Independent Sponsor 338(h)(10) Elections in Multi-Unit Restaurants
Independent sponsor counsel for multi-unit restaurants, focused on 338(h)(10) Elections and the deal mechanics that protect sponsor economics and LP alignment.
The economics on a multi-unit restaurants platform deal usually hinge on a handful of structural decisions. 338(h)(10) Elections is one of them.
The typical multi-unit restaurants platform sits at $8M to $80M EV with EBITDA in the $2M to $14M range. The thesis runs on franchisee roll-up or regional concept acquisition. The franchisor consent letter is the deal. Get it lined up before you spend money on diligence.
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 multi-unit restaurants, layer in franchisor LOI letter requested before market 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.
Transaction Fee Structuring for Multi-Unit Restaurants
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Working Capital Adjustments for Multi-Unit Restaurants
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Representation & Warranty Insurance for Multi-Unit Restaurants
A buyer-side insurance product covering breach of seller representations, reducing seller escrow and indemnit…
Indemnification for Multi-Unit Restaurants
The seller's contractual promise to compensate the buyer for breaches of representations, covenants, and spec…
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Bring the multi-unit restaurants 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.