Equity Rollover in a Transaction

Founders with a firm conviction in their company’s future don’t need to exit a transaction fully. Rolling over equity into the acquiring entity provides a path to partial liquidity while retaining exposure to future value creation.

Some founders assume that achieving liquidity means selling 100% of their business to a strategic or financial buyer. A more flexible structure is often available - where a buyer acquires the company through a mix of cash and equity, allowing founders to become shareholders in the newly combined business.

This structure creates the opportunity for a “second bite at the apple.” The founder gains initial liquidity upon closing the transaction and retains equity in the larger entity, with the opportunity to realize additional gains in a future exit.

Rollover equity strategies are particularly valuable when partnering with a buyer who can accelerate growth and unlock new opportunities for the business. This creates a strong alignment between founders and investors toward a shared success in the next chapter of the overall business.

Elaxtra Advisors is an M&A and value-creation advisory firm that assists institutional investors, private equity-owned platforms, and strategic acquirers invest and create value in worldwide technology services companies. Please contact us to explore potential partnerships.