Rollover and Incentive Equity Terms Middle Market Survey

About The Survey

The 2018 survey is the third iteration of our signature survey, originally published in 2013, covering terms of rollovers and incentive equity in middle market buyouts and majority recaps. Our initial survey was prompted by the lack of studies or data on these topics. We found this particularly striking given the importance of these topics to private equity investors, entrepreneurs and managers alike, especially in light of the existence of exhaustive studies on other matters such as M&A terms for private acquisitions.

How We Did It

We sent out the 2018 survey to our network of private equity clients and friends. The survey questions covered a wide range of issues critical to understanding the overall approaches and trends in this space. This year we had participation from over 55 individuals and our product provides a high level qualitative assessment of factors ancillary to transactions from performance vesting and time-based vesting, to characteristics of sponsor securities.

How It Can Be Helpful

This survey can serve as a quick and efficient tool to determine and ensure that your position is within the realm of the market. Handling rollover and management incentive equity terms appropriately during a transaction can dictate the outcome for a private equity investor. Knowing how to structure win-win solutions and the unwritten rules and norms of the middle market are therefore critical. 

Trends We Observed

Relative to our 2015 survey, the size of required and actual rollovers has decreased. We hypothesize that this is a result of the continued robust debt market and higher valuations which enable sellers to rollover a meaningful amount of capital even at a lower percentage. Click here to access an infographic of top survey trends.

Click here to access the full 2018 Rollover Survey.

Video

Goodwin Partner Jon Herzog discusses the 2018 Rollover and Incentive Equity in Middle Markets Survey.