ML BeneBits

In buyout or take private transactions, the management team of the target business is a key constituency that frequently—yet often unknowingly—requires legal counsel to advocate for its interests. The management team’s interests may be implicated in such transactions in various ways, which differ from those of institutional equity sellers, given that members of management are service providers and, in many cases, equity holders of the target business, who are expected to rollover proceeds to align their interests with the purchaser.

When private equity investment transactions close, management and private equity investors are off to the races—generally aligned on strategic and financial objectives. However, as market conditions and the economic climate shift, key parties may become misaligned and management incentive plans (MIPs) could become underwater or ineffective.