Tra Tax Receivable Agreement

The Tax Receivable Agreement (TRA) is a contract between the former partners who sold their partnership shares and the new public company C Corp, which acquired the stake to share the value of the tax benefits resulting from the increased sale of the partnership shares. Typically, Legacy partners receive 85% of the Step-up`s tax savings and C Corp retains 15% of the value. A tra liability is recorded by C Corp for the 85% tax savings to be paid to former partners. LONDON and PHILADELPHIA, Aug 22, 2019 /PRNewswire/ — Clarivate Analytics plc (NYSE: CCC; CCC.WS), a global provider of trusted knowledge and analytics to accelerate the pace of innovation, today announced that it has entered into an agreement (the “Release Agreement”) for the payment of $200 million for the termination of the Tax Refund Agreement (“TRA”) on May 10, 2019 was entered into with the Company`s shareholders prior to Clarivate`s first listing on the NYSE. including Onex and BPEA. As at June 30, 2019, Clarivate had liabilities of $264.6 million. “We are pleased to have reached an agreement to settle our OBLIGATIONS under the TRA, which will allow us to fully exploit the base increase achieved at the time of Clarivate`s initial separation and add additional cash flow and shareholder value,” said Jerre Stead, Executive Chairman and Chief Executive Officer of Clarivate Analytics. “Since I arrived at Clarivate in May, we have been very committed to streamlining and focusing our business. Managing ATRs under pleasant conditions eliminates the complexity of reporting and simplifies our structure while improving our ability to create shareholder value. The passage of the tax reform last December gave investors greater security regarding corporate tax rates in the near future. One of the consequences is an increased interest on the part of some investors in the acquisition of payment rights under so-called “tax receivables” (“TRAs”) agreements. In short, TRAS are agreements entered into by a company (a “Pubco”) as part of an initial public offering (“IPO”) to monetize the tax characteristics of the post-IPO pubco for the benefit of pre-IPO owners and investors who acquire payment rights under TRAs from these pre-IPO owners.

Our previous article on TSEs focused on some of the ways in which tax reform could affect the value of AER`s payment entitlements. Since the adoption of the tax reform, we have seen a significant increase in investor interest in acquiring tra payment rights, in particular hedge funds, family offices and private investment funds. This article describes some of the characteristics of an TRA that an investor should analyze before acquiring rights under an TRA. Clarivate`s private-in-public-offer agreements-tax-receivable-in-IPOs and its logo, as well as all other trademarks used herein, are trademarks of their respective owners and are used under license. About Clarivate AnalyticsClarivate Analytics™ is a global leader in trusted insights and analytics to accelerate the pace of innovation. . . .