Management Carve Out Plans

I have posted a few times on management carve out plans (back in February 2011 and November 2011; wow, time flies!!).

Our portfolio companies routinely adopt carve out plans when the founders/employees equity values are not likely to provide enough incentive to get a company to an exit.  This typically results when the company has raised a lot of money and the preferred stock liquidation preference would absorb an out sized portion of the exit proceeds.  It can also result from straight forward dilution.   Regardless, I am a big fan of carve out plans.  There is just no way to get a good exit without a motivated management team and employee base.

Some great carve out plan materials were recently shared with me so I thought best to “memorialize” them in a blog post.  Law firms often make startup “legal issues” materials available to help management teams better understand the startup landscape.  So, thanks to Fenwick & West for putting these together.    The first (Carving Up the Pie Using Change in Control Carve-Out Plans to Incentiviz… ) is a very well written memo on carve out plans in general.  The second (Liquidity_Bonus_Plan_-_Board_Meeting_Slides) is a power point presentation that a startup board might review when adopting a plan.   I am not giving legal advice……

Have a great weekend.

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