The rollover decision matrix

Roll equity when you trust the buyer and do not need the cash.

The idea

Roll equity when you trust the buyer and do not need the cash.

Rollover equity is a bet on the buyer. It makes sense when the founder believes in the buyer’s plan and has already covered the number they need.

It is a mistake when the founder is rolling because the buyer asked, or because the headline looked better with it in.

Timing

The time to start the conversation is now

How far out you feel is not the signal. Buyers read the trailing numbers, so time before a sale is room to move them, not a waiting room. A founder with a number in mind may reach it in one sale or in two: a majority stake now, with equity rolled into the buyer’s company for a second sale later. The sale itself, once you sign, runs in four phases.

Read the exit timing window

The sale, signing to the wire

0–0 months

Prepare

Market

Select

Close

Four phases, for a company that is ready. The conversation can start any time before.

An estimate from past engagements, not a commitment.

The figure

Confidence against cash

Covers itCash at close against the number you needBelow

Roll a token amount, or none

You are secure; the buyer is unproven.

What to do Keep the rollover small; negotiate price instead.

Roll meaningfully

Target

Secure and confident.

What to do A 20 to 40% rollover, with governance rights. This is where the second bite lives.

Do not do this deal on these terms

Undercovered and unconvinced.

What to do Widen the field or fix the structure.

Roll less than they ask

Confident, but you cannot afford the risk.

What to do Cash first, a small roll, and revisit at the next round.

LowConfidence in the buyer’s plan and track recordHigh

How to read it

The decision to keep equity in the sold business is sorted by how much cash the founder receives at close against what they need (vertical) and how much they trust the buyer (horizontal). Only when both are high should a large rollover be considered.