I want all the materials including temple , is there any negotiation to buy all?
@ASimpleModel
2 жыл бұрын
Thanks for commenting! Yes, it is all available as part of this course: www.asimplemodel.com/financial-curriculum/lbo-case-study/
@paulb2022
2 жыл бұрын
Great videos as always
@ASimpleModel
2 жыл бұрын
Thanks Paul!
@jd5787
2 жыл бұрын
Hi! Nice and simple. Looking forward to the next one. Would you be able to share a sample of the documentation that comes with such deals when it come to incentivizing management? (am I right to assume Management would either need to rollover equity or buy the equity with the sponsor "lending" them the money? I am wondering what would be the mecanics of this in the case of a multi tiered incentive plan)
@ASimpleModel
2 жыл бұрын
Hi JD! Thanks for commenting! I have seen a lot of variations, but I would separate rollover equity and management incentive equity. Rollover equity is the purchase of equity in NewCo with proceeds realized in the sale (hopefully on a tax efficient basis) (based on our emails you likely know this, but for the benefit of other readers :). So the holder owns it outright, which means they wouldn't be subject to any vesting conditions or hurdles. Management incentive plans (whether shares or units) represent an opportunity to capture value above a strike price (FMV or above) at the time of the grant, and this is typically outlined in an option agreement that is referenced in the executives employment agreement (more on how this works in the course titled Management Equity Incentives as part of the LBO Case Study Curriculum www.asimplemodel.com/model/21/lbo-exit-analysis/ ). But to your point, there are many ways to do this. In one structure we (as the sponsor) had options exercise day one, and helped the executive pay the exercise price with a note (debt) to the company. As part of the executive's employee agreement, we included the interest on this note so that they would not have to pay it out of pocket. The outcome at exit was capital gains treatment vs ordinary income tax treatment. Trying to condense a lot of information into a comment... the notes on the site are better :)
@jd5787
2 жыл бұрын
@@ASimpleModel thanks Peterxmuch appreciated. Apologies I give you extra work each time with my comments 😉 so in one case it was a strip of out of the money call option with different strike prices. In another management bought their shares with the help of the sponsor. Thanks! I will try to find time over the weekend to visit the website. 😁
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