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Selling your Business: What About Rollover Equity?

If the time has come to sell your business, you need to take care of plenty of things. Selling your business is not a one-day journey, so everything needs to go according to a plan. You need to find the right buyer, you need to have a mighty team around you, and last but not least, you have to decide how much rollover equity you would like to invest. A rollover equity ct attorney can help you better understand how the entire process works and what would work best in your case.

What exactly is roller equity? As a rollover equity ct attorney would also explain, rollover equity is the amount of money that the seller wishes to invest or “roll over” into the future equity of the respective business. Choosing the right buyer for your company/business is extremely important because the sale will come with an employment agreement. The employment agreement can be anything from 3 to 5 years, and the deal will also require rollover equity. This is why a good plan is so important.

In today’s market, private equity firms represent the most popular buyers. These firms generally partner up with the seller and their management team to keep driving the business ahead. The ownership period can last between 4 and 7 years. As the market shows nowadays, most of these private equity firms will require a minimum of 20% stake, but this does not mean that the business seller will have to give up 20% of the profits. Most acquisitions are made up of a combo of equity and debt.

When it comes to rollover strategies, there are many advantages and disadvantages involved. This is why it is so important to discuss everything in detail with your attorney, who can help you understand everything clearly before you take any active steps. Whether you are selling to a big corporation or a single employee- buyers and sellers must be highly aware and knowledgeable regarding the rollover equity motives.

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