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Abstract: 

Although practitioners historically have reserved the use of “freeze” transactions for the estate planning purpose of limiting the value of assets includible in the decedent’s estate at death, the technique presents possible income tax planning opportunities in the context of private equity acquisitions of corporations. The authors detail how such acquisitions might be structured and, as private equity sponsors often finance a significant portion of their transactions with debt, also examine how using a freeze technique might impact any related acquisition financing.

Keywords: tax-free recapitalization; frozen interest; growth interest; post-recapitalization ownership

Affiliations:  1: Weil Gotshal & Manges LLP; 2: Weil Gotshal & Manges LLP; 3: Weil Gotshal & Manges LLP; 4: Weil Gotshal & Manges LLP.