Management package

A management package is the set of economic incentive mechanisms designed to align key managers' interests with investors' in an LBO or fundraising transaction. It may combine co-investment in ordinary shares, preferred shares, BSPCEs, stock options, free shares or sweet equity. The objective is to allocate to management a share of value creation — typically 5–20% of gains — in exchange for their commitment and performance. Its structuring must respect the legal, tax and economic balance to be defensible before fiscal and judicial authorities.

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Example: in a CHF 40.0 million LBO, management receives 10% of capital through a CHF 400,000 sweet equity co-investment. If the company is sold 5 years later at CHF 70.0 million, management realises approximately CHF 3.5 million in capital gains — an 8.75x return on their initial investment, tightly aligned with the fund's performance. The package is governed by bad leaver and good leaver provisions.

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Hectelion structures and values management packages in LBO and fundraising transactions, optimising the economic balance between management attractiveness and investor protection.