LOI verbiage for equity roll-over?

November 03, 2020
by a searcher in Los Angeles, CA, USA
Wondering if anyone could share an example of an LOI or verbiage in an LOI where the seller rolls over the equity###-###-#### %) in an asset sale. How is this accomplished structurally and contractually?
from The University of Chicago in Chicago, IL, USA
I do not recommend the language that the rollover investments will be a % of price. That is risky b/c the actual "price" ALWAYS keeps changing and "price" is different from each party's perspective. Also, a fixed $ of rollover investment is psychologically is better for a seller. Further, do not promise tax-free rollover for a small transaction. One more thing: If P =1000 and rollover = 100 i.e. 10% of price, then shareholder will get a LARGER % of NewCo equity depending on leverage.
from Stanford University in Honolulu, HI, USA