Currently negotiating a principal / MD (level below partner) role and working on retaining legal representation and an exec advisory consultant. They'll help me on the final paperwork and benchmarking what I should be asking for, but wanted to ask people here as well what terms they've most hotly negotiated.
I'd be the second person joining the fund (currently a one-man team) that has had first close on $100M and is about to do final close on ~$200M raised without me.
| +64 | Ex Apollo Associate Q&A (But I Actually Answer) | 102 | 3h | |
| +42 | How to Model SaaS Projections for Interviews | 49 | 18h | |
| +35 | Q&A - Anything about PE / MBA / Life | 46 | 22m | |
| +34 | [Technical doubt]: Cash sweep and mandatory amortization | 9 | 6h | |
| +23 | European Megafunds (based on PEI 2023) | 17 | 2d | |
| +22 | Partners Group Long Term | 8 | 17h | |
| +22 | Is internal reporting at most funds really so Excel & PPT heavy still? | 8 | 39m | |
| +18 | Advent NYC Culture/WLB - 2024 update | 7 | 4h | |
| +18 | How is your life in PE? | 10 | 2d | |
| +17 | Moving from PE Fund accounting to top 3 rating agency | 5 | 2d |
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.
Make sure non-compete is very limited in term & specific. You don't want to have a 12 month noncompete that applies to all PE esque work hanging over you
Make sure definition of Cause is very limited. If it's broad they can fire you, claim it was for Cause, and usually take back your vested carry
Pay attention to what happens under different termination scenarios - voluntary, involuntary (with/without Cause), etc.
Pay attention to carry vesting schedule and make sure sensible
How common is it to hire counsel / other advisors to help with these negotiations? How does this differ when you’re coming in from outside vs. being promoted?
it's very common but optically i might not outwardly make it obvious that you are as it sets a sort of transactional/unfriendly tone IMO. so like incorporate your counsel's material comments but don't have them directly looped into anything or do typical lawyerly bs
Are you negotiating your terms of employment or are you looking to amend the GP Agreement?
In addition to the stuff above, consider also making sure you can retain appropriate deal attribution when leaving, access to documents for boards you served on (so you can speak to past investments intelligibly in interviews or with prospective LPs), select information rights regarding investments you actually have (such as annual meeting materials), the ability to get answers to tax inquiries from your tax advisor or at least quarterly estimates for your capital account...
You don’t have to sort all of this out when getting hired, but you certainly could if you wanted to avoid having to do it upon departure.
Negotiating employment. Appreciate you flagging exit terms. It's something we've only gone through on a basic level. Good items to flag to advisors for standard terms.
Thanks! I'm a few years junior but wanted to ask:
1. What does it mean by deal attribution? Is it a right to talk about it?
2. Are these exit information rights typically written in to the employment agreement?
Deal attribution is basically the ability to claim ownership over certain deals. When a partner leaves a PE firm, sometimes they use their deals to go and fundraise at their next firm. Usually which deals belong to the departing partner and which belong to the remaining partners is negotiated upon separation.
Exit info rights are not typically written into the employment agreement, but they can possibly be found in the GP agreement.
To be honest if you need representation to negotiate an employment agreement what does that say about your ability as Principal or MD to negotiate a future CEO's employment agreement.? May look weak since Principals and MDs are expected to weigh in and have a firm grasp of all the terms of an employment agreement for their portcos.
It says they understand the limitations of their own knowledge and, rather than wing it, they consult people who have relevant knowledge/experience? What Principal/MD wouldn't have legal counsel involved in substantive negotiations?
Disagree. If you can't comfortably negotiate the basic terms (e.g., severance, cause, non-compete, non-solicit, carry vesting schedule, release language, non-disparagement etc.) of an employment agreement than that is a bad look. Sure it's fine to have a lawyer make sure it's drafted appropriately, but not having a grasp of the key business terms doesn't look great since Principals and Partners negotiate these all the time. The deal team almost always submits a term sheet first before any lawyers would get involved.
Why does retaining counsel imply that someone isn't able to "comfortably negotiate the basic terms"? That's the critical assumption you're making, which is flawed. Of course a senior deal team member should understand key legal concepts that they are responsible for negotiating as part of their job, but it'd be a counter-productive (and pointless) flex to not hire a lawyer in this scenario. Are you going to inform your prospective employer that you chose not to hire a lawyer because you're so good at negotiating these terms yourself?
Also, you have a curiously low opinion of lawyers. Which I suppose makes sense for someone that is only a 3rd year associate. You will come to appreciate the value that good lawyers bring, as a thought partner and not just some monkey to ensure your docs are "drafted appropriately". Assuming you make it far enough in this industry to actually lead that type of work...
Iusto aliquam eum enim molestiae. Omnis fugit excepturi velit ea. Autem perspiciatis quas molestiae dolor aperiam mollitia dicta. Sed sunt vel omnis voluptate. Eos officia soluta necessitatibus pariatur laborum laboriosam. Aliquam mollitia et quaerat natus sed. Sit nemo et dolor laborum.
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...