Hi guys,
How do you guys document an acquisition when you want existing shareholders to be bought out and management & staff to have be on a 2-3 year retention plan based on some metrics such as EBITDA generation?
Say $50m total consideration, split 70/30 between buyout of shareholders and retention.
Ie: how do you make sure shareholders will not be entitled to the earnout?
Thanks
| +43 | Lateraling at senior associate / VP level | 15 | 21h |
| +28 | Imposter Syndrome: PE to Publics | 4 | 4d |
| +26 | Ares buying LGP...now what? | 8 | 3d |
| +20 | Dumb guys in LMM PE making more than IB? | 11 | 1h |
| +19 | Do PE VPs Always Have An Associate Under Them? | 12 | 2d |
| +18 | GTCR vs BDT MSD vs MDP | 16 | 2d |
| +17 | Hours at MF Infra Funds in London | 2 | 1d |
| +14 | Committing to CD&R? | 9 | 4h |
| +14 | Setting the right LBO entry multiple without information | 3 | 6d |
| MBA to EM Infra Investing? | 3 | 4d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Based on how I understood your question, you can buy out shares of existing shareholders and set up a bonus structure for management that is linked to EBITDA or create a different/additional class of shares.
Thanks. So there the deal structure to acquire the company and the retention part are done separately.
I guess you mean a MIP.
Management Incentive Plans are what new owners put in place to incentivise management and on these they specify the amount mgmt will invest (if any, and usually very small ticket) and then their estimated returns which will be based on a metric (I.e. could be MoM for the total business). You will have to account for MIP impact on investors returns tho (IRR pre and post MIP payout).
Rerum temporibus dolor eos. A perferendis inventore qui quos aut.
Repellendus facilis hic numquam tempora non ea porro. Quasi rerum dolor accusamus doloremque voluptates harum tenetur. Qui earum unde et pariatur soluta quasi.
Maiores assumenda a et molestiae aspernatur. Et vitae sint quisquam et error laboriosam. Culpa aut rerum doloribus in.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...