Legal Question in Business Law in New York

S corp merger?

ST currently is the sole shareholder of an S Corp (restaurant). He is looking to expand and bring on a 50% co-owner and finance the buy in. Is the best route for this creating a new S-Corp then merging the old S-Corp into the new entity?

Payments for financing to ST will be done through payments on existing liabilities and through business income.


Asked on 4/25/08, 9:58 am

4 Answers from Attorneys

Michael Markowitz Michael A. Markowitz, PC

Re: S corp merger?

I never said it had to be 50/50. A share purchase agreement can be for any percentage.

Mike.

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Answered on 4/26/08, 4:31 pm
Michael Markowitz Michael A. Markowitz, PC

Re: S corp merger?

Q. Is the best route for this creating a new S-Corp then merging the old S-Corp into the new entity?

A. No. The best route is a share puchase agreement. Although you can create another corporation and then merge the corporations, it is more work for the same result.

If you need representation feel free to telephone. 516.295.9061

Mike.

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Answered on 4/25/08, 12:51 pm
Nancy Delain Delain Law Office, PLLC

Re: S corp merger?

Mr. Markowitz's answer is good, but let me add that a 50/50 split of corporate ownership is rarely a wise decision. When (not "if") you and your partner disagree about something, there will be absolutely no way to resolve the dispute, and the corporation will strangle and die. I've spent a lot of time and earned a big pile of lawyer fees cleaning up 50/50 ownership situations gone bad.

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Answered on 4/25/08, 1:15 pm
Christopher Hoyt The Law Offices of Christopher W. Hoyt

Re: S corp merger?

Your best bet is to sit down with a lawyer and discuss your options prior to selecting a course of action. It would be wise to have an agreement between the shareholders that deals with issues, such as business disputes, dissolution, buyouts, etc. Please feel free to contact my office if we may be of any assistance.

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Answered on 4/25/08, 4:55 pm


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