Rollover Commitment Letter

Summary

This template rollover commitment letter contractually obligates the signatory stockholders of the target company's securities to make the exchange in connection with the closing of the merger, and provides purchasers and capital sources the assurances they require to proceed with the transaction and its financing. This template includes practical guidance, drafting notes, and alternate and optional clauses. In an acquisition of a target company by a purchaser, a rollover commitment letter, or rollover agreement, is a letter agreement committing certain existing holders of the target company's capital stock to "rollover" those securities into the securities of the purchaser, rather than have such equity interests cashed-out in connection with the closing of the merger. Management equity rollovers are particularly important in connection with private equity buyouts because private equity sponsors are often motivated to retain current management. In the context of a private equity acquisition, capital sources may also require management rollovers, making them a condition precedent to the closing of the financing. Rollover commitment letters are also common in "going private" transactions in which management or significant stockholders, often with the backing of private equity, purchase the company's outstanding public capital. For a full listing of related M&A provisions content, see M&A Provisions Resource Kit, and for a full listing of related private equity content, see Private Equity Transactions Resource Kit. For further discussion of equity rollovers, see Equity Rollover Commitments. For a full listing of related stock acquisition content, see Stock Acquisition Resource Kit.