Understanding How Rollover Equity Truly Works

Think twice if you are a business owner and receive a fantastic deal from a buyer. You would like to pass over your business, but you still want to stay connected to something you have worked hard to build up. So, what now? As a rollover equity ct attorney would explain, rollover equity is a business term that happens during the sale of a business. The seller (the business owner) holds equity in the industry in the form of shares. Whenever the owner decides to sell his company, he can sell 100% of the claims, or he can choose to roll over a certain percentage of those shares into the business they are selling.

So why would a company owner decide to sell his business rollover equity? Here is what a rollover equity ct attorney would answer:

• Because the seller cannot fully detach from his company- he needs to have something to still hold on to, and he can do this with the help of rollover equity
• The company owner wishes to keep profiting passively from his business- and he can achieve this by opting to roll over equity.
• The Private Equity firm may have a request that the owner remains somehow financially involved with his company.
• For risk mitigation purposes for both parties involved (buyer and seller)

The company seller can ask for rollover equity for several reasons. For example, they may want to stay somehow attached to their business. Once the seller remains involved with his business through rollover equity, he will keep some rights regarding company decisions. The seller may also consider that the whole transfer or company transition will work much smoother if he remains involved somehow with his business. Rollover equity allows the seller to transition smoothly instead of suddenly giving up on everything. Through rollover equity, the seller will give up a particular portion of the realistic price of his company to maintain certain rights and involvement with the company. Selling a business should be manageable, especially if each party has a powerful vision regarding the company’s future and both parties make everything possible to close a good deal.