What is the typical range for management equity rollover in a PE transaction, and how does it vary depending on the size and type of deal?
A core Private Equity interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.
THE SHORT ANSWER
The typical range for management equity rollover in a PE transaction is between 5-15% of the company's equity, although this can vary depending on the size and type of deal. In general, larger deals tend to have lower management equity rollover percentages, while smaller deals tend to have higher percentages. Additionally, the type of deal, such as a primary LBO or a secondary LBO, can also impact the management equity rollover percentage.
WHAT INTERVIEWERS LISTEN FOR
- ✓management equity rollover percentage
- ✓deal size
- ✓deal type
COMMON MISTAKES
- ✗ignoring deal size
- ✗failing to consider deal type
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