Identify Management Rollover Agreement Issues

---
name: identify-management-rollover-agreement-issues
task_id: corporate-ma/identify-management-rollover-agreement-issues
description: Guides preparation of a management-side issues memo for a private equity acquisition rollover agreement where equity valuation mechanics, vesting structure, liquidity rights, and operating agreement interactions must be assessed.
activates_for: [planner, solver, checker]
---

# Skill: Management Rollover Agreement Issue Identification

## 1. Subject-matter triage
- Treat the rollover agreement, equity plan terms, and holdco/operating agreement excerpts as one integrated economic package.
- Separate the analysis by issue cluster: valuation/conversion, vesting/forfeiture, leaver treatment, liquidity rights, governance, and post-closing entity agreement interactions.
- Identify whether the memo is management-side only; if so, bias the review toward value protection, exit liquidity, and overbroad sponsor discretion.
- If the source set contains more than one tranche, class, vesting cohort, or option trigger, enumerate each distinct category before analysis and assess them one by one.

## 2. Failure modes the skill is correcting
- Rollover economics are described in prose without testing whether the conversion math is intelligible, internally consistent, and verifiable from the documents.
- Vesting and forfeiture terms are summarized without checking cliff, vesting acceleration, termination treatment, and whether unvested equity is overexposed to sponsor discretion.
- Leaver provisions are accepted as drafted without testing whether the bad-leaver definition sweeps too broadly or whether the good-leaver outcome preserves fair value.
- Call, put, drag, and tag mechanics are listed without assessing trigger events, pricing mechanics, and practical liquidity consequences for management.
- The agreement is reviewed in isolation, while the operating agreement or plan documents quietly override, narrow, or expand the management rights package.
- Governance and information rights are mentioned but not tied to the actual consent, voting, inspection, or transfer limitations in the source documents.
- Issues are stated as observations rather than as actionable concerns with concrete revisions.

## 3. Legal frameworks / domain conventions that apply
- Rollover equity structures typically convert existing target equity into post-closing equity in the acquisition vehicle or holdco; the operative question is whether the implied exchange ratio, unit price, or percentage interest accurately reflects the negotiated deal economics.
- Vesting provisions should be read with termination, forfeiture, repurchase, and acceleration provisions as a single system; the management concern is whether unvested interests can be taken back on terms that are too aggressive.
- Good-leaver / bad-leaver frameworks generally allocate fair value, cost, or discounted value depending on the departure reason; overbroad trigger definitions can convert a negotiated retention mechanic into a punitive forfeiture regime.
- Call and put rights are economically linked to the sponsor’s control rights and management’s liquidity rights; pricing formulas and exercise windows determine whether the manager has any realistic exit value.
- Drag-along and tag-along provisions govern participation in a later sale and should be tested against the rollover agreement to ensure the manager’s exit rights are not functionally eliminated.
- Anti-dilution, preemptive rights, and issuance mechanics should be assessed together because future issuances can materially erode the rolled position even where the initial conversion is fair.
- Governance rights in private equity-backed rollovers are usually limited, but the documents should still be tested for voting, information, consent, transfer, and inspection rights that matter to management.
- Any legal proposition in the memo should be anchored to the governing document language, the applicable state corporate/LLC statute, or a recognized contract interpretation principle, rather than stated as a bare conclusion.

## 4. Analytical scaffolds
- Start by extracting the transaction economics from the rollover documents: what is being exchanged, at what implied value, on what schedule, and under what conditions.
- Compare the draft rollover agreement against the operating agreement and any equity incentive or management equity plan to see whether one document overrides another on transfer, repurchase, or exit rights.
- Test valuation mechanics for transparency: identify the inputs, the calculation path, the treatment of fees or adjustments, and whether the manager can independently verify the result.
- Test vesting for structure: cliff, periodic vesting, milestone vesting, acceleration on change of control, and treatment of partial vesting at termination.
- Test leaver definitions separately for each trigger category: voluntary resignation, termination for cause, death, disability, retirement, and any sponsor-defined catchall.
- Test liquidity rights separately for each trigger or exit event: sponsor call, manager put, drag sale, tag sale, and mandatory transfer on departure.
- For each issue, state three things together: the scale or economic significance, the document interaction that creates the risk, and the downstream effect on management.
- Convert each concern into a recommendation that is specific enough to be used in markup or negotiation notes.

## 5. Vertical / structural / temporal relationships
- Track how rights change over time: closing, vesting period, departure, permitted transfer window, and sale of the business.
- Track how junior and senior equity layers interact if the documents distinguish between classes, units, or tranches.
- Track how the rollover agreement interacts vertically with the operating agreement, equity award plan, and any joinder or counterpart document.
- Track whether a later document silently governs over an earlier one on economics, transfer restrictions, or dispute mechanics.
- Assess whether a sponsor-controlled consent right or board action is a condition precedent to a management right; if so, note the practical leverage point and any timing risk.
- If multiple management participants are covered, compare whether treatment is uniform or whether one cohort receives materially different economics or exit protections.

## 6. Output structure conventions
- Produce a single management-side issues memorandum, not a summary of deal terms.
- Use an industry-conventional memo shape: short executive overview, followed by grouped issue analysis and then practical recommendations.
- Define a clear ordinal severity scale once at the outset and apply it consistently to every issue entry.
- For each issue entry, include: severity, issue title, why it matters, the relevant document interaction, the practical consequence for management, and the recommended fix.
- Keep each issue self-contained; do not rely on later sections to supply the missing legal or economic premise.
- End with a dedicated Recommended Actions section that assigns an action, the responsible role, and a timing anchor tied to the transaction workflow.
- If the source set does not disclose a deadline, use a transaction-stage timing anchor such as “before signing,” “before closing,” or “in the next markup cycle.”
- Write in a negotiation-ready style: precise, concise, and oriented to revisions rather than abstract commentary.