Tuck-In Acquisition Legal Structure

January 21, 2025

by a searcher in New York, NY, USA

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

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Reply by a professional
from Dartmouth College in Los Angeles, CA, USA

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.

Reply by a professional
from University of Virginia in Holmes, NY 12531, USA

howdy, I'm an attorney who's handled plenty of these. Please feel free to drop me a note at redacted 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

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