Does anyone have guidance on Operating Partner Economics?

by a searcher from University of Pennsylvania - The Wharton School

3 years ago

I'm advising a fundless sponsor (with capital access to family officers) for acquisition diligence and general operating partner support. The sponsor is leveraging my vertical experience and industry relationships. Would like to understand creative economic models with sponsor are reasonable.

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investor from University of Pennsylvania - The Wharton School

I would suggest getting a 1-2% closing fee and then being part of the option pool going forward. The level of the option pool you receive would be dependent on your level of involvement going forward and solving for a $ value that you both think is fair based on the base case projections

3 years ago | like reply | 0 likes

investor from The University of Chicago - Booth School of Business

I would suggest that you position yourself relative to the sponsor and not relative to the transaction. Presumably the sponsor cannot assemble the equity without your involvement / support. If so, I would suggest that you link your economics to the sponsor's economics (closing fee, mgmt fee, promote, etc.) and not the EV. Presumably your involvement is key and thus, you should win in tantum to the sponsor.

3 years ago | like reply | 0 likes

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