338(h)(10) Elections for Building Products Independent Sponsors
Independent sponsor counsel for building products, focused on 338(h)(10) Elections and the deal mechanics that protect sponsor economics and LP alignment.
338(h)(10) Elections on building products deals is one of those workstreams that looks routine on a checklist and decides outcomes in practice.
The typical building products platform sits at $10M to $150M EV with EBITDA in the $2.5M to $25M range. The thesis runs on regional manufacturer or specialty distributor consolidation. Pricing power lives in dealer contracts, not in branding. Read the dealer agreements before the LOI.
How 338(h)(10) Elections actually gets structured.
Run a side-by-side tax model showing the seller's grossed-up purchase price requirement.
Document the election in the purchase agreement, with required IRS forms attached.
Confirm the seller's eligibility, including the consolidated group structure.
Plan the tax gross-up payment, often funded out of the buyer's price.
In building products, layer in raw-material pass-through clauses confirmed as part of the 338(h)(10) Elections workstream.
Demanding a 338(h)(10) without offering the seller a tax gross-up. The election only works if the math works for the seller too.
"338(h)(10) is a buyer benefit you have to pay for. Price it into the LOI, not the surprise column."Jason Powell · 338(h)(10) Elections
The deal is one thing. The capital that opens up after close is another.
The capital that opens up post-close, from refinancing to growth equity to strategic exit, runs through a small set of Wall Street relationships. That network is built in.
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Indemnification for Building Products
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338(h)(10) Elections for Home Services
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An LOI on the desk, a building products target, and a 338(h)(10) Elections question worth a real conversation.
Twenty minutes of practitioner-grade input from a securities attorney whose first move is to read the deal, not the engagement letter.