{
  "title": "What is rollover equity? Definition, formula and example",
  "url": "https://acquisitions.com/blog/what-is-rollover-equity/",
  "author": "Moran Pober",
  "publisher": "Acquisitions.com",
  "published": "2026-10-24",
  "updated": "2026-10-24",
  "section": "Glossary",
  "keyword": "Rollover equity",
  "short_answer": "Rollover equity is the part of a business sale price that the seller does not take in cash but reinvests as shares in the company under its new owner. The seller keeps a minority stake, shares in the next sale, and shows the buyer they believe in the business.",
  "facts": {
    "Purchase price": [
      "$10,000,000",
      "Agreed with the buyer"
    ],
    "Cash to the seller at closing": [
      "$8,000,000",
      "Price less the amount rolled"
    ],
    "Value rolled by the seller": [
      "$2,000,000",
      "Becomes shares in the new company"
    ],
    "Buyer's equity": [
      "$4,000,000",
      "New cash from the buyer"
    ],
    "Bank debt": [
      "$4,000,000",
      "Borrowed by the company"
    ],
    "Post-deal equity value": [
      "$6,000,000",
      "$4,000,000 buyer + $2,000,000 seller"
    ],
    "Seller's post-close stake": [
      "33.3%",
      "$2,000,000 ÷ $6,000,000"
    ],
    "Equity value at exit, year 5": [
      "$15,000,000",
      "Sold for $16M with $1M of debt left"
    ],
    "Seller's share at exit": [
      "$5,000,000",
      "33.3% of $15,000,000"
    ]
  },
  "sources": [
    "https://www.investopedia.com/terms/l/leveragedbuyout.asp",
    "https://www.investopedia.com/terms/p/privateequity.asp",
    "https://www.irs.gov"
  ],
  "license": "Facts may be quoted with attribution to Acquisitions.com and a link to the url above."
}