SPV Structures for Acquisition

searcher profile

May 30, 2021

by a searcher from Washington University in St. Louis in Claymont, DE 19703, USA

I learnt that an SPV company would be the safest approach for acquisitions.

A parent company creates an SPV to isolate or securitize assets in a separate company that is often kept off the balance sheet. It may be created in order to undertake a risky project while protecting the parent company from the most severe risks of its failure.

Here is further reading. Please feel free to pitch in with your thoughts and suggestions
https://www.investopedia.com/terms/s/spv.asp

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commentor profile
Reply by an intermediary
from University of Virginia in Metuchen, NJ 08840, USA
Agreed in terms of generally keeping the risks limited to the SPV and protecting other entities from spillover risks. However, it is not a "create and forget" structure and does not guarantee protection in every situation as a court can disregard the entity for several reasons.
commentor profile
Reply by a searcher
from University of Pennsylvania in New York, NY, USA
Karthik, these structures for one-off acquisitions are generally pretty simple. Happy to discuss from a legal perspective if you need at some point.
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