How Private Equity Funds Increase ROI with Employee Retention Credit

calendar iconDecember 8, 2021

The Employee Retention Credit (ERC) offers private equity (PE) funds the opportunity to generate cash for their qualifying portfolio companies, which directly increases return on investment for owners of these funds.

ERC is a refundable payroll tax credit available to many employers who continued to pay employees in 2020 and 2021 despite declines in revenue or business disruptions.

Over the past year, Cherry Bekaert has worked with many private equity funds to help their portfolio companies quantify and receive this well-deserved cash benefit.

Eligibility is based on the following:

  • The employer measuring declines in gross receipts in any calendar quarter of 2020 and/or the first three quarters of 2021 as compared to calendar quarters in 2019: OR
  • Demonstrating that government orders limiting commerce, travel, or group meetings directly disrupted the business (including some supply chain disruptions).

The good news is that portfolio companies owned by PE funds may not have to be aggregated when computing the number of employees or applying the gross receipts tests.

We are performing complimentary scoping discussions to determine ERC eligibility. Reach out to us with questions or to schedule a conversation.

Related Guidance: