Education & Training Deals: 338(h)(10) Elections Done Right
Structuring 338(h)(10) Elections on education and training deals, with the structure protection and capital connectivity an independent sponsor actually needs.
338(h)(10) Elections on education and training deals is one of those workstreams that looks routine on a checklist and decides outcomes in practice.
The typical education and training platform sits at $8M to $90M EV with EBITDA in the $2M to $15M range. The thesis runs on private school, training academy, or B2B training platform consolidation. Accreditation continuity is the only thing that matters in the first 30 days post-close.
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 education and training, layer in accreditor pre-notification calendar set 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.
Capital after close is where the IRR actually gets made. The right introductions at month nine through month thirty are where this practice works as hard as it does at the LOI.
Related deal pages.
Transaction Fee Structuring for Education & Training
The fee paid at closing to the independent sponsor for sourcing, structuring, and closing the platform deal a…
Working Capital Adjustments for Education & Training
The closing-date true-up that protects the buyer from receiving a business stripped of normal-course working …
Representation & Warranty Insurance for Education & Training
A buyer-side insurance product covering breach of seller representations, reducing seller escrow and indemnit…
Indemnification for Education & Training
The seller's contractual promise to compensate the buyer for breaches of representations, covenants, and spec…
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An LOI on the desk, a education and training 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.