Tax Receivable Agreements
Since the adoption of the tax reform, we have seen a significant increase in investor interest in acquiring tra payment rights, in particular hedge funds, family offices and private investment funds. This article describes some of the characteristics of an TRA that an investor should analyze before acquiring rights under an TRA. Mr. Greenwood is a partner in the tax and benefits department. His practice focuses on transaction tax. | Mr. Marcellino is co-director of the company`s Mergers and Acquisitions group and works in the New York office. That`s him. | Read more The simplest is a TRA a contract between the parties to monetize certain tax attributes in different situations.
TRAs have become an integral part of the IPO market, where the relevant limited company (Pubco) agrees to pay the owner pre-IPOs for Pubco`s tax features. Parties may also seize an TRA related to the sale of a private business in order to monetize the tax attributes of the target business. Some critics have described the recording of a high-end 90-minute CLE/CPE webinar with Q&A-TRAs as «bizarre» and «sneaky,» but the economic and fiscal consequences of different types of TRAs have remained largely unexplored in the literature. This article examines whether the reviews of the reviews on ASAs are justified or whether TRAs are simply an effective contract between owners before the IPO and listed companies. .