Rolling Equity

searcher profile

April 03, 2024

by a searcher from Tulane University - A. B. Freeman School of Business in New Orleans, LA, USA

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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commentor profile
Reply by a professional
from Villanova University in West Chester, PA, USA
Echoing ^redacted‌'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.
commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Usually that is outlined in the LOI. You would adjust the LOI and show what is being rolled or retained in equity.
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