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ARTICLE · 15 NOVEMBER 2023

Private Equity Investments In Germany

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In US partnership structures, profits interests are a popular component of executive compensation packages because they tie value to the...

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PART I: EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION IN PRIVATE EQUITY INVESTMENTS IN GERMANY

PROFITS INTEREST STRUCTURES IN GERMAN COMPANIES

In US partnership structures, profits interests are a popular component of executive compensation packages because they tie value to the executive to a gain in the value of the company and offer tax advantages for the executive. Profits interest grants are particularly attractive because the executive does not need to invest money, and the executive receives the benefit of long-term capital gains treatment rather than ordinary income treatment.

This briefing deals with the alternatives available for competitive executive compensation packages in PE-owned German companies using instruments resembling the design of profits interest programs in the US. Bottom line: Although likely more complex, putting together compensation packages resembling US profits interests is

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