Close · Healthcare Services

338(h)(10) Elections Counsel for Healthcare Services Acquisitions

Securities and M&A counsel for independent sponsors structuring healthcare services transactions, from LOI to close to the capital markets that open up afterward.

EV range $15M to $120M EV EBITDA $3M to $20M Audience Buy-side / Sponsor
The deal context

338(h)(10) Elections on healthcare services deals is one of those workstreams that looks routine on a checklist and decides outcomes in practice.

The typical healthcare services platform sits at $15M to $120M EV with EBITDA in the $3M to $20M range. The thesis runs on roll-up of physician practices and ancillary service lines. Most off-market healthcare deals come through advisors who have seen the structure before. Have one in your call list.

The moves

How 338(h)(10) Elections actually gets structured.

  1. Run a side-by-side tax model showing the seller's grossed-up purchase price requirement.

  2. Document the election in the purchase agreement, with required IRS forms attached.

  3. Confirm the seller's eligibility, including the consolidated group structure.

  4. Plan the tax gross-up payment, often funded out of the buyer's price.

  5. In healthcare services, layer in PC/MSO structuring as part of the 338(h)(10) Elections workstream.

The common mistake

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.

Jason's take
"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
Capital after close

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.

MONTH 18
Senior refi
MONTH 24
Dividend recap
MONTH 36
Growth equity
YEAR 4–5
Strategic exit
ENGAGE THE PRACTICE

338(h)(10) Elections for Healthcare Services, on independent sponsor terms.

Independent sponsor counsel that already speaks fluent deal-by-deal economics, structures clean LPAs, and travels with capital markets relationships for what comes after close.