"Traditionally, private equity firms have taken the position that they do not operate a 'trade or business' and as such, Code Section 414's controlled group rules do not apply to their portfolio companies. There have been, however, a few recent court decisions, most notably the Sun Capital case, that have held that a private equity firm that has the requisite ownership and control over its portfolio companies, can be
held responsible for withdrawal liability if a portfolio company leaves a multiemployer plan because the PE firm is in the same controlled group as the portfolio company.
"My question is whether a court (or regulator) can use this rationale in other contexts, specifically whether the portfolio companies need to be aggregated for purposes of determining whether the entity is an applicable large employer under the employer shared
responsibility provisions of the ACA. For instance, a PE firm establishes a fund that has two portfolio companies, one with 30 employees and one with 45. If the PE exercise the requisite ownership and control, do the entities need to aggregated because they are within the same control group under Code Section 414? I have not seen any discussion of this anywhere and I welcome any thoughts. This also has application to other retirement
and welfare plan scenarios."
