LOI · Vertical SaaS

Independent Sponsor Equity Rollover in Vertical SaaS

When the deal is vertical SaaS and the question is Equity Rollover, the structure decisions in the first 30 days outlast the next five years. This is where Jason Powell works.

EV range $10M to $200M EV EBITDA $2M to $30M (or run-rate ARR) Audience Buy & Sell-side
The deal context

Every vertical SaaS acquisition has its own gravity. Equity Rollover is the workstream where independent sponsor counsel earns the seat.

The typical vertical SaaS platform sits at $10M to $200M EV with EBITDA in the $2M to $30M (or run-rate ARR) range. The thesis runs on platform plus adjacent module acquisitions inside a single end-market. The ARR number on the CIM is rarely the ARR number on the closing balance sheet. Reconcile early.

The moves

How Equity Rollover actually gets structured.

  1. Anchor on 15 to 25 percent rollover for a clean alignment story.

  2. Treat rollover as tax-deferred under Section 351 or 721 where the structure allows.

  3. Document tag-along and drag-along rights at the rollover level, not just at the LP level.

  4. Cap exit veto rights for rolled equity to avoid future deadlock.

  5. In vertical SaaS, layer in ARR bridge built before LOI signing as part of the Equity Rollover workstream.

The common mistake

Rolling at the wrong entity level, triggering an immediate tax event on what was supposed to be deferred.

Jason's take
"Rollover is the cheapest alignment tool on the table. Use it; do not abuse it."
Jason Powell · Equity Rollover
Capital after close

The deal is one thing. The capital that opens up after close is another.

Most independent sponsors solve the closing capital and then run into the post-close capital problem alone. The capital markets relationships that matter at month 18 are part of this practice.

MONTH 18
Senior refi
MONTH 24
Dividend recap
MONTH 36
Growth equity
YEAR 4–5
Strategic exit
ENGAGE THE PRACTICE

Equity Rollover for Vertical SaaS, on independent sponsor terms.

Independent sponsor counsel that already speaks fluent deal-by-deal economics, structures clean LPAs, and travels with capital markets relationships for what comes after close.