Services – Jamieson

The route to
a successful private
equity transaction

Management Advisory

Management Advisory US

We believe management has the right to adviser representation in a sale process. This balances the demands for financial commitment with agreement on new equity and compensation arrangements.

For each transaction we prepare a targeted set of commercial management terms. This is incorporated into the sale process and negotiated ahead of signing the sale and purchase agreement, thus facilitating a smooth process for all stakeholders.

There are 4 key stages to agreeing management terms in a sale process:

We believe management has the right to adviser representation in a sale process. This balances the demands for financial commitment with agreement on new equity and compensation arrangements.

There are 4 key stages to agreeing management terms in a sale process:

Using our in-depth market knowledge, network and know-how, we meticulously plan and prepare in advance of bidder negotiations. We take time to understand your priorities and help you to build a picture of your optimal terms – bespoke to you and your team.

We align your vision for the management team with your business plan strategy ensuring all aspects of management planning have been taken in to account. In this phase we will:

Provide insight to different bidder house styles and approach to terms
Familiarise ourselves with your team and its likely future evolution
Review your current incentive arrangements and discuss elements to retain or amend
Brief you on the spectrum of typical market terms for key items and discuss your priorities and preferences in order to build up a draft proposal via a management term sheet.
Model illustrative sale proceeds, cash-out and rollover figures on an individual basis
Produce illustrative returns modelling to help shape expectations, bring the economic terms into focus and help define our negotiating mandate with you
Work with your tax and legal advisers to incorporate their work, and particularly to ensure structuring conforms to local market norms
Prepare a management term sheet that puts forward your desired position on key commercial terms
This term sheet provides the opportunity to put forward an envisaged financial incentive structure (e.g. risk / reward curve) and key commercial terms (e.g. leaver rules) which will be negotiated with bidders in the next phase of our work

Our term sheet focuses on the key financial and commercial points rather than undertaking detailed long form equity documentation at this crucial stage in the sale process. During this stage we will agree these terms with all bidders alongside the later stages of the sale process leading up to signing. In this phase we will:

Lead or advise on equity terms and other incentive / compensation negotiations with bidders
Negotiate and finalise the management term sheet, including items such as cash-out, rollover levels, structure of investment, size and nature of the incentives, and key legal and tax terms that can impact value; such as leaver provisions, refinancing rights, minority protections, drag / tag and exit provisions
Clarify and compare terms from each bidder vs market norms and our benchmarks, providing relevant analysis for management teams to assess their options
Work with your legal and tax advisers to ensure a binding commitment to management terms is in place at the point the sale and purchase agreement is signed

Having negotiated the key commercial terms we work with your other advisers to project manage the completion and implementation of the management incentive scheme. In this phase we will:

Help reach each final agreement on outstanding financial and commercial aspects of the management terms and assist the lawyers in converting the management term sheet into fully detailed legal documents
Assist your tax advisers with the information they need to undertake structuring, valuation or tax computation work that is required in preparation for closing
Prepare and complete the management investment schedules, mapping proceeds from the sale through to cash out and holdings of securities in the new company

After closing, we can assist with finalisation of allocations and general administration of the incentive schemes. This might include:

Communication of the management deal to the wider team and employees, either working with the CHRO and/or members of the senior management team
Administration of the management incentive arrangements (leavers, new hires, reallocations, amendments as a result of subsequent acquisitions, updating returns modelling)

We align your vision for the management team with your business plan strategy ensuring all aspects of management planning have been taken in to account. In this phase we will:

Provide insight to different bidder house styles and approach to terms
Familiarize ourselves with your team and its likely future evolution
Review your current incentive arrangements and discuss elements to retain or amend
Brief you on the spectrum of typical market terms for key items and discuss your priorities and preferences in order to make or react to a proposal via a management term sheet.
Model illustrative sale proceeds, cash-out and rollover figures on an individual basis
Produce illustrative returns modeling to help shape expectations, bring the economic terms into focus and help define our negotiating position with you
Work with your tax and legal advisers to incorporate their work, and particularly to ensure structuring conforms to market norms
If appropriate prepare a management term sheet that puts forward your desired position on key commercial terms
This term sheet provides the opportunity to focus on financial incentive structure (e.g. risk / reward curve) and key commercial terms (e.g. leaver rules) which will be negotiated with bidders in the next phase of our work

Our term sheet focuses on the key financial and commercial points rather than undertaking detailed long form equity documentation at this crucial stage in the sale process. This will prepare us to either advance our term sheet or react to bidders term sheets. We will agree on the terms with bidders during the later stages of the sale process. In this phase we will:

Lead or advise on equity terms and other incentive / compensation negotiations with bidders
Negotiate and finalize the management term sheet, including items such as cash-out, rollover levels, structure of investment, size and nature of the incentives, and key legal and tax terms that can impact value; such as leaver provisions, refinancing rights, minority protections, drag / tag and exit provisions
Clarify and compare terms from each bidder vs market norms and our benchmarks, providing relevant analysis for management teams to assess their options
Work with your legal and tax advisers to ensure a binding commitment to management terms is in place at the point the sale and purchase agreement is signed

Having negotiated the key commercial terms, we work with your other advisers to project manage the completion and implementation of the management incentive plan. In this phase we will:

Help reach each agreement on outstanding financial and commercial aspects of the management terms and assist the lawyers in converting the management term sheet into detailed legal documents
Assist your tax advisers with the information they need to undertake structuring, valuation or tax computation work that is required in preparation for closing
Prepare and complete the management investment schedules, mapping proceeds received from the sale and amounts being reinvested in the new company

After closing, we can assist with finalization of allocations and administration of the incentive plans. This might include:

Communication of the management deal to the wider team and employees, either working with the CHRO, GC and/or members of the senior management team
Assist in the administration of the management incentive arrangements (leavers, new hires, reallocations, amendments as a result of subsequent acquisitions, updating returns modeling)

Other Services

In addition to sale processes, our focus and experience spans a broad range of company and shareholder events that place CEOs and Management at the heart of delivering a successful outcome.

In addition to transactions, our focus and experience spans a broad range of company and shareholder events that place CEOs and Management at the heart of delivering a successful outcome.

Advice to senior executives joining portfolio companies mid investment cycle, on their cash investment and equity incentive packages.

When this involves investing into an existing plan, we bring an independent and objective perspective to analysing the attractiveness of the proposal being made and, where appropriate, suggest areas for negotiation, amendment or additional protection. When no such incentive plans exist, we can work with incoming CEOs to help establish an appropriate structure with the board / shareholders.

Whether proposed changes are driven by shareholders or lenders, management are critical in the execution of any restructuring process, as well as being the driving force behind the ongoing operational performance of the business. Our advice covers both the amendment of existing incentive plans, and the effective structuring of new schemes that are fit for purpose in light of changed capital structures, business strategies and trading environments.

We take a collaborative approach in order to understand and assist:

All stakeholder objectives and their perspectives on past and future performance
Evolution of the management team and time horizons of key individuals
Future value creation through operational (using latest forecasts) and financial scenario analysis (within existing or proposed amended structures)
Assessment of where future value is reflected in the capital structure and across the various stakeholders
Assess management returns against varying investor outcomes and market benchmarks
Solutions to underwater equity arrangements (i.e. share issues, performance ratchets, options, cash-based bonuses) working within existing or amended capital structures
Prepare a term sheet that captures the commercial proposals and is agreed with all stakeholders ahead of full documentation
Key tax and legal considerations in structuring and implementing new incentives
Process time pressures and coordination of multiple parties and their advisers

Our approach is collaborative, working with all stakeholders to align interests in shareholder value creation and reach agreement on an acceptable new management incentive scheme going forward.

Advice to management teams in take private situations. Management teams running public companies that are the subject of approaches or offers from private capital have a complex array of responsibilities to consider. We will help management navigate the process in a manner that appropriately discharges their duties to shareholders whilst securing ongoing incentive arrangements that align senior management with the new investor. In addition, we will help manage the transition of often broadly distributed public company incentives (LTIPs, options, RSUs) into a private company environment in order to retain employees and minimise business disruption.

Advice to boards and management teams on the design and implementation of cash and equity based incentive plans (including synthetic liquidity mechanics). As part of ordinary course business planning or specific planning ahead of an expected future event, we can help:

Structure plans (profit interest, growth shares, options and cash-based plans)
Define economic outcomes / level of payouts – anchor appropriate valuation points at which incentives start to accrete value, and at which they crystallise proceeds
Benchmark payout expectations against market data
Design synthetic liquidity mechanics such as put/call options (if required)
Agree incentive pool allocations and the right breadth of participants
Propose other commercial provisions around the rights to the incentives (e.g. leaver provisions, minority protections etc.)
Coordinate external tax and legal advice as necessary, including the information required for a tax valuation

Strategic advice to owner managers, founders and management teams on raising debt and equity capital. Whether funding a start-up, acquiring a platform business, raising growth capital, delivering a partial exit for shareholders, or to fund bolt-on acquisitions, we draw on our years of experience running processes and agreeing capital structures to align new investors, existing shareholders and management teams to maximise future value creation.

Partial Exits & recapitalisation

Partial exits have become a more popular strategy for funds which wish to retain high performing assets while generating interim liquidity for LPs and gaining third party verification of valuation. Such transactions pose their own challenges for the sponsor / management shareholding dynamic. In these situations we help management shape a proposal to accommodate any evolution in the management team (e.g. exiting Leavers, re-balancing allocations to high performers), balancing cash-out with existing and incoming sponsor objectives, and ensuring go-forward alignment is maximised.

M&A equity funding

Whether M&A targets are acquired through the existing company or a new company (Newco) is formed, we align management teams’ financial interests with investor interests and protect against adverse equity dilution from acquired businesses. Visibility and protection around management incentive terms from M&A can be incorporated into commercial term sheets and negotiated in advance.

Advice to management teams on entering the public company arena. Listing private equity owned businesses often requires careful consideration of the impact on existing equity incentive plans.

Managers’ and Investors’ strong alignment within a private environment can diverge at the point of listing, with conflicting objectives as regards pricing, sell-down, lock-ups, post IPO restrictions and future PLC incentives. Often run alongside a trade or secondary buyout process, we will provide objective analysis of the proposals being made to management and the financial implications of each outcome, modelling the differences between LTIPs, value creation plans, and sweet equity schemes whilst giving a qualitative analysis of other commercial terms.

We support owner managers, founders and management teams undertaking formal business sale processes across all industry sectors. Our expertise lies in transactions that are notably management driven, where the interests of multiple parties need to be met in order to conclude a deal. These types of sale often involve the complication of shareholders rolling-over into the buyer’s structure, earn outs or differing forms of consideration for management and non-management shareholders.

Advice to midstream joining CEOs and Senior Managers on their cash investment and equity incentive arrangements within portfolio companies.

Whether proposed changes are driven by shareholders or lenders, management are critical in the execution of any restructuring process, as well as being the driving force behind the ongoing operational performance of the business. Our advice covers both the amendment of existing incentive plans, and the effective structuring of new arrangements that are appropriate in view of changed capital structures, business strategies and trading environments.

We take a collaborative approach in order to understand and assist:

All stakeholder objectives and their perspectives on past and future performance
Evolution of the management team and time horizons of key individuals
Future value creation through operational (using latest forecasts) and financial scenario analysis (within existing or proposed amended structures)
Assessment of where future value is reflected in the capital structure and across the various stakeholders
Assess returns against market benchmarks
Solutions to underwater equity arrangements (i.e. share issues, performance hurdles, options, cash-based bonuses) working within existing or amended capital structures
Prepare a term sheet that captures the commercial proposals and is agreed with all stakeholders ahead of full documentation
Key tax and legal considerations in structuring and implementing new incentives
Process time pressures and coordination of multiple parties and their advisers

Our approach is collaborative, working with all stakeholders to align interests in shareholder value creation and reach agreement on an acceptable new plan going forward.

Advice to management teams in take private situations. Management teams running public companies that are the subject of approaches or offers from private capital have a complex array of responsibilities to consider. We will help management navigate the process in a manner that appropriately discharges their duties to shareholders while providing for ongoing incentive arrangements that align senior management with the new investor. In addition, we will help manage the transition of public company incentives (LTIPs, options, RSUs) into a private company environment in order to retain employees and minimise business disruption.

Structure plans (profit interest, options and cash-based plans)
Define economic outcomes / level of payouts – identify appropriate valuation points at which equity incentives participate in value growth and any step up points
Benchmark payout expectations against market data
Design liquidity mechanics such as put/call options (if required)
Agree incentive pool allocations and the right depth of participants
Propose other commercial provisions with regard to the incentive arrangements (e.g. leaver provisions)
Coordinate external tax and legal advice as necessary

Strategic advice to owner managers, founders and management teams on raising debt and equity capital. Whether funding a start-up, acquiring a platform business, raising growth capital, delivering a partial exit for shareholders, or to fund add-on acquisitions, we draw on our years of experience to align new investors, existing shareholders and management teams to maximize future value creation.

Partial Exits & recapitalisation

Partial exits have become a more popular strategy for funds which wish to retain strong performing assets while generating some interim liquidity for LPs and gaining third party verification of valuation. Such transactions pose their own challenges for the sponsor / management shareholding dynamic. In these situations we help management shape a proposal to accommodate any evolution in the management team (e.g. exiting Leavers, re-balancing allocations to high performers), balancing cash-out with existing and incoming sponsor objectives, and ensuring go-forward alignment is maximized.

M&A equity funding

Whether M&A targets are acquired through the existing company or a new company (Newco) is formed, we align management teams’ financial interests with investor interests and address adverse equity dilution from acquired businesses. Visibility and protection around management incentive terms from M&A are often addressed and negotiated in advance.

Advice to management teams on entering the public company arena. In such situations private equity owned businesses often requires careful consideration of the impact on existing equity incentive plans.

Managers’ and Investors’ strong alignment within a private environment can diverge at the point of going public, with conflicting objectives as regards pricing, sell-down, lock-ups, post IPO restrictions and future public company incentives. Often run alongside a strategic or secondary buyout process, we will provide objective analysis of the proposals being made to management and the financial implications of each outcome, modeling the differences between the alternative equity arrangements while giving a qualitative analysis of other commercial terms.

We support owner managers, founders and management teams undertaking formal business sale processes across all industry sectors. Our expertize lies in transactions that are management driven, where the interests of multiple parties need to be met in order to conclude a deal. These types of sale often involve the complication of shareholders rolling-over into the buyer’s structure, earn outs or differing forms of consideration for management and non-management shareholders.

Management Advisory

Management Advisory US

Other Services

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