Rollover equity ties seller payout to buyer's second exit

Seller rollover equity can make a deal's stated price only part of the eventual payout, according to Wealth Solutions Report's quarterly M&A review.

What a seller ultimately receives can depend on the buyer's ability to grow the business and deliver a second exit years later.

The review says sellers should investigate the buyer's finances and growth strategy, compare cash with equity, and assess shareholder rights and liquidity restrictions.

For an advisory-firm owner, taking rollover equity means underwriting that second liquidity event.