Tom and team offered tax consulting services to a private equity company and its FinTech portfolio company. The company was looking to convert its mezzanine debt to equity in order to allow for liquidity and to reduce the current tax burden of the debt holders. They were also trying to mitigate any issues with executives to preserve their equity.

Working closely with the private equity company and its lawyers, we mapped out a plan to allow for recapitalizing the portfolio company in a tax-free manner while also reducing the immediate taxation concerns of the debtholders. Certain portfolio-company executives were also allowed to convert equity types in order to share in future profits earlier on in the distribution waterfall.

Through planning and revisions to the company operating agreements, the company was able to maintain the prior economics but alleviate taxation issues inherent in their prior model.

Note: This work was performed prior to joining Stout.