Controlled group - private equity platform

I don't really understand the intricacies of "private equity platforms." 

Let's use the following description as an example.

Acme Capital Partners manages a middle-market private equity platform. The team has invested capital in a broad spectrum of industries for over two decades.

So, if Acme buys a company or companies, wouldn't this constitute a parent-subsidiary controlled group? Or, do they not actually OWN one or more companies, but just provide capital? Or maybe both? 

Private-equity investors often use strategies to order carefully rights and relations regarding investees, and often design these to keep investees separate from one another and from each investor.

Beyond carefully defining and allocating each capital interest, profits interest, or income interest, an investor might assert that it is not “a trade or business”, and so is not to be combined with any other investor nor any investee.

Don’t get involved in trying to sort out what is or isn’t a § 414(b)-(c)-(m)-(n)-(o) employer. Get your client, preferably with its lawyers and accountants, to instruct you on what you are to assume in performing your services.

This is not advice to anyone.

The ones I've seen (and it's not a ton) create funds (like a mutual fund) where Acme will pony up a large percentage, but several other people/entities will also contribute to the fund to make the purchase. That fund may own only one business or may own more than one. So, if they own more than one business in a single fund, THAT fund will likely be a controlled group. But probably not across multiple investment funds.

I would still have an ERISA attorney earn her pay in deciphering.  (This last sentence is advice to everyone.)

Interesting. Thinking about Berkshire Hathaway and all it's wholly owned subsidiaries. I'm sure they have teams of attorneys, internal and external, who are experts at the control group, affiliated service group, and QSLOB rules. Guess I shouldn't complain when a colleague asks me to opine on a control group question!

Whether a pairing or grouping of entities is or isn’t treated as one employer or otherwise related matters not only for qualified retirement plans’ coverage and nondiscrimination conditions but also for ERISA title IV about liabilities to a pension plan, including withdrawal liability to a multiemployer plan; general debtor-creditor law, including equitable-remedies law; bankruptcy law, insolvency law, or both; Federal, State, municipal, and international tax laws, whether for income, value-added, or other indirect taxes; and financial-statements accounting.

A private-equity shop might use many lawyers to fine-tune the arrangements.

Look at the Sun Capital line of cases. Sun Capital partners III, LP v. New England Teamster ___ Pension.  I don't have the cite but it was a First Circuit decision with the S. Ct,. eventually denying cert.  The most important conclusions from Sun Capital are that PE funds may be found to engage in a “trade or business” for controlled group purposes, and that two or more funds may be deemed to be under common control or have formed a partnership-in-law (or partnership-in-fact).  The key in Sun Capital is how "passive" is the investment.  Under this line of cases, to ensure that there is no controlled group, PE funds may want to structure investments so that no single fund acquires more than 80% of any single portfolio company. If PE funds want to use related funds to complete an acquisition, they need to give consideration to how they structure an investment to stay within the principles identified in Sun Capital.   

Thanks all. No, I would never even consider giving a client an opinion on something like this. We make sure we get the answer IN WRITING. I expect they are going to take the approach (rightly or wrongly) that there is no CG, but we'll see. I just wanted to have some notion of the issues at hand.