Management Equity Participation (MEP)
A MEP is a complex and high-risk private investment, which is usually negotiated by the CEO / CFO. Professional advice not only leads to more attractive terms & conditions but also ensures that interests of investing managers are protected with the required attention to detail.
In a sale from one Private Equity investor to another (multiple buy-out) and resulting re-investment requirement of significantamounts, a careful structuring of the MEP in different risk classes is recommended. We also support management in the transformation of the existing MEP into a new MEP taking into account a changed group of participants (existing and new participants) and the given re-invest and new invest conditions.
We support management in the negotiation of an appropriate financial risk-return profile of the offered MEP on the basis of our experience and extensive database of relevant parameters of comparable transactions.
We support management in the negotiation of the key terms & conditions of the MEP as well as on the key corporate governance topics regarding interaction with the Private Equity investor on the level of the top holding company and amongst managers on the level of the respective management investment pooling vehicle (if any).
The key terms & conditions are driven by the respective risk-return profile, the given market standards as well as tax considerations.
We support the management in the communication and explanation of the respective MEP conditions to investing colleagues who were not part of the negotiation process. A detailed presentation of the financial as well as legal chances and risks of a management participation is important given the risk and the illiquidity of an investment in a Management Equity Participation.
Management equity participations with a large number of participants require a professionally organized and structured implementation process. We therefore support executives in project management and execution.
A MEP is a complex legal construct that needs to be administered in a professional manner. This includes, for example, entry of Further Participants and resignation of Leavers as well as the interaction with auditors regarding accounting and tax issues. We support management in the administration of the participation program. In addition to expediting the process for senior management we can offer the advantage of taking HR matters of highest confidentiality outside of the organization.
In case of an Exit we support management in the professional winding-down of the MEP.
We advise management regarding the restructuring of their equity participation in cases of financial distress driven by company specific and / or market events with the management equity participation being out of money and thus having lost its incentivisational effect.
An IPO exit requires at some point the conversion of the MEP into direct shares in the listed entity. This conversion process potentially triggers financial, legal and tax issues for the MEP and should therefore be addressed in an IPO process as early as possible to find sustainable solutions for the management, the Private Equity investor and the underwriter(s).
We advise management regarding an effective financial exit incentivisation in combination with or in absence of an existing MEP.
We support management in all commercial issues of a management equity participation. Regarding legal documentation and detailed tax optimization in various jurisdictions we can recommend respective specialists from our extensive network of experienced advisors.
We support management in the set-up of capital markets appropriate long term incentive plans.
We support manager-owners of Mittelstand companies in the structuring of Private Equity like incentive programs.
Business mediation to address conflicting situations within private equity portfolio companies. We support in all conflict situations between employees, employees and management as well as management and private equity investors.
Investor Search / Fund Raising
Management Buy-Out (MBO) / Buy-In (MBI) Advisory
We advise management teams in the execution of a MBO/MBI. We support the management team in the selection process of the appropriate Private Equity investor as partner, in the structuring and negotiation of the equity participation and the suitable corporate governance.
(Partial-) sale to Private Equity Investors
We advise manager-owners in the (partial-) sale to Private Equity investors. On the basis of our longstanding Private Equity experience we can support manager-owners in the positioning and valuation of the company, the selection of the appropriate Private Equity investors and in the execution of a competitive M&A process.
Expansion Capital / Venture Capital
On the basis of our longstanding experience in all Private Equity risk classes we can advise on company positioning, business plan and investment theis and support in the capital raising process. Additionally, we advise on valuation and anti-dilution discussions as well as on other key terms of the shareholders’ agreement.
Benefits for manager-owners
- Support on the highest professional level by experienced and highly qualified specialists
- 100% focus on manager-owner interests – professional support without conflicts of interest
- Strong network in the German Private Equity industry
Benefits for Private Equity
- Transparent and efficient negotiation processes
- Mediation in negotiation dead-lock situations
- Proven bandwith of alternative participation and incentive programs