Rollover equity is the portion of sale proceeds a seller reinvests in the buyer or a holding company at completion, typically taking the form of shares in the new ownership structure. Rollover equity is common in Australian PE-backed deals where the buyer wants the founder aligned post-completion.
Typical rollover percentages range from 10% to 30% of total consideration, though levels vary by buyer and deal. Rollover equity may be tax-deferred where structured correctly under the relevant scrip-for-scrip rollover provisions, but the seller takes ongoing risk on the buyer’s performance and exit.