We are trying to decide between a full exit with a transition period versus rolling over fifteen percent equity into the buyer's platform. How do we evaluate these two structures from a risk and multiple perspective?

Question

Tyler Smith · Accepted Answer

When negotiating with private equity, you will often face a choice: take a clean exit with a short transition or roll over fifteen to thirty percent of your equity into the buyer's new platform company. This rollover equity is often pitched as a second bite of the apple, but it carries significant operational and financial risk.

To evaluate this structure, look closely at your personal goals and your V/TO. If you want a complete exit to start your next chapter, rolling over equity will keep you emotionally and financially tied to a business you no longer control. You will be subject to the buyer's decisions, and your rollover equity could easily be diluted.

If you do choose a rollover structure, you must protect your position. Use your Accountability Chart to clearly define who holds the seats with true operational authority post-close. Do not let the buyer replace your leadership team with generic corporate executives who do not understand your AI-powered operational rhythm.

Negotiate strong governance rights, including board seats and veto powers over major capital decisions. Treat your rollover equity as a high-risk investment and ensure the base cash portion of your deal is high enough to satisfy your financial targets even if the rollover goes to zero.