A good leaver provision defines the circumstances under which a departing manager or shareholder receives fair value (or a favourable price) for their shares upon exit. Good leaver events typically include death, permanent disability, retirement, non-renewal of mandate by the company, or redundancy without cause. It contrasts with the bad leaver provision, which imposes a punitive price (often nominal or cost) for departures in adverse circumstances. In fundraising and LBO structures, the good/bad leaver boundary is one of the most economically significant and contested points in shareholders' agreement negotiations.

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Example: in an LBO management package, the CFO becomes seriously ill 18 months post-closing and must resign. Their situation qualifies as good leaver: their sweet equity shares are bought back at current fair market value (CHF 850,000), versus nominal value of CHF 5,000 under bad leaver provisions. This CHF 845,000 difference illustrates the substantial economic stakes of the qualification — and why precise drafting of good/bad leaver triggers is critical.

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Hectelion advises on the drafting and negotiation of good leaver and bad leaver provisions in shareholders' agreements and management packages for fundraising and LBO transactions.