I read a fascinating article in which the author’s hypothesis is that New York City real estate is an attractive way for wealthy persons to anonymously hide assets. The article suggests that the buyers are choosing to hide their purchases through the use of Limited Limited Companies (“LLCs”) and other legal structures, citing among other things the lack of transparency and the ease of implementation.
Although the article highlights the potential illicit use of these business entities for money laundering, the lesson is that LLCs are a viable method for lawfully acquiring assets while maintaining privacy. As startups grow and attract investment, startups may want to make strategic acquisitions without revealing the startups’ strategy – “tipping their hand” – to competitors. However, we always recommend that management of a startup company should consult legal counsel and other advisors before trying to create an acquisition vehicle on their own.