Gut Check on Entity Structure for Asset Purchase

July 08, 2025

by a searcher from Georgia Institute of Technology in Indian Land, SC 29707, USA

I’m under LOI on a manufacturing business in North Carolina. It’s an asset purchase, and I’m working through entity formation. I’d love to get a gut check from anyone who’s structured deals like this, especially with SBA financing in the mix. Here’s the working plan: Family Trust --> HoldCo (LLC) --> OpCo (S-Corp) + RECo (LLC) • OpCo will acquire and operate the business • RECo will own the real estate and lease it back to OpCo • HoldCo would own 100% of both • Family Trust owns HoldCo for estate planning purposes Goal is to keep it SBA-friendly while preserving long-term flexibility for growth, governance, and potential equity participation. A couple things I’m watching closely: • Making sure OpCo qualifies for S-Corp election under this setup • Confirming that SBA doesn’t view the trust ownership as an issue • Avoiding unnecessary complexity if this structure isn’t adding real value Would love to hear from anyone who’s: • Used a similar setup • Run into pitfalls with trust → HoldCo layering • Navigated SBA approval smoothly with this kind of structure Appreciate any feedback or war stories. Happy to share what I learn in return.

Reply by an intermediary
from Harvard University in Los Angeles, CA, USA

Miguel--Please talk to a M&A attorney and dive into the details of your plan. Do not listen to online advice exclusively.

Reply by an intermediary
from Georgia Institute of Technology in Atlanta, GA, USA

Hi Miguel — really thoughtful setup, and you’re asking the right questions. I’m not a lawyer or CPA, so not offering legal or tax advice, but I’ve worked on several deals with similar structures (including SBA-financed ones) and wanted to offer a few considerations that might help clarify your approach. A few questions that could shape the right path forward: - How important is it for you to have standalone financial statements and tax returns for OpCo and RECo? Would clean separation make future sales, investment, or refinancing easier? - Are you planning to have OpCo and RECo as disregarded entities and filing taxes at HoldCo and Trust levels or filing taxes at each entity (OpCo, RECo, HoldCo, Trust)? - What’s your primary objective in electing S-Corp status for OpCo? Is it to manage self-employment tax exposure, enable distributions, or meet some lender requirement? - How do you plan to compensate yourself—or route cash flow? Will you be taking a W-2 salary, or is the idea to flow profits up to the trust via a management or admin agreement with HoldCo? - Are you anticipating a long-term hold or is there a future exit in mind—for the whole platform or potentially just OpCo or RECo? - Is the trust structured in a way that’s compatible with S-Corp ownership? If not, would an alternative tax treatment (e.g., disregarded entity, partnership) give you more flexibility? - Have you validated your structure with the SBA lender underwriting the deal? SBA rules matter, but ultimately it’s the lender’s interpretation and comfort that will drive what they accept. Both the estate planning goals and operational plans are driving structure here—it’s just a matter of making sure they don’t work at cross-purposes. Happy to share more offline if helpful, and I’d love to hear what you ultimately decide.

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