Equity Rollovers in M&A: Bridging the Finance and Valuation Gap

Negotiating and Structuring Rollovers; Tax Considerations for Buyers and Sellers

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, June 7, 2017
Recorded event now available


This CLE webinar will provide guidance to deal counsel for structuring equity rollovers in M&A transactions, focusing on current market trends, governance provisions, stock rights, and tax considerations for both buyers and sellers.

Description

The seller equity rollover is a popular vehicle for bridging the finance and valuation gap in private equity mergers and acquisitions. The technique aligns management with the new company and signals the seller’s confidence in the acquired company to prospective buyers and financiers. Equity rollovers facilitate a smooth ownership transition.

Rollovers are typically structured as an exchange by the seller of a percentage of its equity for common or preferred stock, thus resulting in a reduction in the cash purchase. Equity stakes generally are between 10 and 49%. The seller is generally offered certain governance rights and input regarding future operations of the business.

When properly structured, the rollover can be a tax-free transaction for the seller. However, an equity transaction may limit the buyer’s ability to step up the tax basis of the acquired company’s assets. Counsel must understand the tax treatment in these deals in order to achieve the desired tax outcomes for the parties.

Listen as our authoritative panel of practitioners guides you through seller equity rollovers in M&A deals. The panel will look at current trends in equity financing, rights and obligations of each party, and tax considerations for both buyers and sellers.

Outline

  1. Equity rollovers—current market trends
  2. Structuring rollover provisions: rights of seller
    1. Preemptive rights
    2. Tag-along, drag-along rights
    3. Registration rights
    4. Voting rights
    5. Transfer restrictions
  3. Tax implications and deal structures to optimize tax outcomes

Benefits

The panel will review these and other key issues:

  • In what situations are seller equity rollovers an attractive financing option for private equity M&A deals?
  • What are the key tax issues to understand and consider when using equity rollovers?
  • What stock rights must be negotiated between the buyer and seller in a rollover transaction?

Faculty

David R. Hardy, Partner
Osler Hoskin & Harcourt, New York

Mr. Hardy’s practice focuses on corporate and international tax including the tax issues affecting corporations in the energy industry. He has been involved in cross-border merger transactions, real estate and private equity partnerships. Mr. Hardy is a frequent speaker at tax conferences and frequently writes on various topics.

George H. Wang, Partner
Barton, New York

Mr. Wang focuses his practice on mergers, acquisitions, joint ventures, investments and broad-scope business transactions on behalf of clients in North America, Asia and Europe. He represents clients on domestic and cross-border M&As, private equity, venture capital and related transactions. He also serves as de facto general counsel for the U.S. operations of several global clients, providing his strategic legal experience in completing multijurisdictional M&A transactions as well as corporate, joint venture, strategic alliance and licensing matters and general legal advice.


Recordings

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CLE On-Demand Video $297.00

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Program Materials

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Program Materials

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Customer Reviews

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Mergers and Acquisitions Law Advisory Board

Charles H. Baker

Partner

O’Melveny

Igor Kirman

Partner

Wachtell Lipton Rosen & Katz

Kevin C. Logue

Partner

Paul Hastings Janofsky & Walker

Mark D. Williamson

Principal

Gray Plant Mooty

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