Welcome back to another edition of The Wise Exit newsletter. This week, we're covering:

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The Second Bite of the Apple. Is It Worth the Risk?

When it comes time to sell, a lot of founders get pitched some version of the same idea. Don't take all your money now, roll some of it into equity in the new company, and get a "second bite of the apple" when it sells again down the road.

The story sounds great. You stay in the game, you keep some upside, and maybe that rolled equity doubles or triples by the time the next sale happens.

But too many founders say yes to it for the wrong reasons.

They get excited about the number. They like the idea of still being part of it. And a lot of them assume that if the business keeps being run the way they'd run it, that upside is basically guaranteed.

Except once you sell, it's not your company to run anymore.

The new owner can restructure it, change the team, or take the business in a completely different direction than you would have. You don't get a vote. And once you've rolled equity into that company, you're along for whatever ride they take it on, as a minority shareholder with far less control than you had a day earlier.

That rolled equity is also illiquid. You can't just cash it out when you want to. You're tied to your buyer's timeline, not yours.

Don't roll equity because the story sounds good. Roll it because you genuinely believe in this specific buyer, their track record, and their plan for the business, and because you can afford to have that money tied up for years if it doesn't play out the way you hoped.

If you need the cash, take the cash. If you believe in the upside and are comfortable handing over control of how your business gets run, that's a different conversation. Just make sure you know which conversation you're actually having before you sign anything.

1️⃣ Do I actually need the full proceeds from this sale now, or can I afford to have a portion tied up for years?

2️⃣ Do I know this buyer's track record with past acquisitions? Have they grown businesses well and delivered for other rollover holders?

3️⃣ Am I comfortable knowing this buyer, not me, will have final say over how my company is run going forward?

4️⃣ Have I thought through what happens to my rolled equity if the business changes direction or underperforms under new ownership?

5️⃣ Do I have real protections in place, like information rights or anti-dilution provisions, or am I just trusting it'll work out?

☑️ Get clear on your personal number: Decide how much cash you actually need at closing to feel financially secure, before any conversation about rolling equity even starts.

☑️ Do real diligence on your buyer, not just their offer: Look into their history with past deals and how they've treated companies (and rollover holders) after the sale closed.

☑️ Bring in advisors before you negotiate rollover terms: Rollover agreements get complicated fast. Make sure your team is protecting you on dilution, governance rights, and exit timing before you sign anything.

That's all for this week. Rollover equity isn't good or bad on its own. It comes down to whether you understood, going in, that the company you built is no longer yours to steer.

If you're thinking through a rollover offer and want a second opinion, reply to this email or contact us here. We're always happy to walk through it with you.

Talk next week,

Brian Dukes
Managing Partner at Exitwise

P.S. In case you missed it, we quietly launched a new show: Wise Up on M&A, our educational YouTube series that gets back to basics on deal topics. Episode 2 is live now, check it out below, and feel free to pass it along to anyone a few years out from their own exit.