Rollover equity structures and considerations

September 04, 2024

by a searcher from INSEAD in Singapore

Hi Forum Members!
Looking for any articles that analyze different rollover equity structures and considerations, especially
1. Different amounts grants
2. Drag along / tag along rights
3. Voting / Board rights
4. Call / Put structures

Thank you!

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Reply by a professional
from University of Michigan in Detroit, MI, USA

Hi ^redacted‌, in a majority/minority partnership (e.g., 90/10), the majority partner will usually have almost complete control of the company, save for some minority veto rights (normally few and far between e.g., majority partner cannot modify the organizational documents or the partnership agreement). The majority partner will also want to secure strong buy-sell provisions, which should include drag along rights and may include a call right. However, usually the minority partner will also demand some protections in the form of preemptive rights and, sometimes, tag along rights. As for management structure, that all depends on the size of the business. There is no need to have a board if there are only two partners, for example. The exact terms and provisions will be highly context dependent. Happy to discuss further. DM me here or reach out directly at redacted and we can set up a time to talk.

Reply by a searcher
from The University of North Carolina at Chapel Hill in Austin, TX, USA

In the context of a founder/management rolling over or a financial sponsor?

+3 more replies.

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