Overview of Rolling Equity in an M&A Transaction for a Seller

<p>Benefits of Rolling Equity</p><p>   a. Allows seller to retain some ownership and control of the company post-sale</p><p>   b. Opportunity to potentially receive additional compensation from the buyer</p><p>Potential Risks of Rolling Equity</p><p>   a. Risk of reduced sale proceeds if the company does not reach performance milestones</p><p>   b. Potentially complex tax implications for seller</p><p> </p><p>Summary of this episode:</p><ul><li>Exchanging the value of the equity in your firm for the value in the combined equity.  Ideally suited for a transaction where there is a potential for another transaction.</li><li>It’s ideal for an ownership team that’s <a href="https://www.revenuerocket.com/podcast/selling-in-vs-selling-out/">selling-in</a> with a partner for future growth.</li><li>For companies that have hit a <a href="https://www.revenuerocket.com/podcast/10-million-hurdle/">growth hurdle</a>, it’s a way to gain cash at close but realize the value of future performance to get to an enterprise value that’s your number over time and success</li><li>Rolling equity gains alignment like few other deal structures as you all want to maximize your investment.</li><li>Returns can be material – 2-3X times can happen. We’ve seen much higher.  You’ll see multiple arbitrage as growth continues</li><li>You’ll need to know how to monetize the equity you’ve received</li><li>Buyers should expect reciprocal due diligence</li></ul>