QSBS Stock Acquisition with a Holding Company

The graphic below illustrates the ownership structure after 100% of the stock is acquired in a qualified small business.

The PE fund would form a holding company that would issue QSBS to the PE fund after infusing capital into the holding company. The holding company would then acquire 100% of the stock in the qualified small business.

The next graphic illustrates the same scenario but with a rollup of multiple qualified small businesses. Although it is possible to rollup multiple businesses into the holding company, only the holding company has issued QSBS; therefore, only stock in the holding company could be sold and not individual shares in the subsidiaries for the stock sale to qualify for Section 1202.


About Brett Calhoun

Brett Calhoun is a licensed CPA/ABV and holds an MBA from the University of Missouri. Mr. Calhoun has experience as an operator with startups, venture capital experience, and experience advising growth to mature companies’ management on financial reporting, tax, and valuation issues.