In this podcast, Mike Levison delves into the intricacies of rollover equity – a mechanism used in mergers and acquisitions where the seller retains some ownership in the enterprise post-sale, allowing them to benefit from its future growth. It discusses rollover equity as an advantageous situation for both sellers and buyers, as it aligns their goals while paving the way for shared success. However, the podcast also highlights the potential downsides such as reduced upfront cash for sellers and uncertainties about future valuations. Additionally, it examines the tax implications that come with rollover equity – how it may defer certain capital gains taxes and why its tax treatment should be thoroughly reviewed with tax advisors. Lastly, Levison underscores the importance of understanding one’s needs from a transaction to structure the decision on equity retention effectively.
