The Moderating Valuation Effects of the Organizational Form of Flow Through Entities

23 Pages Posted: 27 Dec 2009

Date Written: December 22, 2009

Abstract

A flow through entity is a legal form of entity choice where income is passed directly to the owners. Types of flow through entities are; general partnerships, limited partnerships, limited liability companies, master limited partnerships and S Corporations. Although, a common tax regime exists among S Corporations, partnerships, limited liability companies, and master limited partnerships, prior literature has implied there should also be corresponding valuation parity among these entities. The literature is void in identifying a fact pattern of when a situation may arise that provides a distinction of such potential valuation differentials. This research intends fill that break in literature by investigating acquisition transactions of privately held flow through entities to determine which characteristics may moderate valuation differentials between these types of entities.

Keywords: Privately Held Company, S Corporation, Tax Partnership, Valuation

JEL Classification: M41

Suggested Citation

DiGabriele, James A., The Moderating Valuation Effects of the Organizational Form of Flow Through Entities (December 22, 2009). Available at SSRN: https://ssrn.com/abstract=1525498 or http://dx.doi.org/10.2139/ssrn.1525498

James A. DiGabriele (Contact Author)

Montclair State University ( email )

Upper Montclair, NJ 07043
United States
973 655 7288 (Phone)

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