In a structure commonly referred to as an “up‑C,” an existing LLC or other partnership form undertakes a public offering through a newly formed corporation, which is structured as a holding company that owns an interest in the LLC.  Traditionally, if the owners wanted to undertake a public offering of the entity’s securities, the owners would re-organize the LLC or partnership as a corporation and offer and sell that company’s common stock to the public in the offering.  Increasingly, owners are employing the up‑C structure as an alternative.  Use of the up‑C approach allows the LLC or other entity to undertake a public offering, albeit through a holding company, while maintaining the partnership status for the LLC, where the principal assets and operations of the business remain.  This structure is particularly attractive to private equity-backed companies because it maintains many of the tax benefits of a partnership, offers an ongoing exit strategy, and enables the sponsors to preserve some control over the business.

For more information, see our “Practice Pointers on the Up-C Structure” available at: http://www.mofo.com/~/media/Files/Articles/2016/05/160500PracticePointersUpCStructure.pdf