Anyone know about a funded deal w/ the previous owner retaining 49%?

by a searcher from Harvard University - Harvard Business School

4 years ago

Exploring a deal where the business is relatively new (5 yrs old) and growing really well. Would like to offer the founder/owner/CEO the chance for a partial cash out while retaining the CEO role until I'm ready to take it over (will take ~2 yrs to get up to speed on the somewhat complex business). He's late in his career, so it would be helpful for him to do a planned, time-bounded succession plan. Appreciate everyone's thoughts.

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investor from Pennsylvania State University

Fairly common to structure a rollover with current owner retaining <50% (49% or otherwise) with several years to work toward the next liquidity event. Important to develop the partnership in such a way to align on control provisions and clearly develop milestones to manage executive transition. You should have a clear value add outside of the current owners ability to obtain near term liquidity and be aligned on your contribution to the growth trajectory to make it clear to the value of the rollover stake is likely to be more valuable in several years with you as a controlling shareholder versus the seller executing a debt recap and retaining full ownership.

4 years ago | like reply | 0 likes

investor from Harvard University - Harvard Business School

Happy to chat about this. Have experience with deals where the seller has stayed involved and retained meaningful equity (not quite 49%, but meaningful). Please shoot me an email at --@----.com if you'd like to chat.

4 years ago | like reply | 0 likes

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