Benefits of Rolling Equity

   a. Allows seller to retain some ownership and control of the company post-sale

   b. Opportunity to potentially receive additional compensation from the buyer

Potential Risks of Rolling Equity

   a. Risk of reduced sale proceeds if the company does not reach performance milestones

   b. Potentially complex tax implications for seller

Summary of this episode:

• 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.
• It’s ideal for an ownership team that’s selling-in with a partner for future growth.
• For companies that have hit a growth hurdle, 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
• Rolling equity gains alignment like few other deal structures as you all want to maximize your investment.
• Returns can be material – 2-3X times can happen. We’ve seen much higher.  You’ll see multiple arbitrage as growth continues
• You’ll need to know how to monetize the equity you’ve received
• Buyers should expect reciprocal due diligence

Listen to Shoot the Moon on Apple Podcasts or Spotify.

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