Sep 17, 2026 · 2 min · 3 segments
In this episode, we break down the concept of rollover equity, a common and crucial topic that frequently arises during mergers and acquisitions (M&A) transactions. - **The Basics of Rollover…
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So if you're the 100% owner of your company and then you sell to another firm, you're going to take a portion of your proceeds and instead of taking that in cash, you're going to take that in equity of the new company.
So if you're selling your company to a private equity firm, they're usually going to insist on some amount of rollover.
Generally, that's from 10% to 30% of the total deal proceeds will go into equity of the new company.
And the real kind of reason for doing that is to incentivize you as the seller to be engaged and invested in the success of the new entity.
Oftentimes, if you're a younger seller who's wanting to go into a management position in the new company and really push it to the next level, that rollover equity can become very valuable, especially if you're able to grow and scale the company the way that you want to.
There are instances where the second bite of the apple, as we call it, or the liquidity from that rollover equity is more valuable than the consideration the first time around.
So you've given up control and there's a certain amount of trust you have to have with the company that's acquiring you, that they're going to be able to execute on their vision and make your equity valuable.
So if you're the 100% owner of your company and then you sell to another firm, you're going to take a portion of your proceeds and instead of taking that in cash, you're going to take that in equity of the new company.
So if you're selling your company to a private equity firm, they're usually going to insist on some amount of rollover.
Generally, that's from 10% to 30% of the total deal proceeds will go into equity of the new company.
And the real kind of reason for doing that is to incentivize you as the seller to be engaged and invested in the success of the new entity.
Oftentimes, if you're a younger seller who's wanting to go into a management position in the new company and really push it to the next level, that rollover equity can become very valuable, especially if you're able to grow and scale the company the way that you want to.
There are instances where the second bite of the apple, as we call it, or the liquidity from that rollover equity is more valuable than the consideration the first time around.
So you've given up control and there's a certain amount of trust you have to have with the company that's acquiring you, that they're going to be able to execute on their vision and make your equity valuable.
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