KeyOn Communications Holdings, Inc. (fka KEYO)

[lesnshawn]

Popt: YES, there ARE 'Tax-Free Reverse Triangular Mergers Under Section 368(a)(2)(E)'. Any lawyer will say the same because they know it's allowed under law.

IF somebody doesn't believe that then somebody needs to contact Forbes if it's not believed what's written into law that allows this.

Toni Nitti, Forbes contributor, must not know a thing of what he's writing about if none of this is true. If none of what he's written is true then why is this guy being touted (by employment) by Forbes as an expert on the subject if he's so wrong. Is he? Is that what is honestly and sincerely being proposed here?

Quotes from Toni Nitti...
- As promised, today we will take on the tax-free reorganization provisions of Section 368 in the same nauseating detail
- We’ll get to that, but first, let’s gain an understanding of why a tax-free reorganization is permitted by statute. Why Does Section 368 Exist?
- And that is why Section 368 exists and why, as discussed last week, if A wishes to fit the deal under one of the tax-free reorganization provisions, A MUST receive as consideration primarily stock of P.
- Today, we will focus on the five “acquisitive tax-free reorganizations” of Section 368.


Tax-Free Reverse Triangular Merger Under Section 368(a)(2)(E)

At long last, we come to the final of our five acquisitive tax-free reorganizations. A reverse triangular merger is a hybrid of a an “A” merger and a “B” stock acquisition. In the transaction, P sets up a wholly-owned subsidiary, Newco. T then merges into Newco, with T surviving. In the transaction, the former T shareholders give up stock constituting control of T – meaning 80% of the vote and value – in exchange for P stock and, subject to limitation, cash.

A reverse triangular merger looks like this:



If you’re particularly astute, you’ll notice that the aftermath of a reverse triangular merger looks exactly like the end result of a “B” reorganization – T remains in existence as a subsidiary of P. Just like in a “B” reorganization, T will not file a final tax return unless it leaves or joins a consolidated group.

These folks need to be contacted too...

Tax-Free Deal Structures

Section 368 of the Internal Revenue Code recognizes three types of corporate acquisition structures that qualify as tax-free (or tax-deferred) reorganizations:

Type "A" Reorganization (stock-for-assets acquisition)
Statutory merger or consolidation
Forward triangular merger
Reverse triangular merger
Type "B" Reorganization (stock-for-stock acquisition)
Type "C" Reorganization (stock-for-assets acquisition)

Reverse Triangular Merger ("A" Reorganization)

insert-text-here

In a reverse triangular merger, a subsidiary of the acquirer is merged into the target, leaving the target as the surviving entity and a subsidiary of the acquirer and eliminating any minority shareholders in the target. This structure allows the acquirer to shield itself from the target's liabilities, as in the forward triangular merger, but with the added benefit that non-transferrable assets and contracts are not lost. For this reason, the reverse triangular merger is a commonly used structure. However, at least 80% of the consideration must be paid in voting common or preferred stock of the acquirer, eliminating some flexibility in the type of equity consideration paid relative to the forward triangular merger. Other characteristics of this structure are similar to those found in forward triangular mergers, including the "substantially all" and shareholder approval requirements.

Links are needed that can disprove any of the above and also that disproves the fact that a parent company LLC can go public via a RTM.

lns