In this episode of the Dealmaking with Laura DiFranceco podcast, Laura discusses rollover equity in the context of recent SBA changes. She explains the differences between rollover and retained equity, the perspectives of buyers and sellers, and the implications of the new SBA requirements. The conversation also covers negotiation strategies for terms related to rollover equity and the importance of governance rights in these transactions.

What You’ll Learn

Understanding Rollover & Retained Equity // Learn what differentiates rollover equity in an asset purchase from retained equity in a stock purchase and why that distinction matters legally and financially.

Buyer & Seller Perspectives // Explore how rollover equity can align incentives between parties, create tax benefits, and foster post-closing collaboration — but also the risks, from control limitations to financing complications.

SBA Regulation Updates // Understand how new SBA rules now require sellers to personally guarantee loans when retaining equity, and how this changes the landscape of lower middle-market transactions.

Deal Structuring & Negotiated Terms // Dive into common LOI provisions like purchase price allocation, lockup periods, drag-along and tag-along rights, and how to approach these terms with alignment and transparency.

Strategic Use of Rollover Equity // Discover when seller rollover equity makes sense — how trust, shared vision, and long-term collaboration can turn this deal term into a powerful strategic advantage.

Episode Highlights:

00:00 Intro

01:18 Introduction to Rollover Equity and SBA Changes 

04:00 Understanding Rollover vs. Retained Equity 

07:21 Pros and Cons of Rollover Equity for Sellers 

09:49 Buyer Perspectives on Rollover Equity 

10:30 DSL Advertisement

14:00 SBA Requirements and Their Impact

17:07 Structuring Rollover Equity Deals 

19:17 Outro

Resources Mentioned

• Entrepreneurship Through Acquisition: A Legal Guide to Buying a Small Business // https://lauradifrancesco.co/eta-landing-page

• Share Your Review + Get the Free Pre-LOI Due Diligence Request List // Email etareview@lauradifrancesco.co

• Dean Street Law // https://www.deanstreetlaw.com/ & deanstreetlaw.com/links 

• Entrepreneurship Through Acquisition: A Legal Guide to Buying a Small Business Ep 32 of DWLD // https://www.youtube.com/watch?v=ScOjsEfBwZQ 

• Schedule your complimentary consultation with Dean Street Law today!

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Credits

Host // Laura DiFrancesco

Executive Producer // Teagan Rowland 

Editor // Teagan Rowland

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