We are choosing between a family office offering a clean asset purchase with no rollover, and a private equity firm offering a higher multiple but requiring a twenty percent equity rollover. How do we evaluate these deal structures?

Question

Tyler Smith · Accepted Answer

Evaluating a clean asset sale from a family office against a higher-multiple deal from a private equity sponsor requiring a rollover requires looking beyond the headline number. You must analyze how each deal structure aligns with your personal post-exit goals and the long-term vision in your V/TO. A family office typical operates with a longer-term horizon and fewer aggressive debt requirements, which can offer greater stability for your remaining leadership team. This option provides immediate, clean liquidity at close, allowing you to walk away with minimal post-close entanglements. In contrast, a private equity sponsor's rollover structure binds a portion of your wealth to their future exit. While this second bite of the apple can yield a massive payout if they scale the business successfully, it carries significant risk. You will be a minority shareholder with limited voting rights in a company loaded with senior acquisition debt. Use the Trust Equation to evaluate your alignment with the sponsor's leadership team. If you do not trust their operational capabilities or their respect for your culture, the higher headline multiple is rarely worth the risk of a rollover.