Second bite of the apple

Definition

The payday on the equity you rolled, when the new owner sells again.

Why It Matters

It is the argument for taking less cash at close, and it is an argument rather than a promise: the rolled stake is minority equity in a company somebody else now controls, priced at their exit on their timing. What decides whether it pays is the same list every time, and none of it is on the headline number. Whether the buyer adds leverage, whether your shares sit behind a preferred return, and whether you have any say in when they sell all change the answer more than the multiple does.

In numbers: Rolling 20% into a $12M recap leaves a $2.4M stake; if the buyer sells five years later at $30M, that stake is worth about $6M before any preferred return ahead of it.