338(h)(10) Elections Counsel for Wealth Advisors & RIAs Acquisitions
Structuring 338(h)(10) Elections on wealth advisors and RIAs deals, with the structure protection and capital connectivity an independent sponsor actually needs.
The economics on a wealth advisors and RIAs platform deal usually hinge on a handful of structural decisions. 338(h)(10) Elections is one of them.
The typical wealth advisors and RIAs platform sits at $10M to $180M EV with EBITDA in the $3M to $25M range. The thesis runs on RIA aggregation or wealth platform roll-up. Client consent process is the longest pole. Start it the day after the LOI signs.
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 wealth advisors and RIAs, layer in negative consent process timed with regulators 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.
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An LOI on the desk, a wealth advisors and RIAs 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.