If you own a service company in Ohio and a private equity group has asked about buying a majority, the economics work the same way as in any state. Two Ohio rules deserve a look early, because both turn on how your deal is structured.
Rolled equity is a security, and Ohio licenses securities dealers
Ohio law says: "No person shall act as a dealer, unless the person is licensed as a dealer by the division of securities," with listed exceptions (Ohio Revised Code 1707.14 (opens a new tab)). A majority recap usually involves securities: the shares you sell, if it is a stock sale, and the rolled equity you receive in the buyer's company.
Several states have adopted specific relief for M&A advisors in these deals. Ohio does not appear on the 2025 list of such states compiled by the International Business Brokers Association (IBBA state list (opens a new tab)). Ask your attorney early how your deal's structure, asset sale or stock sale, cash or rollover, is treated under Ohio law.
Ohio taxes business income at a flat rate
Ohio taxes an individual's taxable business income at three percent, separately from the graduated rates on other income (Ohio Revised Code 5747.02 (opens a new tab)). Whether the gain from selling your company, or from the later sale of your rolled stake, counts as business income depends on the facts and on the structure. Your CPA decides. Ask the question before the letter of intent, while the structure is still open.
Asset sale or stock sale changes more than tax
In an asset sale, the buyer acquires the business's assets; in a stock sale, it acquires your shares. The choice affects taxes, which contracts and licenses carry over, which liabilities stay with you, and whether securities rules apply. Buyers often prefer one and sellers the other, so it is negotiated, usually early.
Whichever structure you land on, the stake you keep sits behind any debt and preferred equity at the second sale. Our article on the second sale shows how, and the one on earnouts and holdbacks covers price paid after closing.
The federal rule underneath
Federal law lets an M&A advisor work without registering as a broker-dealer only in deals where the buyer ends up controlling the company (presumed at 25% or more of a voting class) and is active in managing it, and the company is under $25 million in EBITDA or $250 million in revenue (15 U.S.C. 78o(b)(13) (opens a new tab)). States add their own rules on top.
Caution
Retained ownership and future upside are possibilities, not promised second paydays. Rolled or retained equity is usually illiquid, often a minority position behind acquisition debt, and can lose some or all of its value.
Sources for this guide
Own a service company in Ohio? Tell us about it and we will explain how a recap would work for you, or say plainly if it would not. We work on control transactions: a full sale, or a majority recap in which a buyer acquires a controlling interest and takes an active role in running the business. We introduce qualified buyers, including private equity groups, family offices and strategic acquirers. We do not arrange minority investments or growth-capital raises; if one may fit, we can refer you to a registered broker-dealer.