Explain the buyout considerations in deal structuring of P.E. How does it contrast with U.S. system?
Answers
With desirable assets in hot demand and with many private equity houses competing to win assets through auction processes, competition is no longer simply a matter of price: bidders must also battle for the hearts and minds of the senior management team and often win a competition of generosity when it comes to incentives and benefits. Against this backdrop, there are an increasing number of sophisticated management teams who have experienced private equity ownership before and, assisting them, a growing phalanx of dedicated advisory teams who solely represent management in agreeing incentive arrangements with private equity houses. As a direct result of these dynamics, management incentive packages have become increasingly complex and diverse. This article seeks to explore some of the key areas for consideration when establishing and administering a management incentive plan..