S-Corp or LLC?

May 01, 2025

by a searcher from Royal Holloway and Bedford New College in New York, NY, USA

I'm evaluating legal structures for my upcoming search—primarily deciding between an S-Corp and an LLC. My goal is to acquire a platform company and pursue both organic growth and bolt-on acquisitions. Would appreciate your insights: Which structure (S-Corp vs. LLC) aligns best with a strategy focused on long-term flexibility, tax efficiency, and ease of integrating future acquisitions? Thanks in advance for sharing your experiences!

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Reply by a professional
from University of Notre Dame in New York, NY, USA

Hi ^redacted‌ Based on the information above (and most other scenarios), an LLC taxed as a partnership (if you have investors/ or pass through single member, if just yourself) is usually the better choice over an S-Corp. LLCs give you (1) more flexibility on equity structure (profits interests, preferred equity, etc.); (2) tax efficiency (pass-through); (3) much easier rollovers for sellers in future acquisitions; and (4) no restrictions on ownership or classes of equity. Plus exit options are way tricker if your platform is an S corp, it's very easy to accidentally blow the S election creating a very significant adverse tax event. S-Corps are fine for solo ops or small businesses, but too limiting for deals involving outside investors, complex cap tables, or long-term growth through M&A. TL;DR: If you're raising capital, doing roll-ups, and want flexibility—go LLC taxed as a partnership. Happy to chat more about it - redacted or shoot me a DM

Reply by a searcher
from Harvard University in Omaha, NE, USA

Always bounce this off a tax advisor, but here's my 2 cents: LLC. Provides the most flexibility. If it's just you--you'll set up a sole-member LLC (disregarded entity) to maximize optionality. A) You can always elect the S Corp Tax Election in the future. B) When you acquire a company's assets, it's better with an LLC, which gives you more freedoms than an S-Corp, such as classes of units. You'll want this flexibility if you're going to pursue additional follow-on M&A. Good luck.

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