Rolling Equity

by a searcher from Tulane University - A. B. Freeman School of Business

8 months ago

In an LOI if the current owner is going  to roll some equity do you make a statement about it in the LOI? Or is that negotiated  after the acceptance of an LOI? 

Thanks

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professional from Villanova University - Villanova School of Business

Echoing ^Searchfunder member‌'s comment above, we always recommend the terms be outline in the LOI. If there are any unusual components such as convertible shares or shares with step up being offered to others, this should be included as well as any other material terms regarding the rollover. It should also be noted for which portion of the purchase price is comprised of the value of the rollover equity or that the purchase price is only purchasing x% of the outstanding stock. I'd be happy to discuss this further.

8 months ago | like reply | 0 likes

lender from Eastern Illinois University

Usually that is outlined in the LOI. You would adjust the LOI and show what is being rolled or retained in equity.

8 months ago | like reply | 0 likes

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