Alexandre Denault and Ira Stechel wrote an article for Law360 analyzing the outlook for private equity funds interested in pursuing the federal tax benefits offered by the Qualified Opportunity Zones program.
In the article titled, “Why PE Funds Should Consider Qualified Opportunity Zones,” they explained, “The extent to which qualified opportunity zones will be of value to — corporate — private equity funds will be dependent on the regulations that have yet to be promulgated. This stems from the fact that the QOZ program is not just for real estate projects, but can apply to a wide variety of business types with which PE funds are familiar, including traditional manufacturing and sales-based businesses, as well as technology-based businesses and startups.”
Denault and Stechel wrapped up with, “PE funds are in a unique position to invest in operating and startup businesses under the QOZ program due to their industry knowledge and experience in acquiring those types of businesses. However, PE funds need to be aware of the special QOZ program requirements that, in many cases, will change the way in which deals are selected and structured.”