Searcher Equity Structure with PE Partner

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by a searcher from Rice University - Jesse H. Jones Graduate School of Business
in Houston, TX, USA

1yr ago

Searcher Equity Structure with PE Partner

All,

I am currently evaluating an acquisition opportunity in partnership with a Private Equity firm for the purchase of a $3 MM EBITDA business (Steep growth profile for search standards). Can people share typical equity structures between financial sponsor and myself?

For context, my full-time search has not yet started and the PE firm reached out to me about running the business for them. I will kick in a few hundred thousand as my "skin in the game" but would like to know if you think the traditional search equity structures are applicable hear (~15% equity based on vesting over multiple milestones).

Thanks!

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reply by a searcher 1yr ago
from Rice University in Houston, TX, USA

There is a bit more back story here. I have known the team for a few years and have discussed different deals with them in the past. My background (despite current title) actually aligns quite well with the target and potential growth markets.

reply by a searcher 1yr ago
from Northwestern University in St Paul, MN, USA

Seems reasonable Cole. I often seen management teams receiving 10% option pools over certain hurdles so anything above that would be a bonus. Maybe you could negotiate 20% over a 5x MOIC.