Management Compensation, Retention, Severance in Private Equity Leveraged BuyOut

ActiveAllocator is pleased to share with you our research piece on “Management Compensation, Retention, Severance in Private Equity Leveraged BuyOut “.  Gleaned from our own experience across over $40 billion in M&A, poring over scores of SEC filings, and our private investment diligence credentials we bring visibility to a topic long shrouded in secrecy. Our deck sheds light on why the average CEO pay is 271 times the nearly annual average pay of the typical American worker, why select normal senior executives become extra ordinarily wealthy during certain corporate events, and other subjects of conversation. We describe the main components of compensation, the general features of equity retention and severance arrangements and employment contracts, and conclude with a few case studies to illustrate calculations.

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How to Buy Companies and Assets

Institutional investors running deep pools of capital moving to in-house management, now increasingly do club and direct deals outside allocating to traditional private equity fund sponsors. They compete and win and also outperform co-investments. The ones who do, usually have excellent in house talent, access to deals etc. But what exactly is a deal? How do you buy a company? The actual process has long been shrouded in secrecy and practitioner jargon. Having done +$40 billion in M&A, seen and evaluated hundreds of buy offers, having sold portfolios of assets and companies, we bring sunlight to the ‘investment banking’ buy space.

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