How does an equity rollover work in an asset purchase?

There are several ways to accomplish a step-up in the tax basis of the assets you're acquiring and the sellers to have a tax-deferred rollover. The option you choose is based on a variety of facts. Further, since the Seller will retain more than 20%, you will need to make sure your goodwill step-up will be amortizable and not get caught by the anti-churning rules. Again, whether they apply all comes down to facts. I can help structure your deal to achieve the desired results for both parties. email me at --@----.com and we can set up a call.

Yes the seller acquires an equity interest in your new acquisition sub. It's crucial to have the right tax structuring advice (which isn't me, so this isn't tax advice, but I'm a deal lawyer and this is always the key issue), since the equity rollover in certain cases can be done as a tax free rollover so the seller isn't taxed on a sale of 100% of the assets. Often the seller doesn't have the right advisors, so you as the buyer have to alert them of this potential and recommend they hire someone with this experience so that it's less of a tax hit on the seller, which makes your bid more attractive.