Specialty Construction Deals: 338(h)(10) Elections Done Right
When the deal is specialty construction and the question is 338(h)(10) Elections, the structure decisions in the first 30 days outlast the next five years. This is where Jason Powell works.
338(h)(10) Elections on specialty construction deals is one of those workstreams that looks routine on a checklist and decides outcomes in practice.
The typical specialty construction platform sits at $8M to $110M EV with EBITDA in the $2M to $18M range. The thesis runs on trade-specific buy-ups (roofing, mechanical, electrical, fire protection). Bonding capacity is the gate. Without it, the independent sponsor deal stalls at the first big project bid post-close.
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 specialty construction, layer in surety pre-qualification for the buyer entity 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.
Refinancing, recaps, growth rounds, and the right strategic conversation eighteen months early are all downstream of relationships that take years to build and minutes to use.
Related deal pages.
Transaction Fee Structuring for Specialty Construction
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Working Capital Adjustments for Specialty Construction
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Representation & Warranty Insurance for Specialty Construction
A buyer-side insurance product covering breach of seller representations, reducing seller escrow and indemnit…
Indemnification for Specialty Construction
The seller's contractual promise to compensate the buyer for breaches of representations, covenants, and spec…
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338(h)(10) Elections for Specialty Construction, 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.