Second Bite of the Apple

The second bite of the apple is a second payday. You sell most of your company, keep a stake through rollover equity, and get paid again when the new owner sells.

For example, you sell 70% of a company and keep 30%. Later, the company is sold. Your 30% is paid based on the new price. If the company grew, the second payout can be meaningful. If it did not, it can be smaller than expected.

This idea matters because it changes how you compare offers. A higher cash price today may not beat a lower cash price plus a stake in a company that is growing with a strong partner.

It is never guaranteed. The value can fall as well as rise, and your stake is usually illiquid until the next sale. Ask your tax adviser how the rollover is taxed. See how it works in the rollover equity guide. Related: majority recapitalization.