An Examination of the Use of a Type F Reorganization in Private Equity Transactions Involving S Corporations.

Private equity firms are becoming significant players in the mergers and acquisitions marketplace. Increasingly, buyers are interested in obtaining less than 100 percent of the target corporation and are also keen on using rollover equity to defer tax to the seller and provide additional financing for the buyer. Finally, buyers also wish to obtain a stepup in the basis of the assets of the target. A Type F reorganization involving a state law conversion of an S corporation into a limited liability company (LLC) can provide harmony between buyers and sellers in these transactions. This article will examine the technique and will offer practical guidance to practitioners. [ABSTRACT FROM AUTHOR]