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Sugar is sweeter
Key points
- Private equity transactions usually involve management acquiring an equity stake known as ‘sweet equity’.
- Consideration to tax under ITEPA 2003 s 62 and Pt 2.
- Section 431 elections must be made within 14 days of receipt of the shares or securities.
- Does management have the requisite interest of at least 5% for the purposes of s 169(3)(a) for entrepreneurs’ relief purposes?
- Tax advisers should work with legal and corporate finance teams to ensure the best outcome.
BDO’s Private Company Price Index Reports for 2018 showed an active and buoyant private equity (PE) market with a high volume of transactions and strong valuations.
Private equity transactions usually involve management acquiring an equity stake often referred to as ‘sweet equity’. Management may receive this equity as part of the consideration for the sale of any shares held in the target or by subscription for cash consideration.
This article looks at some of the tax...
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