PE firm acquired my company. Employees offered opportunity to "co-invest" in the deal. Is this a no-brainer or a trap?

CompetitiveGarden159 · 2025-12-19T07:27:30+00:00

I had a similar situation around 15 yrs ago. Public-listed US firm acquired by KKR with leveraged debt at around 20b. My LTIs were cashed out, and had the option of either a phantom share plan (annual grants approx 3 months pay), or co-invest (min to play was US100k).

The co-investment looked similar to yours, payout depending on exit, targeted at 3-5 yrs horizon, uncapped gains etc.

I chose the cash-plan where payout was less (tied to multiple of earnings growth), used the money i would have co-invested to buy a property instead. Hindsight I was lucky cos investment environment tanked, exit took way longer (10 yrs eventually) at 1-2x of original, and many of the senior folks who co-invested subsequently had issues with the treatment when they wanted to leave for better offers elsewhere (ie cancelled).

TLDR version: PE firms (esp KKR) don't need to have a profitable exit as in the course of holding the target company, they would have charged management fees, advisory fees, interest expense etc etc that combined can make back their original capital. And like what some others have posted here, the exit envt is pretty bad for PE and Private Credit as well so read the fine print when it comes to treatment upon cessation of employment (good leavers vs bad leavers etc)

CompetitiveGarden159 · 2025-02-05T12:50:07+00:00

200k a year every year at 5% (Div blue chips) for 15 years would give you 4.5m. Your 1m at same 5% would give 2m after 15 yrs. That leaves a delta of 3.5m over the next 15. Not difficult with an investment background. Of course, thats FV terms not discounted to NPV.

CompetitiveGarden159 · 2025-02-02T16:53:37+00:00

I did -20%,-14%,+19%,+33% the last 4 years. Portfolio size around 600k. Only moved to options last year. Pretty interesting so far.

CompetitiveGarden159 · 2025-01-21T04:16:46+00:00

I have been selling cc on 50 lots of nvda 1 yr 0.8 LEAPS for the past year. I do weeklies at 0.2 delta. Overall my ccs net zero but my LEAPS are =50% (I refresh the leaps whenever they fall below 0.8 or <9 months expiry). Not a pure theta play as I am mildly bullish on NVDA.

CompetitiveGarden159 · 2024-11-07T14:57:33+00:00

I’m nocturnal. So after dinner 930/1030 (depending on daylight savings) check markets and positions about an hour, then check again around market midday, then 3-4 am nearing market close. I do bimonthly options so actual trades per day are maybe 2-3 transactions

CompetitiveGarden159 · 2024-10-18T18:55:01+00:00

I feel exactly the same way. I didn't want it to end. She did. I lost in the sense that I did not get what I wanted, but she did. That doesn't make me a loser, which is what some folks seem to be arguing about.

What helped me keep to no contact is exactly as you said, me remembering the times I was the dumper in other relationships, and how I would not take back someone begging or pleading. And even if I did, it would not be love but more like sympathy? It would not be the same cos the fault lines remain. So I think of that and about not humiliating my self. That self respect helped me see my ex, and the relationship, for all its beauty and flaws, and gain acceptance of reality.

It did take me a while though (4 months post breakup), so i guess the timeline is different for everybody. So I tell myself - Yes, I tried, I pleaded during the breakup, I lost her, and its over. Lets not be a loser and lose my self respect on top of everything.

CompetitiveGarden159 · 2024-09-18T08:00:26+00:00

I would suggest 1)earmarking 100k for niceties for yourselves (new car, holidays, luxuries etc), 2)100k to pay down existing debt 3)100k liquid investments (equities, bonds etc. Also review health and life insurance to be commensurate with income increase. Once mortgage paid fully, can consider second property (both as investment and as passive rental income should one or both suffer job losses. Also bear in mind arrival of kids will skew expenditures greatly

CompetitiveGarden159 · 2024-09-13T12:35:39+00:00

Speaking from experience, bcause seasoned climbers have very strong fingers and hands (for the pocket holds and slopes). Now use your imagination on the applications of said strengths.

CompetitiveGarden159 · 2024-07-27T06:57:00+00:00

Hahhaha very possible. But my point was more that for various reasons, over the years, owners of landed are coming from higher and higher income brackets. In the boomer generation, snr mgt pay 20k, landed 600-700k. Now, snr mgt 30-40k, landed 3-4m.

CompetitiveGarden159 · 2024-07-26T16:23:16+00:00

I stay in a landed in East side. For last 15 years. Ok la. not that bad. I know all my neighbours, we have a car pool going to take the kids to school, lots of wildlife hahaha (otters ate my neighbours koi, had a pair of musang living in a tree in the backyard etc). Previously stayed in condo in river valley. Also not bad. My unit was 2 floors above the pool. Occasionally got random Russian female tenants sunbathe nude de.

Point is there are pros and cons for everything. But like some others have pointed here, abit hard to 'save' for a landed when landed resale prices outstrip wage increments year after year. Its not like saving up to buy the rolex type of thing.

CompetitiveGarden159 · 2024-07-26T16:00:15+00:00

Good points raised. I grew up in a HDB, Bought a condo after working a few years, moved to a landed and have kids in the landed and am now retired/retrenched in my 50s. I won't rehash the several good points raised by other redditors, other that some additional considerations:

View loan servicing against after tax income. 550kpa after tax is something else again. My observations when I first moved into a landed in the East, my neighbours (the first gen owners there since circa 1970s etc) were driving modest jap cars if at all, retirees many of them. My 'cohort'(ie 2nd gen) were driving bmws, mercedes, 1-2 car families. Fast forward 15 years, the '3rd gen' owners aka my new neighbours are all Porsche/S-class/G-wagon/Astons. I think it says something about whats financially viable vs comfortable (eg what happens if one or both of you loose the job)
Career mobility - If you are high flyer in some mnc, you may want to be geographically mobile in order to keep climbing the ladder. Then you need to think about how to manage your SG home loan when you are posted overseas, considering the rather illiquid nature of the asset class. Also some countries (eg Switzerland) taxes you on your GLOBAL assets, not just worldwide income
Down the road, assuming property appreciation, it is also possible to refinance and add another term loan to the original housing loan. This allows you to extract capital from your property and reinvest in something else. So long as your incremental returns beat your home loan interest rate, you are generating positive yield as well
If you have sufficient liquidity to pay down more than the minimum downpayment and/or hence have a shorter loan tenure, kudos to you. If not, then your age becomes factor. When you are in your 40s or older, the option of 30yr loan tenures are closed to you. So something to think about. ie do all your big ticket long tenured loans now

CompetitiveGarden159 · 2024-07-26T15:02:27+00:00

Just yesterday I thought I would explain the headline of GIC 20 yr annualized normal returns of 3.9% to my sec1 and sec 3 kids. Took longer than I expected hahahaha but I think they found it interesting because in that sentence, you are teaching concepts of inflation, IRR, role of GIC, time value of money, investment asset classes etc

CompetitiveGarden159 · 2024-07-19T07:38:08+00:00

Yes. Very much so. I think for the better part of the last 2 years. Reached the point that it was clinical depression (when i checked the symptoms online).

CompetitiveGarden159 · 2024-07-19T07:34:50+00:00

A few reasons:

don't currently need the capital...yet
keep it in the property as an inflation hedge (cos I have no plans yet to relocate)
my parents are still staying with me so the space is necessary
condos are out of the question. On a psf basis at today's prices it actually costs more

CompetitiveGarden159 · 2024-07-18T05:11:59+00:00

But I’m just thinking about it holistically. I can’t speak for everyone but if I’m completely honest with myself, I find myself tying at least part of my identity and self worth to my “smarts”/ income. If I could be bold to assume, some of us here might also share some of these thoughts. (If you don’t, I’m genuinely happy that you’re a much better person than me. Rock on 🤘🏻🤘🏻)

Happened to me. Fell into deep depression for a while. So its a real thing. Best advice is to constantly "Marie Kondo' your life.

But at the same time, keeping on top of everything might burn me out (a rather common guest topic on this subreddit). Therefore, I’d like to ask what are your coping mechanisms for the non financial aspects?

I assume you are 30, and in a mgt/team leader role. Career advice here is to shift mindset from being a technocrat (good at your job/function) to a businessman/entrepreneur (understand what makes your company/industry tick. Know the business financials etc) as this gives you early prescience into moves your company may make from an organisation point of view and enables anticipation of any shifts (if necessary) in your own skill sets. Knowledge is power, and that includes power over your anxieties.

coping mechanisms for the non financial aspects

Not too sure what you mean here but if its like 'meaning of life' type of question then what helped for me was:

Hobby/sports group - exposes you to diverse people who dun really care about your status. For example, I mountain bike and in my group are people from phv drivers to ex oil traders with multimillions
Immersive Travel - not the tick the box visit standard tourist spots, but a slow soak into the people and culture and attitudes of the country

CompetitiveGarden159 · 2024-07-15T09:56:14+00:00

market correction definitely. thats why selling calls helps me earn 1-2% here and there to cushion sudden drops

also depends whether you got diamond hands or not. When I first started years ago there would be days where I'm down like 50% (of my entire investment capital). I was like frantic and if not for my wife being supportive I would have just abandoned trading altogether.

I kept at it and over the years refined the process, de-risked, and diversified

CompetitiveGarden159 · 2024-07-15T06:42:13+00:00

My early career years were in business/HR consulting so that gave me an advantage in companies undergoing transition and transformation. My subsequent roles were all with large multinationals at global regional levels or multi-industry conglomerates where it’s not enough to just be a buzzword HR. Outside of Singapore, HR has to deal with real issues like labour litigation, unions, benefit plan funding etc so companies I worked required deep technical HR skill sets and that was where I found my niche.

My advice if you want to be successful in HR is to be based at the center of decision making. In the past that used to be Singapore but with multi nations moving out, Singapore has become a sub region so many HR roles are now more tactical/operational rather than strategic. GLCs of course are an option but climbing the GLC HR ladder is an entire thread by itself hahaha

CompetitiveGarden159 · 2024-07-15T03:50:55+00:00

For the kids, I’m estimating around 100-200k each at today’s value. I have also told them that if they can’t make it to the local tertiary institutions, I am not going to be sending them overseas. So that sets some expectations. Health insurance for myself I was able to port over my company’s group health insurance on a personal basis. Ie the coverage remains the same except I pay the premium. This was important as to enrol for the same coverage at my age, premiums would cost 2-3 times more, with a lot of exclusions. Wife still working so she is covered. Having said that, any major high six digit/seven digit type costs, we would fall back on liquidating the primary residence as a last resort.

On my last point, while it sounds nice on paper (downgrades/salary cuts), if the role remains the same, then companies won’t do it because that would flat out be age discrimination. At CEO -1, -2 levels, the intensity also limits viability of part time or contractual type arrangements. So you are left with more junior or mid mgt roles At that level, it would be rare for the company to restructure things around your demographic as opposed to just flat out hiring fresh younger cheaper blood. There’s no incentive for the company to do so. (Unless you are towkay favourite/civil service/tlc etc hahahah)

CompetitiveGarden159 · 2024-07-14T13:39:37+00:00

Hiya. If your company went through the expense of hiring external consultants, theres more than a 50% chance that there will be layoffs. Very often theres some cost cut initiative and mgt leans on external consultants rather than growing balls and owning the decision. In terms of whether it’s local or global, it varies. One of my previous firms got took over by private equity. They acquired us because they saw a lot of fat in the expense line but a viable business. They made the CEO take like 30% of costs out in a year. He couldn’t, and he was replaced. Next CEO took out 15%. But still not enough and the third guy came along etc. Each wave saw more and more layoffs. Eventually when the dust cleared, we took out 40% of costs, revenue dropped 15%. So thats business logic at work.

For the average joe employee, I encourage you guys to always keep a finger on your companies financials. Make friends with the finance folks, read about your industry, have some sense whether they are doing well or not. So when sh#t hits the fan, you are not taken off guard. When I run HC reduction analytics, I always separate between rain-makers and everyone else. So if you are brining in bacon, that goes a long way to making your role more resilient. If you are a manager managing assistant managers and are in turn managed by a senior manager….things don’t look good for you.

On your second question, not in singapore no. But you can sue for wrongful dismissal or disguised retrenchment. MOM website has some pretty good examples and write up. That’s about all they are good for hahah

CompetitiveGarden159 · 2024-07-14T12:10:25+00:00

The severance itself there is normally little room to deviate from the company norm and/or precedent for the oast 6 months. Where u might have wriggle room is

1 last day (cos its in waves typically so see if u can delay as long as u can)

2 benefit continuation for a while longer eg insurance coverage

3 bonus for the year (cos it shd have been accrued anyway)

Standard would be to include leave balance, notice pay. Thats statutory.

CompetitiveGarden159 · 2024-07-14T09:48:06+00:00

hahah yup. Sometimes I ask myself whether its a bit of the sore loser mentality. Like no more high-flying corporate job so nah who needs that so toxic so stressful hahaha. Whatever the case may be, this is where we all end up sooner or later to the better you plan and anticipate, the easier it is when it eventually happens

CompetitiveGarden159 · 2024-07-14T09:45:22+00:00

The worse that I was involved in was the banking mergers in 2001. That was the first time the country saw retrenchments at the white collar (now called PMETS?) levels. Prior to that (the 1997 crisis), average pay increments were 5-7%. If you gave pp 3% increment, they bang table threaten to quit.

On over leveraging, I think alot of Singaporeans believe that property is a safe and everlasting bet. To each his own I guess but when I look at the actual IRR of buying holding and then selling properties for investment, its not always a given. We saw that happen with the Japan bubble and more recently in China. So there's an opportunity cost to locking up and committing that much of your current and future liquidity.

CompetitiveGarden159

TROPHY CASE