What to check before taking rollover equity in a sale
A is close to selling the company, and the buyer wants the active to keep about 40% to 60% of their shares as instead of taking the full price in cash. The would also stay with the company after the sale, but their future roles are not yet clear. The main question is whether the stake kept in the buyer’s structure later becomes worth more than the cash given up, or less.
The next concern is whether a actually happens on the promised schedule and whether the payout per share is better than the first sale. Control also matters: the may or may not be able to choose when to sell their kept stake, and they could be tied to the buyer’s timing. Life after the sale can change sharply because former owners may become executives or board members inside a structure they no longer control.
Leaving before the next sale could also affect the shares, depending on whether th protects full value or forces a cheap sale.
Key points
- The buyer wants active to keep roughly 40% to 60% of their shares as .
- The kept stake may end up worth more or less than the cash the give up.
- A may happen later than promised, or may pay less per share than expected.
- need to know whether they can choose when to sell or whether the buyer controls the timing.
- Leaving before the next sale may reduce the value of the shares if th allows a .