EMI Due Diligence Is Transaction Archaeology

At some point, every self-respecting share plan, incentives and/or tax practice has to write and publicise something along the lines of: “All the things that can go wrong with EMI options.” Indeed, I once wrote about the tragedy and triumph of EMI options which you can read here. Well, here's another contribution to that venerable tradition, hopefully with some new insights.

EMI can look straightforward when the options are granted. The company qualifies, the employee qualifies, a valuation is agreed, and the documents are signed.

Five years later, someone offers £100 million for the business. The option agreements are still there, but the company has raised money, reorganised its group, changed its share rights and agreed new arrangements with employees.