How permanent-capital holdcos actually pay founders: equity rolls, earn-outs, and ongoing economics.

Most B2B SaaS founders have been pitched at least one strategic acquisition and at least one private-equity recap by the time they take a serious meeting with a permanent-capital holdco. They arrive with a mental model already calibrated to those two deal types. A strategic offers a high headline price, mostly cash, and an integration plan that quietly retires the brand and the team within eighteen months. A PE recap offers a somewhat lower headline price, a meaningful equity rollover, and a five-to-seven-year clock to a second sale. Both end with the founder out of the building.

A permanent-capital holdco deal is shaped differently because the holding period is different. We are not underwriting a sale; we are underwriting a quarter-century of compounding. The deal structure has to make sense for both sides under that assumption, not under the assumption of a near-term exit. This piece walks through the four building blocks we use, why each one is sized the way it is, and which kinds of founders find the result attractive.

Building block one: cash at close

Every deal includes a cash-at-close component. It funds the founder's personal de-risking — paying off the house, setting aside the family liquidity bucket, removing the financial weight that has been distorting decision-making at the company. It is not the headline number a strategic might quote. It is sized to do a specific job: take enough chips off the table that the founder can keep operating from a place of choice rather than necessity.

On most of our deals, cash at close clears between forty and sixty percent of total enterprise value. The exact number is usually less interesting than the logic behind it. Founders who want to maximize cash at close are almost always better served by a strategic process. Founders who are intrigued by the long-tail economics of the holdco structure tend to view cash-at-close as a means, not the prize.

Building block two: equity roll into the holdco

The piece that usually makes the conversation different is the equity roll. Founders selling into Cobalt Glacier do not roll equity into a portfolio company that will be flipped on a fund clock. They roll into the parent holding company, alongside us, on the same terms we hold our own equity. That single design choice is what most institutional founders react to when they first see the deal architecture.

Rolling into the holdco — not into the brand — is the structural commitment. The founder is not selling a company and renting an option on its future. They are buying a stake in the larger compound.

Three things follow from that design.

• Diversification across the portfolio. A founder who rolls equity into the holdco no longer has all of their post-deal upside concentrated in one brand. They participate in every brand, including ones acquired after theirs.
• No second-sale clock. The equity is not marked to a target IRR or a planned exit window. Its value is the value of the holdco compound, mark-to-market once a year by a third-party valuation firm.
• Aligned incentives with us. Decisions about their brand are made by people who hold the same equity they do, on the same terms, with the same liquidity profile.

We sized this piece deliberately so it cannot be dismissed. Equity roll is typically twenty-five to forty percent of enterprise value. For founders who believe their company compounds, that participation can be the largest financial event of their career on a ten-year view — even when the cash-at-close number underwhelms a comparable strategic offer.

A note on mechanics: when the target is an LLC, the rollover is typically a §721 contribution into the holdco and is tax-deferred at the federal level. When the target is a C-corp, the rollover usually runs through a parallel §351 path — the founder receives equity in a C-corp subsidiary plus, where appropriate, a profits interest at the holdco so the portfolio-exposure promise still holds. Either way, the founder ends up with economic participation in the broader Cobalt Glacier compound; the legal vehicle adapts to the target's existing entity. Final structure is confirmed with deal counsel and the founder's tax advisor before signing.

Building block three: earn-out tied to what the founder controls

We are skeptical of earn-outs as an industry instrument. Most of them measure things the founder no longer controls after close — synergy revenue, integration milestones, performance of products that have been re-shaped by the acquirer. Those earn-outs are functionally a way to lower the headline price without admitting it.

Our earn-outs are designed in the opposite direction. They measure the operating metrics the founder still controls because, in our deals, the founder is still running the brand. Net revenue retention, gross margin, and net new ARR — the same metrics we publish to our investors — are the instruments. The earn-out vests over twenty-four to thirty-six months and is paid in a mix of cash and additional holdco equity. The founder can hit it because the founder is the one operating the lever.

Why we keep earn-outs simple

We have learned, expensively, that the only earn-out worth writing into a contract is one that both sides can describe in a single paragraph. Earn-outs that require footnotes get litigated. Earn-outs that hinge on clean, measurable B2B SaaS metrics — and that the founder is in a position to actually move — get paid.

Building block four: ongoing operator compensation

Most founders who sell into our structure stay on as the operating leader of the brand. That decision is independent of the deal economics; we make a separate, market-rate operator offer for the role. Salary, bonus, and a discretionary long-term incentive plan that tracks brand performance.

We separate the two on purpose. Folding operator compensation into the deal price is a common mistake we see in PE recaps; it conflates the value of the asset with the value of the founder's labor for the next three years, and it usually means one of them is mispriced. Our deals price the company for what it is, and pay the operator for what they do from day one onward. We expanded on the founder-experience side of this in Selling your B2B SaaS to a permanent-capital holdco.

What the package looks like in the aggregate

For a typical deal in our size band, the package looks roughly like this. Forty to sixty percent of enterprise value as cash at close. Twenty-five to forty percent rolled as holdco equity, on the same terms we hold our own. A simple, operator-controlled earn-out worth low double-digit percentages, paid over two to three years. And a market-rate operator package for the founder who stays on to run the brand. The exact mix moves with the size and shape of the company; the underlying logic does not.

If a founder runs the math under a five-year compounding assumption, the holdco package usually beats a comparable strategic offer once the rolled equity matures. Under a ten-year compounding assumption, it does so by a wide margin. Under a "we sell as fast as possible" assumption, the strategic wins. Which assumption is realistic depends on the company and the founder, and it is exactly the conversation we want to have early.

The kind of founder this fits

This deal structure is not for everyone. Founders who want to be done — fully cashed out, off the cap table, off the org chart — should pursue a strategic process. Founders who want to optimize for a short, finite engagement followed by a second sale are usually better served by traditional private equity.

The founder this fits is the one who looks at their company and sees another decade of compounding ahead, who wants to participate in that compounding without continuing to carry the full personal financial risk, and who is energized — not depleted — by the prospect of operating it inside a portfolio of similar businesses. For that founder, the structure described above is unusually well-aligned. It is also the only deal we know how to do well.

The bottom line

A permanent-capital holdco deal is not a strategic sale with a rollover, and it is not a PE recap with a longer fuse. It is a different instrument, designed to keep both the founder and the operator economically engaged across a holding period long enough that the second sale is not the point. Founders weighing a conversation with us are welcome to start one here. We respond to every inbound, and the first conversation is always the deal architecture, not the price.