Spin Doctors: Attorneys, M&A Advisors Assist Clients With Corporate Spin-offs and Divestitures

December 10, 2019

A whole is often better than the sum of its parts, but some business owners choose to roll the dice with the parts.

Attorney Louis Vlahos has noted an uptick in shareholders opting, for various reasons, to spin-off part of their corporation, creating two separate companies. When a spin-off is done for a valid business reason and one or more of the parent corporation’s shareholders control the spun-off company (and certain other conditions are met) it can be a tax-free transaction.

“The spin-offs that I’m encountering are not limited to any particular industry,” said Vlahos, a partner at Uniondale-based law firm Farrell Fritz, who has a concentration in tax law. “I think the number of such transactions is attributable to the realization by closely held businesses and their advisers that a serious dispute among groups of shareholders need not end in litigation, or the sale of the business, or the buyout of one or more of the owners, each of which can be very expensive, and not only from a tax perspective. After all, buyouts usually have to be financed.”

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  • Related Practice Areas: Tax
  • Featured Attorneys: Louis Vlahos
  • Publications: Long Island Business News