Independent Sponsor 338(h)(10) Elections in Insurance Brokerage
Independent sponsor counsel for insurance brokerage, focused on 338(h)(10) Elections and the deal mechanics that protect sponsor economics and LP alignment.
Insurance Brokerage deals in the lower middle market run a specific playbook. 338(h)(10) Elections is where the structure either holds or starts to leak.
The typical insurance brokerage platform sits at $10M to $150M EV with EBITDA in the $3M to $25M range. The thesis runs on regional retail agency roll-ups. Producer non-competes are unenforceable in too many states to ignore. Plan retention, not litigation.
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 insurance brokerage, layer in E&O tail insurance priced and bound 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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338(h)(10) Elections for Insurance Brokerage, 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.