Rollover Equity

by a professional from Duke University

8 months ago

Big mistake I see business buyers making:
Don't assume that getting the seller to roll equity under the SBA's new partial buyout rules means they'll necessarily be motivated to help post-closing.
They also might make a terrible partner that you quickly want to get rid of!

We closed ~$700 million in SBA 7(a) last year with zero partial rollover. Now everyone wants the seller to roll. 

It should be saved for limited circumstances, tied to an employment agreement.

1 like
301 views
17 comments

intermediary from Southern Methodist University

To me, rolled equity makes sense in the LMM deals where Seller continues to run the business. If I'm a Searchfunder who desires to be owner operator after the transition period, I would avoid rolled equity like the Plague.

2 months ago | like reply | 0 likes

searcher from University of Southern California

Great reminder thanks

6 months ago | like reply | 0 likes

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