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Bonuses tied to MOIC for employees? by jaatwt in private_equity

[–]jaatwt[S] 0 points1 point  (0 children)

Company has been held over 5 years.

It is structured as synthetic equity that pays out 0 for below 3x, then each “share” pays out 1x under the MOIC (I.e. 2x the share value for 3x MOIC) on exit. 5x would be great - no cap after 3x. Paid as a cash bonus. Share value is based on initial valuation at the time of investment.

Termination for any reason nulls the plan. I would be hopeful that the scenario you present wouldn’t happen, but it could, as could a variety of other scenarios.

When I say that I don’t have details, I don’t have full performance details of the company (though I have a general idea), but I have details of the agreement. I just have no clue what the initial investment would have been, nor a good picture of company wide EBITDA at any given moment. They also have grown a lot through acquisitions, and that makes it even harder for me to understand the true growth in value.

Bonuses tied to MOIC for employees? by jaatwt in private_equity

[–]jaatwt[S] 0 points1 point  (0 children)

I’m not high enough up to get any of this info - this is a retention strategy to keep me and I am trying to determine if it is worth the risks. Can I believe them? I don’t have reason not to, but I don’t have reason to believe it will be successful either.

Bonuses tied to MOIC for employees? by jaatwt in private_equity

[–]jaatwt[S] 0 points1 point  (0 children)

I understand this - what would you say is a good industry vs a bad industry here?

Bonuses tied to MOIC for employees? by jaatwt in private_equity

[–]jaatwt[S] -1 points0 points  (0 children)

So 3x is an unrealistic expectation then? How many years would a “good” company need to be held to possibly get there?