338(h)(10) Elections for Logistics & Distribution Independent Sponsors
Securities and M&A counsel for independent sponsors structuring logistics and distribution transactions, from LOI to close to the capital markets that open up afterward.
Logistics & Distribution 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 logistics and distribution platform sits at $12M to $140M EV with EBITDA in the $3M to $22M range. The thesis runs on regional acquisitions of brokerages, 3PLs, and last-mile operators. Fuel-volatile years make for clean entry multiples. Read the math, not the narrative.
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 logistics and distribution, layer in earnout indexed to gross margin, not revenue 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.
Most independent sponsors solve the closing capital and then run into the post-close capital problem alone. The capital markets relationships that matter at month 18 are part of this practice.
Related deal pages.
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Indemnification for Logistics & Distribution
The seller's contractual promise to compensate the buyer for breaches of representations, covenants, and spec…
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Bring the logistics and distribution deal. Get 338(h)(10) Elections done right.
Direct counsel from a securities and M&A attorney with billions in structured transactions, the independent-sponsor-native playbook, and the capital markets network that opens up post-close.