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11RolloverTaxIssuesMostrolloverinvestorsseektorollovertheirequityinterestsonatax-deerredbasis.Atax-deerredrolloverwillreducethevalueoanytaxwrite-upoacquiredassetsinconnectionwithanacquisition.Rolloversomorethan20canraisetaxissuesorcertaincompaniesintransactionswhereataxwrite-upissought.ThroughtheuseoLLCsequity-likeinterestsintheormooptionsorphantomequitycanberolledoverintotrueequityinthebuyeronatax-ecientbasisalbeitwitheconomicrisktotheholderoequityvaluedoesnotincrease.Rolloverequityisusuallyullyvestedalthoughitissometimessubjecttorepurchaseorevenoreitureispeciedadverseeventsoccursuchasengagingincompetitiveactivities.Putrightsinavorotheholdersorolloverequityarerelativelyrareandareexceedinglyrareinthecaseomanagementincentiveequity.Forbothsellingstockholdersandsponsorsseekingtowoothemattentiontoestateplanningopportunitiesrelatingtorolloverinterestsisasmartwaytogenerateadditionalvalue.SecurityStructuringIssuesThedataandourviewowhatwemostrequentlyobserveinthecurrentmarketplacesuggestthatparipassutreatmentorrollovershasbecomeairlycommon.Tosomeextentthisrefectsanevolutionovertimeromaperiodwhenrolloverinterestsweremorecommonlysubordinatedtothesponsorsequitypresumablyrefectingincreasedcompetitionortrans-actions.ParticipatingpreerredstockenablesasponsorandrolloverinvestorstotheextenttheyholdsuchasecuritytoenhancetheirreturnsinasaleorinsomecasesanIPOwiththeeconomiceectbornebythemanagementincentiveequitypool.HistoricallymanysponsorspreerredstockstructuresespeciallyontheWestCoastprovidedorareturnocapitalplusaresidualequityinterestonasalebutnotinanIPO.InmorerecentyearssponsorsecuritystructurestendtotreattheseeventssimilarlyandsponsorslookorunderwriterswhocandeliverareturnotheircapitalasauseoproceedswhenselectingthemortheirIPOtransactions.PreerredsecuritiesthatreturncapitalonanIPOcancreatetaxissuesthatrequirestructuralattention.TheincreaseduseoLLCsinthepast15yearsorsohasundamentallyaectedthestructureoprivateequitydeals.ManysponsorsnowhavethefexibilitytoinvestdirectlyinLLCsnotwithstandingtheUBTIECIeectsandmanywhocannotinvestdirectlyareallowedundertheirundstructurestocreatealternativeinvestmentvehiclestoallowinvestorswhowishtodosotoinvestdirectlywhileretainingablockerstructureorUBTIECIsensitiveinvestors.obseRvatIonsGoodwinProcterRolloverSurvey