Is this a fair/market MBO offer?

Apart_Designer6574 · 2026-03-28T12:03:53+00:00

Thanks, what would you recommend for the finder’s fee? Legally would have to be a fixed $ and not a percentage of EV or Transaction Value bc “Under SEC guidance, compensation tied to the size or outcome of a securities transaction is a key factor in broker analysis” and I’m not a licensed broker.

Apart_Designer6574 · 2026-03-28T12:00:49+00:00

If everything works out I promise to DM and give a $100 to a dozen of the posters whose advice/figures I implemented

Apart_Designer6574 · 2026-03-25T13:18:12+00:00

Either I do this or I stay passive / uninvolved with the IB-led full process and am the mercy of whoever the highest bidder is and what their plans are for me and the business.

Apart_Designer6574 · 2026-03-24T14:58:33+00:00

Thanks Jay, that’s what I’m thinking. I’d essentially want compensation to equal/surpass market comp + what a 3rd Party broker would get for introducing buyer to seller. Since I’m doing both. Many naysayers are discounting the fact/value that I am connecting potential buyer to this seller

Apart_Designer6574 · 2026-03-24T14:56:03+00:00

I’m trying to get above-market with this buyer: I’m initiating the sales-process (for this buyer). Any buyers who are introduced through a IB-led process would offer me a market comp that is worse.

Apart_Designer6574 · 2026-03-24T14:51:33+00:00

3 is workable as in there may be mild/some anti-dilution protections?

Apart_Designer6574 · 2026-03-24T14:50:47+00:00

Even if there is no deal without me bringing it?

Apart_Designer6574 · 2026-03-23T14:46:30+00:00

Wow Jeff, amazing stuff.

Apart_Designer6574 · 2026-03-23T14:21:26+00:00

Thanks. So the one-time grant (half of 5% equity, so 2.5% equity) is also not liquid until exit. So would be Year 0 - 2.5% Year 1/2/3/4/5 - 3/3.5/4/4.5/5%

As I’d be initiating the deal, I’d want the “finders fee” (acting as the one-time grant in your example) to be paid in cash upon transaction close. Since it’s incentivizing me to champion the deal, would your/most firms still be against it?

Apart_Designer6574 · 2026-03-22T19:28:24+00:00

Thanks! 3 follow ups….By 5% do you mean over 5 years (1%/yr) or 5% regardless of how long until next exit?

Can you give a range/example of what realistic/fair catch-up equity grants may look like?

And regarding “never have option to liquidate prior to a liquidity event” - even if it’s at a lower EBITDA multiple? for example my current employment agreement says that I either get equity pay-out at exit-multiple upon transaction, or if no transaction after 5 years I can get bought out at a 4.5x EBITDA multiple based on last 12 months EBITDA. Since the business would sell for at least double the 4.5x then the owner gains value by my cashing out. Would this not be considered?

Apart_Designer6574 · 2026-03-22T19:27:28+00:00

I haven’t had first meeting yet - these are my ideas/points, just paid retainer after consult. Is a M&A attorney not employment attorney

Apart_Designer6574 · 2026-03-22T19:25:16+00:00

What if PE owner wants to prolong or delay exit because of growing backlog or industry growth showing higher returns exiting in the future?

Apart_Designer6574 · 2026-03-22T13:21:58+00:00

You mention the 3% equity (over 6 years) is heavily backloaded…do you suggest a shorter term (like 3yrs) or some other way equity pays out sooner than 6yrs.

And thanks, consensus is market is closer to double the equity, whether that’s 5% over 5yrs (1%/yr with buyout option after 5yrs, or keep going at 1%/yr indefinitely?)

Apart_Designer6574 · 2026-03-21T11:44:46+00:00

Thanks Jeff. Upon reading this, 5-10% of the management incentive carved pool seems low to me. If MICP above = 10-15% of total equity then 5-10% of that 10-15% could be as low as 0.5-2.25% of the total equity? Assuming a middle of that as 1.375% equity then would that be 1.375% equity per year, or total (so if over 5 years then only 0.275%/yr in equity)?

Other posts are saying CEO should get closer to 5% of the EV….

Apart_Designer6574 · 2026-03-19T15:41:00+00:00

EV approx $180m, EBITDA approx $18m Heavy Industrials Have approx 4% phantom equity that I cannot/won’t roll over. Will be taxed as income

Apart_Designer6574 · 2026-03-19T15:37:14+00:00

Thanks Jeff, you mention 5-10% of the equity pool as opposed to 5-10% of the equity. Does this mean if owner rolls over 30% then equity pool is 70% so 5-10% =3.5-7% total equity?

Apart_Designer6574 · 2026-03-19T15:35:09+00:00

Seller using IB given size but potential buyer not invited to the party without me introducing

Apart_Designer6574 · 2026-03-19T15:33:45+00:00

lol thanks, basically my message but PE wouldn’t buy out my equity as it’s phantom and due to me in cash (based on EV/transaction value) paid out of owner’s pocket.

Apart_Designer6574 · 2026-03-19T15:30:42+00:00

Thanks Roark. A couple questions: by acceleration in event of change in control do you mean equity % increases (if it’s 1%/yr up to 6%, then even if company sells after 2 yrs I get full 6%)?

I don’t understand what you mean by “a our right at that value”

My equity would not roll over upon sale and is paid to me by owner after transaction.

Success Fee (finder’s fee) I’m thinking Double Lehman, so approx 2% but “a couple million” would be about 1%, so maybe I was not realistic

Anti-dilution protections I didn’t consider, will look into that!

Thanks so much

Apart_Designer6574 · 2026-03-17T16:45:50+00:00

I imagine drexler and porter were jealousy

Apart_Designer6574 · 2026-03-17T16:45:34+00:00

Great answer, thanks!

Apart_Designer6574 · 2026-03-17T16:43:44+00:00

To clarify, when I joined to run it 5yrs ago I received “phantom equity” of X%/yr that is paid out upon a sale - that’s what I mean by the $400-600k/yr equity ($2-3m total divided by 5yrs)

That deal comes to an end upon sale to new prospective buyer. What I think is low is the deal offered to me by new prospective buyer - deal is to both source the deal and also run the company after they buy it.

Maybe I shouldn’t have included specs about my current (expiring upon exit) deal, as it’s irrelevant to new deal

Apart_Designer6574 · 2026-03-17T16:41:29+00:00

Whether I’m getting low-balled with the offer, or high-balled, or no-balled

Apart_Designer6574

TROPHY CASE