yes there is some benefit to keeping liabilities separate, but probably more complexity than it's worth, unless you already maintain a holdco structure where services, HR etc. are maintained at the holdco level and services provided to subs via intercompany agreements. Creating this from scratch for a smaller company probably doesn't make sense. Happy to discuss more.

3 weeks ago | like reply | 1 like

professional from University of Virginia

howdy, I'm an attorney who's handled plenty of these. Please feel free to drop me a note at --@----.com if you'd like to get into some specifics. It's really a circumstance-dependent analysis. Steve is correct above that if there particular concerns about certain liabilities, that's certainly a potential rationale for a separate entity. Also need to do a thorough examination of third party contracts and have a look at the tax consequences of various structures. Good luck and best, Matt

3 weeks ago | like reply | 0 likes

More on Searchfunder

Just Closed on My First Deal! Reflections and Takeaways for other Searchers

45,152 transactions are available on Searchfunder (now searchable by keyword)

Now everyone has unlimited IBISWorld access

Family office looking for traditional searchers

Investor seeking Self-Funded Search Deals

Downsides of "buying a job" below 750k+ EBITDA?

2 Best Ways To Find Motivated Sellers, Off-Market Deals

6-7x for a Self-funded Search Deal?

Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.

We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.