LBO | Mgmt Rollover Question
For a 20% rollover, do you take 20% of equity value, or is it 20% of equity used in sources? More likely the first id guess, but any rationale would help
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Equity used in sources. In your example, it would be 20% of the total equity CHECK. So if it’s a $500mm enterprise value, with 50% debt the total equity check would be $250mm. Then you take 20% of that ($50mm) for the rollover and the sponsor would fund $200mm.
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