We are pleased to share with you the latest in our series of Private Equity Reports – an in-depth review of Portfolio Company Equity Participation Plans. This report is based on 375 survey responses received worldwide from executives of private equity portfolio companies and their private equity sponsors.
The management incentive programs sponsors employ to link the interests of their portfolio company leadership teams and their investors vary widely in structure, tax treatment, scale and performance hurdles. Variations exist within a single firm’s portfolio. Even the terms which are used to define key plan components vary from location to location and plan to plan. Ask someone in the US about “sweet equity” and you are likely to be corrected, “You mean sweat equity, right?”
This report is intended to shed light on both the differences and prevailing norms between Equity Participation Plans. We appreciate the participation of the many executives and private equity professionals who made this report possible. Where questions to these two cohorts were different, we have included both sets of questions and responses. It should be noted that executives were asked to answer questions about their current portfolio company, PE professionals were asked to answer these same questions about “their most recently acquired portfolio company.” We thank them for their insights.