Equity Rollover Benefits
An equity rollover occurs when a business owner sells their company but chooses to reinvest, or “roll over,” a portion of the proceeds into the newly acquired business. An equity rollover allows a shareholder to benefit from any future growth and value creation. In a bolt-on acquisition or consolidation, the owner would likely receive equity in a larger, more diverse and less risky business enterprise.
The benefits of an equity rollover for the shareholder include:
- Continued participation in the company’s growth and potential upside.
- Opportunity to partner with experienced investors or strategic buyers who can help scale the business.
- Potential referral of capital gains taxes that would otherwise be due upon a full cash-out.
For the new owners or investors, an equity rollover helps to:
- Retain and incentivize valuable expertise and knowledge within the company.
- Align the interests of key stakeholders.
- Reduce the upfront cash requirements for the transaction.
Learn more about the advantages and risks of an equity rollover in these articles on our website:
What is a Recapitalization Exit Strategy
Recapitalization Pros and Cons
What is an equity rollover when selling your business
For further information on this subject or to discuss a potential business sale, merger or acquisition need, confidentially, contact Al Statz at 707-781-8580 or alstatz@exitstrategiesgroup.com.
