Rollover Equity
Private Equity glossary · Advanced LBO Modeling Mechanics & Deal Structuring
Definition
Equity retained by selling shareholders in the transaction, rolling their interest into the new capital structure.
Rollover Equity in plain English
Rollover equity is when the people selling a business don't take all cash and walk away — instead they keep a slice of ownership in the newly bought company. Imagine selling your house but agreeing to keep a 20% stake so you still profit if its value climbs later. Buyers love this because it keeps the old owners financially motivated to help the business thrive (their money rides alongside the buyer's), and it lowers the cash the buyer has to put up. So both sides win if the company does well after the deal.
Learn these first
Related Private Equity terms
Private Equity practice questions · Private Equity flashcards · Private Equity study guide