Charles Sapnas Discusses Rollover Equity Structures in Private Equity Deals

Earnout Structures Mitigate Risk in Volatile MarketsCharles Sapnas, Managing Director in VRC’s Financial Reporting Practice, was recently published by Business Valuation Update, with the article “Rollover Equity: Don’t Just Take It at Face Value.” In the article, Sapnas’ points out that deal structures vary widely and often incorporate multiple financing components. PE firm-sponsored transactions often include a “rollover” of ownership into a newly-formed transaction company.

Rollover equity can confer significant benefits, including keeping prior owners/management invested in the company’s success, bridging disagreements over the sale price, and reducing the sponsor’s cash outlay. Several factors, including the rights and preferences of the rollover equity compared to the private equity sponsor’s shares and the sources of deal financing, have important implications for valuation.

Business Valuation Update subscribers can read the full article here: Rollover Equity: Don’t Just Take It at Face Value