Industrial Services Deals: 338(h)(10) Elections Done Right
Securities and M&A counsel for independent sponsors structuring industrial services transactions, from LOI to close to the capital markets that open up afterward.
Every industrial services acquisition has its own gravity. 338(h)(10) Elections is the workstream where independent sponsor counsel earns the seat.
The typical industrial services platform sits at $10M to $130M EV with EBITDA in the $3M to $22M range. The thesis runs on regional consolidation of plant maintenance, specialty contracting, or rentals. An EMR over 1.0 will cost you a half-turn at close unless you fix the story upfront.
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 industrial services, layer in MSA renewal calendar mapped pre-LOI 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.
Related deal pages.
Transaction Fee Structuring for Industrial Services
The fee paid at closing to the independent sponsor for sourcing, structuring, and closing the platform deal a…
Working Capital Adjustments for Industrial Services
The closing-date true-up that protects the buyer from receiving a business stripped of normal-course working …
Representation & Warranty Insurance for Industrial Services
A buyer-side insurance product covering breach of seller representations, reducing seller escrow and indemnit…
Indemnification for Industrial Services
The seller's contractual promise to compensate the buyer for breaches of representations, covenants, and spec…
338(h)(10) Elections for Healthcare Services
roll-up of physician practices and ancillary service lines
338(h)(10) Elections for Home Services
regional roll-ups of HVAC, plumbing, and electrical operators
An LOI on the desk, a industrial services 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.