Forward Triangular Merger

You are CEO of GloboTechnoCorproCon, a multinational conglomerate making everything from spy satellites to baby laxatives. You want to buy Slope Dancer, a startup that makes Google glass-like ski goggles. Your lawyers suggest the acquisition should be completed using a forward triangular merger.

This process involves buying Slope Dancer through a subsidiary and not buying it directly using the GloboTechnoCorproCon corporate entity. So you set up a shell company, Slope Purchase LLC, to make the transaction. Technically, Slope Purchase will buy Slope Dancer and become its parent company. Meanwhile, GloboTechnoCorproCon will be a the parent of Slope Purchase.

This indirect approach gives the bigger company some distance from the acquired company’s liabilities. Two years ago, some guy broke his leg after tripping over a mogol while skiing. At the time he fell, he was watching Game of Thrones on his Slope Dancer goggles. So...he sues Slope Dancer.

It will be hard for any judgment to touch GloboTechnoCorproCon because of the triangular merger. Meanwhile, the triangular merger setup can offer some tax benefits as well, depending on the situation.