Rolled Equity: Compare Ownership Report Bases

Rolled equity starts with an ownership record

Rolled equity is an ownership investment retained or received as part of a sale. The headline amount does not identify the issuer, security class or rights. This page compares different views of the same ownership register. It shows why two percentages can differ even when no units have changed hands.

The SEC's private-secondary-market explanation notes that private securities may not be freely tradable. Its private-placement bulletin discusses limited disclosure, illiquidity and risk of loss. These sources explain investment risks; they do not value a dental transaction or establish the rights of a particular security.

Worked example: two reports, one unchanged register

Assume an invented issuer has 1,000 equal units issued and outstanding. The dentist holds 100. Another group holds rights to acquire 200 more equal units, but none has been exercised. There are also 100 units reserved for future grants, with nobody yet holding a right to them. The dentist holds none of these additional rights. No units change hands during this comparison.

The first view gives 100 divided by 1,000. The next two use 1,200 and 1,300. They are views of the same supplied register, not a series of new issues. None proves that the dentist just lost units. The broader denominators assume possible future units for comparison; they do not make those units currently outstanding.

No exercise prices, grant conditions, cancellation rules or issue proceeds are supplied. The exercise therefore cannot value those rights or predict whether they become units. It also does not measure voting power or distributions. Each of those questions needs the actual terms. The rounded percentages are comparison measures, not a valuation of the dentist's investment.

Ask which version of the ownership table you received

Mark the table's date and its basis. Ask what a label such as fully diluted includes in this specific report. Does it include granted rights, an ungranted pool or both? Are any classes excluded? Our row labels are supplied definitions for the example, not universal legal or accounting definitions. Ask the issuer to reconcile them to the documents.

Keep evidence for each change: units before, units issued or transferred, units cancelled, and units after. An existing holder selling units to another holder does not itself increase the issuer's total units. A new issuance can. The stock-sale term page examines that transfer-versus-issuance distinction from the buyer's side.

If the ownership record and offer summary differ, ask for a written reconciliation before relying on either. Have the preparer rebuild both views from the same date and line items. A difference that disappears under a common basis is a reporting issue. A real new issue needs a separate before-and-after review.

Separate unit ownership from payout rights

The table assumes identical rights solely to make the denominator visible. A real security may have distribution priorities, conversion provisions or other terms that change what a holder receives. Identify the issuer and class first, then ask an appropriately qualified adviser to explain the actual economic rights.

Use the rollover equity guide for wider document review. Use the second-bite example to distinguish a future business sale amount from cash reaching an equity holder. Neither page forecasts an exit or assesses whether a private investment suits your needs.

Keep the negotiation and investment review controlled

Outside buyer outreach should begin seller-blind. Obtain an NDA before approved identifying disclosure, then limit circulation of ownership and financial files to authorized reviewers. Decide staff communication timing around their actual transition duties and required notices, not a blanket promise of secrecy through closing.

Keep any investment analysis separate from the clinical work arrangement and closing cash budget. A stated rollover value cannot pay a current bill unless a lawful, actual liquidity event supplies cash. Have legal, tax and investment advisers review the proposed structure and your circumstances before committing. This unit exercise establishes only its stated arithmetic.