Typical Management Incentive Size
Does anyone know how much equity (as a % of fully diluted shares) is typically set aside for management and how this varies by deal size and industry (e.g. capital intensive -> less equity?). I've heard 5% to 10% is the standard range.
Depends how big the company is. For a larger company, 6-10% may be typical. For a lower middle market company 10-15% is typical.
I just always assume 10% as a baseline for modeling purposes.
My shop does 5-10% with half time-based vesting and half performance-based vesting (i.e. vests after 2x, 3x, etc.)
I’ve seen 10% allocated to the MIP, but not all of it is doled out day 1 - keep 2-5% unallocated for future hires, or addons where we want to incentivize certain managers to stick around. As someone else mentioned generally half is performance based and half is time based.
Curios what others have seen especially at growth equity / buyout shops (TA, Summit, GA, etc)?
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