Modeling a deal fee for independent sponsors

by a searcher from Columbia University - Columbia Business School

2 years ago

In an independent sponsor transaction, how is a rolled deal fee modeled in sources and uses? 

Does it come out of the capital provider’s (say an SBIC) equity or total equity (including a roll). 

I am trying to understand if this would be dilutive to a seller rollover. 

Thanks!

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searcher from Columbia University - Columbia Business School

Thanks ^Searchfunder member‌ - sent a dm

2 years ago | like reply | 0 likes

searcher from University of California, Santa Barbara

Total equity usually; key question is also where the rolled equity sits in the preference stack; if pari with the money than the fee is usually taxable income to sponsor; if behind pref, then equity can be not taxable but obviously that rolled equity is more at risk

2 years ago | like reply | 1 like

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