Liabilities Under Tax Receivable Agreement

It examines TSMs in the broad landscape of financial transactions and shows that the way TRAs are used in the public market differs from similar private transactions in a way that is likely to be detrimental to public shareholders. This article also shows how Up-C, a type of IPO transaction that most often uses TRAs, allows owners before the IPO to take money that should be planned for public shareholders in an undisclosed way, and offers remedies to this problem. The passage of the tax reform last December gave investors greater security when it comes to corporate tax rates in the near future. One of the consequences is an increased interest on the part of some investors in the acquisition of payment rights under so-called “tax receivables” (“TRAs”) agreements.

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