Transcript
Implementation of Management Equity Participation in
Germany
A management equity participation program is a very important
instrument when doing deals for a private equity investor.
Management is key for the success of an investment, and therefore
the intention is to have management participate in the success of
the investment. And at the end of the day, the higher the after-tax
returns, the higher the incentive.
What does a typical German MEP look like?
There are three options to structure a management equity program
in Germany. The first option is if management subscribes and
acquires equity or debt instruments. This is the option
that’s typically chosen if the intention is to provide a tax
beneficial result. The second option is manager signs an agreement
that mimics the economics of an equity or debt participation. And
the third option is pretty simple — management gets a bonus
payment.
