Carry Structure for SPV / Holdco with Callable Equity Commitments

June 24, 2025
by an investor in New York, NY, USA
We're looking an aggressive industry consolidation opportunity that will include significant upfront seller rollovers from multiple companies, alongside a long tail of committed equity capital that will be deployed over time. Are there ways to structure carried interest language to avoid being diluted by equity rollover from sellers?
We want to invite sellers to rollover equity value at the same terms and conditions as new investors in this entity. If that rollover is ultimately dilutive to sponsor economics, we will push them to roll less and replace that need with investor dollars -- which ends up being an unintended consequence of aligning the sellers to the new platform.
Any preliminary recommendations from the legal community would be appreciated.
Would an SPV fund structure with typical PE fund language, with each underlying company structured as an individual opco (with prorata ownership split between fund + seller rollover at opco level) + a centralized management services entity make the most sense? Presumably this avoids dilution of carry from rollovers, but probably opens up a world of other governance pitfalls & issues.
I'm sure I am missing an easy solution...
from Dartmouth College in 80 S Main St, Hanover, NH 03755, USA
from Northwestern University in Chicago, IL, USA