Designing Management Incentives For An Uncertain PE Exit, Law360

Partners Gemma Roberts and Andrew Callaghan authored an article in Law360 on how private equity sponsors can design management incentive plans (MIPs) to remain effective as holding periods lengthen and exit routes become less predictable.

The article notes that sponsors should build flexibility into MIPs from the outset, including considering broader participation, cross-border tax implications, future hires and acquisitions, and alternative liquidity scenarios. The article recommends scenario-testing MIPs against partial disposals, continuation transactions, longer holds, and changes to management teams, while monitoring whether evolving circumstances warrant targeted liquidity, additional incentives, or a reset to preserve alignment.

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